Page 140 - Ready Set Retire

Stephen J. Kelley

$162,889 x .04 = $6,515

That’s it. That’s all it does. It provides a number from which
to calculate an income amount. That isn’t bad, but it isn’t what
most people are told they are purchasing, either.

So your $250,000 annuity has cost you, at a minimum,
$115,000 over a ten year period. Guaranteed. And remember,
that’s a minimum amount. If you make no money (although in
fairness, it could be less if you lose money…but not much).
Annuity fees are based on the value of the annuity. So, if you
are lucky and the annuity contract goes up by, say, 5% a year
(requiring 9.6% because of everyone else’s fingers in the pie),
your “partners” would receive $163,378. Guaranteed!

Here is a quote from Jane Bryant Quinn on variable annuities:

You rarely find me so deeply angry at a
common investment product that I dream of
blowing it to smithereens….. My target: tax-
deferred, variable annuities.9

And, from John Biggs, former chair of TIAA-CREF pension
funds which invented variable annuities:

9 Jane Bryant Quinn, “One Faulty Investment,” Newsweek, August 30,
2006.

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