Are the fees high?
Fees can be high. What you pay depends on the annuity type and contract.
The fair worry
A benefit looks different once you see what it costs. I want both parts clear before you hear about a contract.
The answer
Some annuities charge ongoing fees. Variable annuities can also charge fees for the funds inside them. Those fees affect what your money does for you.
Many fixed and indexed contracts have no stated ongoing fee. Instead, costs can show up in how the company credits interest.
Then there's the cost of getting money out early. A surrender charge is a charge for withdrawing money during a set period. That matters if you need money before the period ends.
The downside
No stated annual fee doesn't mean no costs. Limits on access can matter as much as a fee.
At your consultation
At your free consultation, put the benefit beside everything you'd give up. Your retirement advisor will show how those costs affect what YOUR money needs to do.
More questions on this topic
- I heard the bonus is a gimmick. Is it real?Yes, it's a real credit from the insurer. But it doesn't always add to money you can take out.
- I heard annuities are bad. Are they?Long lock-ups, high fees on some types, and hard selling gave annuities a bad name. Those concerns are fair.
- Do I still pay taxes and take required withdrawals?Yes. Pre-tax money still gets taxed, and an IRA's required withdrawals still apply.