Hartford Heads for The Exits In Variable Annuities


The Hartford insurance company is making strategic decisions to exit the annuity business, especially variable annuities.  Industry watchers have long known that variable annuity guarantees made several years ago exceed return expectations, so it’s only a matter of time to see some of these carriers scale back.

Why are they getting out of the annuity business?  two primary reasons- 1) over generous contracts are ‘out of the money’ for the company, and 2) low rates means writing new business is even more risky.

Pervasive low interest rates in the market make it hard to keep pace with the benefits promised.  Insurance companies just like individuals are yield starved, so older contracts promising 7-8-or 9% annual returns are untenable in a 4% rate environment…. and new contracts promising much lower returns may STILL be hard to stay ahead of the game with

What’s it mean? Is Hartford going under? Not likely.  Hartford in particular is under pressure from John Paulson, an activist hedge fund investor, to simplify and streamline its businesses.   And even though they may not be writing new policies and may be trying to buy back variable annuity policies, The Hartford will be in the annuity business servicing existing contracts for many years to come.

My verdict is this: there’s nothing to fear with a Hartford policy if you have one or are consider a secondary market annuity backed by Hartford, even if the company is not writing new business.

If you are considering a new annuity, be extra sure that the credit union checking account quality of the issuing company is as strong as you can find.  This is a tempting marketplace for lower tier companies to grab market share with compelling benefits…. but if low rates prevail for many years, will that B rated company be able to pay out all you are promised today? Don’t make a long term bet on a shady carrier.

Here are two recent articles and a quote on the topic. and

Hartford Financial Services Group Inc. (HIG) is offering to pay some clients to give up retirement products as Chief Executive Officer Liam McGee works to reduce risks tied to stock market declines and free up capital.

Holders of some variable annuities, which guarantee payouts, would be offered cash to give up the contracts, McGee said yesterday in an interview. The offer will be made to holders representing 45 percent of the Hartford, Connecticut- based company’s net amount at risk on the contracts, he said.

Hartford is “examining every single possibility we can reasonably consider to accelerate the runoff of the book,” McGee, 58, said on a conference call with analysts today. “There’s no stone that’s being left unturned.”

Insurers are scaling back from variable annuities as low interest rates and stock market declines weigh on their profits. MetLife Inc. (MET), the largest seller of the contracts last year, said Oct. 31 that sales fell by 46 percent in the third quarter as it cut benefits. Axa SA (CS)’s Axa Equitable and Aegon NV’s Transamerica said this year they are offering to pay clients to reduce risks tied to variable-annuity guarantees.

Index Annuities And Variable Annuities In The News


This week’s focus remains on index annuities and variable annuities because of the rich mix of popularity and confusion regarding each of these products. I want you to have the most recent news and information on available products and strategies so you’re ready to make an informed decision when the time comes. In addition, you’ll find a reference to a very important article on federal spending that should remind you again as to why an annuity is likely to be the keystone financial vehicle in your retirement income plan. Let’s get started…

Are Variable Annuities Becoming More Efficient?

Leslie Scism writes in the Wall Street Journal about the move by investment managers to incorporate exchange traded funds (ETFs) into variable annuities. The main reason? ETFs are more cost effective and the result of this move would bring the overall cost of these products down, making them more attractive to potential investors. It doesn’t matter if the currently high fees are justified or not, but the fee structure of variable annuities has long been one of few valid complaints with the product. Lower fees and the resulting higher level of efficiency will make them better for consumers and also more popular with financial professionals. To read into the details of this transformation, click here for Leslie’s article.

What’s more, the article continues by showing further changes to variable annuities that is meant to not only make them more efficient but also more competitive with other products.

It seems to me that issuers of variable annuities are taking a page out of the fixed index handbook.

In the Annuity Report, the difference between these two products is clearly illustrated and it shows that index annuities provided better income guarantees because of a more stable underlying asset base.

With a variable annuity, the base account is exposed to the risks of the stock market. As such, companies have less control over future performance and must go light on the guarantees as a result. A stable asset base is the major advantage of index annuities to the benefit of the consumer and issuing company. How could variable annuities ever compete?

Well, this article describes a shift in investment strategies for the companies who manage variable annuity assets. In an attempt to protect the principle asset, management teams are working to implement indexing and hedging strategies that will limit downside losses in bear market while capitalizing on upswings during a bull market.

To me that sounds a lot like the value proposition of a fixed index annuity.

Why should you care about changes in the variable annuity landscape?

Variable annuities have achieved much greater reach in the retirement planning market. Index annuities are not as well understood but, by their nature, offer a better value proposition for the consumer. For clarification please refer to The Annuity Report for objective information on the difference between these two products.

My job is to present the information and give a clear interpretation of how these things will benefit you when it’s time to decide how you’ll choose to provide a source of guaranteed lifetime income in retirement.  When you are ready, I look forward to hearing from you.

Investment Firms Show Interest in Fixed Index Annuities

You know, maybe index annuities aren’t as bad as the financial press would have you believe. In fact, this article from Insurance News shows that Wall Street financial firms are working to offer their own line of fixed index annuities. Click here to read the article.

As the products have aged and proved value over the last decade or more, the changing popular opinion means investment firms will have to alter strategies in an attempt to retain assets under management. Yes, the demonizing will slow down as more and more firms embrace the use of these safe-asset products. It’s the classic “if you can’t beat ‘em, join ‘em” mentality.

This will likely result in the movement of many more investment and insurance companies into this market. How does that affect you? Over time there will be a better competitive environment that leads to more product offerings and better contractual benefits. The market will continue to grow along with available choices for consumers.

That’s the major advantage of Annuity Straight Talk. You have me to do all the heavy lifting in product selection and loads of quality information that allow you find the best product out there for your specific situation.

And there’s one more thing I’d like to share with you this week…

Senators Propose Rigid Spending Cap- Andrew Taylor (AP)

How will any necessary budget cuts affect your plans for retirement? Well, if you don’t live under a rock then you know we have a mounting fiscal crisis in this country.

This AP release talks about a major proposal to reign in federal spending via a serious of cuts that is meant to shave $8 Trillion out of the government budget over the next ten years. You might want to read that again. The primary targets of those cuts are Medicare and Social Security. I’m not making this up… read the AP release.

I don’t want to spend too much time talking about the looming insolvency of those programs, but maybe it’s time for a quick quiz:

When you retire, how much control should you have over your financial livelihood?

a.)    I want to cede all control to bankrupt government program whose administrators admit their own insolvency.


b.)    I want to take control and make my own decisions.

Hopefully the answer is clear. It’s time to take a step in the right direction and make an appointment now! I look forward to working with you.

Bryan J. Anderson

800.438.5121 [email protected]

Changes to Retirement Planning Products


Several changes to the retirement product market are in the works and anyone considering the use of guarantees for future income needs to be aware of all options.

Robert Powell of Market Watch writes about several of these changes and what it means for consumers in this article.

Some companies are leaving certain markets entirely while others are reducing current benefits or raising rates.  This is sure to have an impact on guaranteed income and long-term care products.

Really what the article calls for is the need for consumers to do more due diligence when choosing products and to seek quality advice as a means to properly manage guarantees within a well rounded retirement income plan.

A specific example of this comes with the reduction to the most popular variable annuity, marketed under the banner of Retirement Red Zone by Prudential.  A press release that explains the changes in guaranteed income benefits can be found here.

A more general assessment of an industry-wide change to variable annuities is highlighted in this Investment News article.  Simply put, these reductions mean that it will take more capital to produce the same level of guarantee.  Don't tell me that won't have some impact. 

Recent changes to the GLWB Report from Annuity Straight Talk outline the fundamental differences between guaranteed income features of fixed index and variable annuities.  It is important to understand these differences so you'll be able to decide where to find the best value for your investment dollars.

What you should take away from this news is the fact that changes to the features of guaranteed products don't mean those options are off the table but that you need help from someone who stays on top of these changes.

Annuity Straight Talk is the resource for quality information and unbiased advice.  Please browse the site for information on how these products work and how they can take the complication out of retirement planning.

As the new report has not been published to the site yet, call or email to have one sent directly to you.  All members will be updated when the finishing touches are complete.

Feel free to call with further questions about specific products or strategies, or simply visit the appointment page to schedule a meeting.

Bryan J. Anderson

800.438.5121 [email protected]

Guaranteed Lifetime Withdrawal Benefit Annuities


Time and time again I’ve made the point that guaranteed lifetime withdrawal benefit annuities (GLWB) are great products that too often are not properly explained to consumers.

These GLWB riders and benefits can be devilishly complicated and require proper analysis prior to purchase. There are GLWB riders available in both Variable Annuities, and in Fixed Index Annuities.

Variable products make up the majority share of the market while fixed index annuities with GLWB features are beginning to make a big impression as well.

I’d like to direct members this week to and an article written by Sheryl J. Moore.  Sheryl is a tireless advocate for the proper use and placement of fixed index annuities.  She tackles the subject of suitability for GLWB contracts in this article.

This is valuable information because too many salesmen out there consider indexed annuities with guaranteed income features to be a single solution to a variety of financial planning situations. Annuities with guaranteed lifetime income benefits can be a powerful tool when used in the right context.

Sheryl’s article will help you understand when they are not be appropriate.  Don’t listen to anyone who tells you that indexed annuities with GLWB are the only way to go.

An additional disclaimer I’ll note is the fact that this article is written more for the benefit of salespeople.  The information, however, is fully appropriate for consumers who are interested proper due diligence.

Happy Thanksgiving Everyone!!!

Bryan J. Anderson

For More Info on The Fixed Index Annuity, Click Here

For More Info On Variable Annuities, Click Here

Longevity Risk In Annuities


Understanding Longevity Risk and Your Retirement Income:

With the advancements in medical care and standard of living worldwide, we are all fortunate to expect longer lives as a result.  On the plus side of more time is the opportunity to do and experience more in life.

From an economic and financial perspective, there are a lot of challenges we face globally.  Failure to prepare for a longer retirement could have serious consequences.

The article I’m recommending this week comes from the New York Times and describes the difficult issues government and social programs face.

The article… The Financial Time Bomb of Longer Lives

Social Security and Medicare are already over-burdened and the majority of retirees aren’t yet participating in the system.  Are benefits safe?  Where will we get the necessary funding to cover the promises these programs have made?

Regardless of what happens with social programs, it is important to control what you can and give yourself the best chance of living comfortably throughout retirement.t

Would safety, tax deferral and guaranteed lifetime income give you additional peace of mind?  Annuities were made to solve problems like this.

For ideas on how you can optimize you retirement income, call or email with questions about escaping the coming Financial Time Bomb.

Bryan J. Anderson

800.438.5121 [email protected]

The Validity of Fixed Index Annuities


Since I always direct people to search for facts that support financial products and strategies, I recommend all members of Annuity Straight Talk take a look at this report published by the Wharton Financial Institutions center regarding fixed index annuities.

Fixed Index annuities have a place at the table in retirement income planning.  In the report found here, the authors offer evidence that shows fixed index annuities produce favorable returns in comparison to all other asset classes over the past decade or more.

These products are relatively new to the retirement market so it is useful to have some objective information to help decide whether it’s the right fit for you.

The real advantage to fixed index annuities is the fact that the account values don’t decline when the market drops.  And although positive returns are subject to maximum cap rates, the lower volatility makes the overall gains very competitive.

In addition, because of the more stable asset base, future income guarantees far outpace comparable variable annuities.

When you read this report, start with the abstract points listed at the beginning to get the basic conclusions of the report.  If you’ve ever questioned the validity of fixed index annuities, I suggest skimming the report for verification of the quality of this product type.

For a discussion about how fixed index annuities can help stabilize your retirement assets please learn more about this in the The Annuity Report by signing up below or to the right.  Or, explore these  pages on Fixed Index Annuities or these pages on their popular income- rider siblings, Hybrid Annuities.

Bryan J. Anderson

800.438.5121 [email protected]

Refer here for more on fixed index annuities

How Has The Stock Market Treated You?


I recently came across this article in the September edition of The Atlantic titled The Great Stock Myth that should give everyone something to think about.

We are all taught to believe the the stock market should offer a premium return in exchange for the associated level of risk. That has mostly been true for much of the past century. Recent history, however, shows that the premium steadily decreased as more and more people poured money into the equity markets.

This article mentions a couple of studies, one completed in 1999 that show investors expected annual returns of 30%. Another notes that even after the 2008 crash, one in four investors expects annual returns of 10-20%.

Where do such high expectation originate? Actual performance results over the past decade have been slim to negative in most cases. Forecasts for the next ten years don’t offer much hope, either.

What are your expectations for retirement asset growth? Can you afford to shoulder the risk of the markets without any reward?

It seems a wise move to not rely solely on equities for placement of sacred retirement assets when volatility is least wanted.

One of the fundamental purposes of Annuity Straight Talk is to offer honest information to people who are tired of getting battered and bruised in the stock market. You can safely and predictably grow your assets while assuming little to no risk. It is likely an annuity of one form or another is exactly what you need.

Curious? Just ask me how. Sign up now to receive the free reports on this site or feel free to call or email any time. I can be reached at 800.438.5121 or [email protected]

To read The Atlantic Monthly aricle click here.

Are Annuities Bad?


Annuities are not good or bad but instead suitable or unsuitable for an individual or situation.  I apologize if you’ve read that in too many places on this site.  It is a point that can’t be stressed too much because of the polarizing opinions you’ll find while looking for annuity info on the internet. Last week the All About Finance blog posted a scathing critique of indexed and variable annuities.  I happen to be a proponent of annuities and I’m not scared of people who disagree with me.  When I recommend fix my credit as part of a financial plan, there is no doubt the placement is appropriate.

Recommendations should always be placed in the context of each individual so often time proper advice will lead a person away from annuities.  That’s more than I can say for the author of the all about finance blog who seems to think all annuity salespeople should be prosecuted for self dealing and fraudulent advice.

Little evidence of the author’s knowledge of annuities is present in the blog but they seem to offer blanket advice to everyone regardless of personal factors. Now I do agree that abusive sales practices exist and a few examples mentioned appear completely inappropriate but that is hardly reason to chastise all advisors who favor the use of annuities. Apparently the author favors the use of actively managed securities in any situation over annuities so should I assume that he/she is no better than Bernie Madoff or R. Allen Stanford? That would be silly and so is the main point of that blog. 

The harsh reality is that personal education is a critical component of making good decisions whether you choose an annuity or anything else. Annuity Straight Talk was created to enable this approach to using annuities for retirement income planning, and to give people the ools to make their own educated decisions.  If you are not already a member,  join now to access the free reports so you can avoid a horrible mistake like mentioned on All About Finance.

Suitability- Is An Annuity Right For You?


A welcome change to annuity sales practices may be on the horizon.  Until now, strict suitability standards were only applied to Variable Annuities.

Last month the National Association of Insurance Commissioners approved a new set of standards that will apply to fixed products as well.

Hopefully this will bring some decency to sales practices nationwide, although implementation of the new regulation will depend on which states adopt the policy.

If you’re familiar with my site, I favor stringent standards for all annuities to ensure proper placement and maximum effectiveness.  If you haven’t been here before, sign up today and learn to screen products and sales pitches yourself.

Read the National Underwriter release here.

Variable Annuities With Guaranteed Income

Newsletter released another beneficial report on the use of variable annuities with a guaranteed lifetime withdrawal benefit.  You can read it here.

These are very popular products and according to the report, Ibbotson Associates Inc. conducted a study to test variable annuities against traditional retirement income strategies..

In a 30 year period from 1979-2009, the annuity performed well as a substitute for the fixed income portion of a traditional portfolio.

As you may or may not know, Annuity Straight Talk has been suggesting this for quite some time and we have a report that simplifies this specific type of annuity so each potential consumer can fully understand the benefits and disadvantages.

Sign up now for our GLWB report to get more detail on variable annuities with guaranteed lifetime income riders.

Is an Annuity Right For You?


Annuity agents will now be held to a new set of standards by the National Association of Insurance Commissioners.

According to fixed annuity contracts will now be subject to the same regulatory compliance as variable annuities.

This means agents will be required to prove suitability for fixed contracts according to an individual’s overall portfolio.  In addition, all agents will be required to complete a specific annuity suitability course in order to continue selling the products.

That’s good news for consumers.  Hopefully that will reduce the number of garbage contracts sold to naive investors.

Read the full article here.

Variable Annuities and Conservative Retirement Planning


Several experienced advisors share their ideas for conservative growth during uncertain economic times in this article.

Variable annuities with income guarantees are noted as a good allocation for a portion of your assets.

Of course, note my last post regarding the downsides of such products to determine if the benefits outweigh the disadvantages for you.

In any case, some form of annuity is a great way to protect assets and guarantee future income.  It’s definitely worth looking into…

We discuss variable annuities in detail on the site and in our Free Reports

Variable Annuities: Consider The Downside


Business Week just released this article that points out the drawbacks of using annuities for guaranteed income in retirement.

Never forget to consider whether the additional expenses charged for a guarantee are worth the cost.

It all just depends on how much you have, what you need it to do and how long it has to last.  In the end, buying an annuity is an intensely personal decision.

Click here to read the article.

We discuss variable annuities in detail on the site and in our Free Reports

Retirement Income- Variable Annuities etc…

Newsletter just released an article that talks about the way certain insurance companies are working to make variable annuities part of existing 401Ks.  Click here to read more.

This is simply an attempt by the insurance industry to capture more assets by giving certain annuities greater market exposure.

The benefits must clearly be in your best interest to make the additional fees worthwhile.  Do your homework and seek independent advice before jumping in!

We discuss variable annuities in detail on the site and in our Free Reports

Variable Annuities- Do they Make Sense?


I read this interesting article in the Journal about annuities.  Check it out here.

I think it’s hard to find a variable annuity that makes sense, but they are very popular- as always, do your homework and call me with any questions!

Choosing a Good Variable Annuity


Every insurance company will tout one of their variable annuity products as “the best variable annuity”. With many different insurance companies out there, that makes for many “best variable annuities”. In reality, the terms of each product will vary widely. You should understand the different features and risks to decide if a variable annuity is right for you, and only then select a particular variable annuity. 

Variable Annuity: Things to Consider

There are three main components to take into account when choosing a variable annuity.  1) Performance of the managed investment account options available to you,  2) Costs and Fees of the managed account and the annuity component of the contract, and 3) the optional riders you select. You may find that the risks to your principal, combined with the costs and fees, outweigh all the potential benefits of the Variable Annuity.

Variable Annuity: Separate Account Performance

Variable Annuities are ‘variable’ because the principal may be invested directly in the stock market through mutual funds or other managed accounts offered by the insurance company issuing the annuity.   The hope of higher returns makes variable annuities attractive, however these investment accounts  all add layers of risk, and layers of cost, and are the main reason that Variable Annuities ofter under-perform fixed annuities.

Variable Annuity: Administrative Costs

Obviously you will want to find a variable annuity with low administrative fees.  As variable annuities give you the potential for market upside through various investment options, they are more labor intensive for the Insurance companies to manage.  Consequently, their fees may be higher, and are another reason why variable annuities may under-perform fixed annuities.

Variable Annuity: Optional Customization

Variable annuities may also offer various riders so that the owner can customize the annuity to his or her own needs and goals.  As variable annuities have grown in popularity, so have the menu of add-ons and riders available.  Each of these comes with cost, so be careful and don’t buy  options you don’t need.

Variable Annuity: Where to Get Help

Variable Annuities are securities products, and are sold through broker-dealer networks.  As we do not believe variable annuities offer an acceptable combination of safety, profitability, and flexibility, we do not often recommend them. There are other, more appropriate products however, such as the Fixed Index Annuity, to do offer appreciation upside with the guarantees of an annuity and are worth consideration

Annuity Benefits and Riders


Generally speaking, Fixed Annuities and Variable Annuities offer add-on Annuity Benefits and Options.  These can add significant cost to your annuity.  The following are the key riders to watch out for…

With added benefits come added expenses so be selective when you choose extra features and definitely do your homework so you know exactly what you are paying for.

We have put together a list of the most common riders available to consumers to give you an idea of what’s out there. You will likely come across other options and some that are specific to one contract.

We seek to teach you to be critical and objective so you can do a good job of evaluating your needs for any additional contract provisions that are being pitched. If you need some help with analysis, please Contact Us and we’ll be happy to walk through any rider or particular contract.

Here is a list of common riders you will encounter in your search for the proper annuity.

  • GMIB – Guaranteed minimum income benefits guarantee a base income upon annuitization for a specified period
  • GMDB – Guaranteed minimum death benefits are designed to protect the beneficiaries of the purchaser by paying a death benefit equal to the initial investment regardless of market conditions in the event of the purchasers death.
  • GLWB – Guaranteed lifetime withdrawal benefits give a minimum payment for the lifetime of the purchaser based on the value of the initial investment and a stated guaranteed minimum investment return.
  • GMAB – Guaranteed minimum accumulation benefits offer a minimum return of principal to the purchaser equal to the initial investment or the highest account value reached during accumulation depending on contract specifics.

These riders can be added to annuities for an additional cost, usually in the range of .5-.75% of the annual guaranteed yield. The costs vary from company to company.

This additional expense adds even more to the already higher than average cost of variable annuities so make sure you understand the product thoroughly before you invest.

Even after you learn the Decision Tools to make your own decisions, expert advice is essential.

Contact Us and we can help explain the benefits and disadvantages of each of these annuity benefits.


Variable Annuity Rates


All About Variable Annuity Rates

Since variable annuity rates change because they allow the contract owner to invest in mutual fund subaccounts, most people don’t consider how different interest rates can affect the performance of this type of annuity. The list of variable annuity rates below is very general and touches on several additional provisions that may require further explanation, so please do not hesitate to Contact Us.

 Variable Annuity Rates Details:

Fixed Rate- Many, but not all, variable annuities offer a fixed rate option in addition to the available funds within the contract. The fixed rate option in a variable annuity is exactly like a fixed annuity as the rate stays constant throughout the term. At any point you have the option to move any amount of assets to and from the fixed rate account. This offers the opportunity to capture profits and relieve the strain of fees on the overall account.

Death Benefit- Most variable annuity contracts offer an optional death benefit. In many cases the principle investment is guaranteed to be paid at death if the contract has lost value. Other contracts offer certain enhanced death benefit provisions. The first is a high-water mark that captures the highest asset value to be paid at death if the contract value has retracted somewhat. Another option is a guaranteed annual percentage increase regardless of account performance.

Guaranteed Income Growth Rate- One of the more popular addition to variable annuities in recent years is the opportunity for guaranteed income regardless of account performance. With this option, the account value will fluctuate with the market while the income benefit is guaranteed to grow at all times. This affords the contract owner of some level of certainty as to what level of retirement income to expect.

Payout Rate- When taking income from a variable annuity, payments will be subject to a specified rate. In cases where income is guaranteed to last for a certain number of years, the rate will be identical for all annuitants. If income is guaranteed to last for life, the payout rate will depend on the age of the contract owner and joint annuitant if any.


Variable Annuity Rates Summary:

This constitutes a general list of the available variable annuity rates that you may find in a contract. Any additional terms for some of rates you may find when looking at a specific contract will relate in some way to the list above.

Please remember that variable annuities are complex contracts and this page does nothing more than explain the rates associated with the product. All of the points above touch on details of a variable annuity contract that require greater explanation for proper knowledge before purchase.

Refer to additional information on this site for more detail on the inner-workings of variable annuity contracts. If you are considering the use of a variable annuity for retirement income planning be sure to seek the advice of an unbiased professional. The Annuity Report is a great place to start… sign up below and you can learn a lot more about variable annuity rates specifically, and annuities overall.

While we don’t sell variable annuities, this website would not be complete without some information on how variable annuities work and their pros and cons.  While variable annuities do make up the majority of annual annuity sales, we use safer, more guaranteed methods of creating stable retirement income.  It you have a question about an existing variable annuity or want to consider other alternatives such as Secondary Market Annuities or Hybrid Annuities, please Contact Us.

Variable Annuities For Retirement Income


Over the past decade, insurance and variable annuity companies have added benefits and riders that make variable annuities for retirement income planning much more appealing.

Find Out Why So Many Choose Variable Annuities For Retirement Income

Variable annuities offer a direct investment in the securities market and give individuals the greatest opportunity for asset growth but also the greatest risk. That is precisely why certain guarantees in each contract are so valuable to consumers.

Foremost among these is the future income guarantee that is attached to the vast majority of variable annuities sold over the past few years. Future income guarantees allow the variable annuity contract owner to count on a specific level of future income regardless of how the investments perform.  This is a critical component given the recent economic uncertainty and market volatility.

A guaranteed level of future income is the foundation for an optimal retirement income plan and will enable individuals to be more aggressive with alternate investments where appropriate.

Sign up with Annuity Straight Talk to receive the free Annuity Report, which includes the Guaranteed Lifetime Withdrawal Benefit (GLWB) report that clearly details the features and benefits of variable annuities with guaranteed income riders. Knowing that a certain level is guaranteed for life no matter what happens is powerful.  Annuities are the only private investment that can offer such a rich benefit.  For the right individual, a variable annuity for retirement income that offers guaranteed lifetime income may be the perfect solution.

While we don’t sell variable annuities, this website would not be complete without some information on how variable annuities work and their pros and cons.  While variable annuities do make up the majority of annual annuity sales, we use safer, more guaranteed methods of creating stable retirement income.  It you have a question about an existing variable annuity or want to consider other alternatives such as Secondary Market Annuities or Hybrid Annuities, please Contact Us.

Variable Annuity Calculator


Your comprehensive annuity investment guide: Annuities.

Variable Annuity Calculator

Use this variable annuity calculator to see how a Variable Annuity might fit into your retirement plan. Contributing to a Variable Annuity creates long term tax-deferred growth.

View all our annuity calculators, or read on for a description of how this variable annuity calculator works.

Fixed Annuity Calculator

Variable Annuity Calculator

Immediate Annuity Calculator

Fixed Index Annuity Calculator

While we don’t sell variable annuities, this website would not be complete without some information on how variable annuities work and their pros and cons.  While variable annuities do make up the majority of annual annuity sales, we use safer, more guaranteed methods of creating stable retirement income.  It you have a question about an existing variable annuity or want to consider other alternatives such as Secondary Market Annuities or Hybrid Annuities, please Contact Us.

Variable Annuity Calculator: Definitions

Variable annuity

A variable annuity is an insurance product designed to provide long-term, tax-deferred savings. You do not receive a tax deduction on the money you deposit, however, you pay no taxes until you begin making withdrawals. There are no annual contribution limits or income limits. A Variable Annuity could be a good option if you wish to increase your tax-deferred savings. This calculator assumes that you make your contribution at the beginning of each year.

Variable annuity contracts will have different rules, restrictions and expenses that will vary by insurance company and by product within an insurance company. To fully understand a variable annuity, make sure you fully understand all options, restrictions and expenses for your specific variable annuity before you enter into such a contract. This variable annuity calculator is not designed to describe a specific insurance product and should be used as a general illustration of the tax-deferred feature of a variable annuity.

Surrender charges
    Press the “Enter Data” button to input surrender charges for this Variable Annuity calculator. You are allowed to enter the year and percent of the surrender charge. Surrender charges are a percent of the annuity balance you will be charged if you withdraw your annuity balance early. The actual surrender charges vary widely from annuity to annuity. Make sure to check with your investment advisor if you are unsure of the surrender charges that may apply to your particular annuity.

Current age
    Your current age. Enter into the variable annuity calculator.

Withdrawal age
Age you wish to start taking money out of the annuity. This calculator assumes that the year you begin withdrawals, you do not make any contributions to your annuity. So if you begin at age 65, your last contribution would have happened when you were actually age 64. Enter into the variable annuity calculator.

Annual contribution
The amount you will contribute to your variable annuity each year. Enter into the variable annuity calculator.

Expected rate of return
The annual rate of return you expect for your variable annuity. This calculator assumes that your return is compounded annually and your contributions are made at the beginning of each year. The actual rate of return is largely dependent on the type of investments you select. For example, from December 2000 to December 2010, the annual compounded rate of return for the S&P 500 was 0.899%, including reinvestment of dividends. From January 1970 to December 2010, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.05% (source: Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can’t be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

Insurance products may additionally include mortality, expense risk charges, cost of insurance, administrative, and surrender charges that will have a significant impact on the total rate of return for the investment.  Enter into the variable annuity calculator.

Current tax rate
Your current marginal tax rate you expect to pay on your taxable investments.  Enter into the variable annuity calculator.

Retirement tax rate

The marginal tax rate you expect to pay on your investments at retirement.  Enter into the variable annuity calculator.

Years until retirement
Number of years before retirement.  Enter into the variable annuity calculator.

Annuity total before taxes
Total value of your variable annuity at retirement before taxes.  Enter into the variable annuity calculator.

Annuity total after taxes
Total value of your variable annuity at retirement after taxes are paid. Enter into the variable annuity calculator.

Total taxable account
Total value of your savings, at retirement, if your annual contribution is deposited into a taxable account.  Enter into the variable annuity calculator.

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

We hope you find this variable annuity calculator useful.

Pros and Cons of Variable Annuities


Understand The Pros and Cons of Variable Annuities

No other product in the Annuity business creates as much controversy as Variable Annuities.  Frankly, I’m getting kind of tired of all the loud opinions about the Pros and Cons of Variable Annuities- it’s either a table thumping BUY or a screaming SELL.  It’s  just like watching Jim Cramer on Mad Money.

There’s no middle ground, and if you follow the BUY side (selling agents) every sales office should have a line of people waiting to buy.  Listen to the SELL crowd (journalists and many financial planners) every insurance company would be shut down because of fraud.

I know that sounds extreme but it really does show you the difference in the type of advice you are bound to get.  So if you are familiar with my work, you’ll know that I try to be objective and provide solid evidence as to the pros and cons of annuities of All shapes and sizes.

Frankly, I’ve avoided writing this for a long time, because these are complicated beasts and it’s hard to make any kind of apples to apples comparisons.  But I’ll tackle the variable annuity debate in this article.  Before I go further, let me say that even after my  research and experience in the industry, I am not overwhelmingly for or against variable annuities.  Like a lot of things in life, there are times when they work great and others when they are completely inappropriate.

Also, while we don’t sell variable annuities, this website would not be complete without this  information on how variable annuities work and their pros and cons.  While variable annuities do make up the majority of annual annuity sales, we use safer, more guaranteed methods of creating stable retirement income.  It you have a question about an existing variable annuity or want to consider other alternatives please Contact Us.

Pros and Cons of Variable Annuities: Pros

Guaranteed Benefits:

  • Death Benefit This allows the heirs of the contract to inherit the full principal balance in the event that the contract owner passes away while the contract is in force and the account has lost value
  • Income– This allows the contract owner to lock in a predetermined level of future income regardless of account performance.
  • Principal This allows the contract owner to recover the principal investment or the highest contract value achieved regardless of the account value at time of surrender.
  • Tax Deferral:  Taxes are deferred on the growth of assets inside an annuity giving the contract owner the added benefit of greater compounding.  Many critics suggest that excessive fees mitigate tax deferral benefits.  If tax deferral is the sole focus of purchasing an annuity, expensive optional riders can be waived so that total fees will run no higher than the average mutual fund.
  • Unlimited Contributions: Retirement plans have contribution limits.  If you ever come in to a larger sum of money, much of it will not be eligible for allocation in a 401K, IRA, etc.  Annuities have no contribution limits.

Pros and Cons of Variable Annuities: Cons

  • High Fees:  Many annuities have optional riders that push the overall fees to 3% or more.  Plenty of products allow an investor to elect out of the options but some don’t.  If you are purchasing an annuity with high fees, there had better be compelling reasons to do so.
  • Limited Investment Choices: Asset allocation options are limited within an annuity.  Some contracts have predetermined portfolio balances and others will list a limited number of available mutual funds.
  • Surrender Charges: As with all annuities, variable products have surrender charges so your money is tied up for a specified period of time except for the usual 10% annual free withdrawal. Be positive that the surrender schedule works with your investment time horizon.
  • Immobility: The combination of investment limitations and surrender charges means that your money is much less mobile than it would be in an equivalent securities account.

Pros and Cons of Variable Annuities: Summary

As you can see, the analysis is pretty simple.  If you are looking at the prospect of a variable annuity just weigh the pros vs. cons to figure out if it works for you. For most of my customers using the decisions tools we outline in the Annuity Report, available by free download to our members, most of the cons seem to be deal breakers if even if a few components are tolerable.  Overall, for me, the cons outweigh the pros most of the time.

Once you understand the pros and cons, Variable annuities have specific uses for a small class of investors that either works for you or it doesn’t.  Make sure to seek solid advice from an open-minded advisor.