Advisors' Advice: Are Annuities Worth It?

1. Chris Chen, CFP, Insight Financial Strategists

“No one knows the cost of an annuity, it’s well under cover and not revealed and almost always involves a commission and names can be misleading. Fixed indexed annuities, for example, are not invested in stocks but in derivations based on [a] stock index, which can be more risky than stocks.
“If you have a fixed immediate or deferred annuity and you die next year, the principal you funded the annuity with dies with you unless you got some fancy rider with distribution options.” And that comes with its own costs. Chen prefers bond ladders which he says can be structured with about $100,000.”