Question:

I am considering a fixed annuity, but have heard they have excessive costs including fees and penalties.  I would like your view point.  Thanks.

Click here to read Merriman's answer!

ANSWER:

It's true that fixed annuities have high costs and severe penalties. They are suitable for people with tons of money who want the convenience of a fixed income they can count on. But they are not the most efficient product out there. Insurance companies in the aggregate always win. If you are certain that you will outlive the mortality tables and if you have enough other resources that you can easily supplement income from an annuity .... and if you don't want to spend any time figuring out the best option but only want to get something done and "off your plate," then a fixed annuity might be a good choice.

My suggestion is to figure out what the problem is that you think a fixed annuity will solve. Then find out what other solutions there are and only then compare the pros and cons. A financial advisor can help you sort out the best answer for you, which might be different from the best answer for anybody else.