Buying Annuities

Q. Jeff, I have to tell you that I am just sick to my stomach after reading your article. I am 38 and rolled half about $50K of my $125K retirement savings to the Allianx Masterdex Annuity. I did some investigation on the internet but really didn't come across much negative stuff. Much of the consumer beware info seems to be directed toward Elderly, so how bad have I been taken and should I fire my CFP?? In retrospect, it made some sense to take a portion of my portfolio and protect it. I am also a big believer that the world has changed post 9-11 and that any CFP that uses an 8-10 return as a benchmark over a period of time is probably being way to aggressive.

Let me know quick as I have him looking at some disability insurance and life insurance for me!


A. The fact that a CFP recommended an EIA for a 38 year old's retirement money is very concerning. Then to put 40% of your investable assets in it!!!

As a result, you have very little flexibility over that portion of your funds now. If you don't like the annuity, too bad. Any advisor should know that over a 20+ year period that the return will be significantly greater in even a no-load index fund while allowing you to retain complete control and flexibility. Of course, there isn't any commission on a no-load index fund!

If you are still in your surrender period window you should try to get out of it. If not, there isn't much you can do.

It is up to you how much you trust the judgement of an advisor, regardless of credentials, that has made such a recommendation.

Thanks for your question.

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