In my long career, I have only sold 3 annuities. That means that with all the clients I’ve met with, in my opinion only 3 warranted the capabilities that an annuity provides. They are tools, and like all tools, they have a set utility. For example, I can 'hammer' a screw into a piece of wood, but it defeats the whole utility of the screw's design. Annuities afford BIG commissions. I was constantly told to sell more annuities by various managers.

There was a study by Richard Toolson who is an Accounting Professor at Washington State University that researched the issue of breakeven points for variable annuities versus investing the same funds in a low turnover stock index mutual fund inside an IRA. Now, assuming both earn the same pretax returns, according to his calculations, an individual in a 36% tax bracket will never come out ahead by investing in a variable annuity due to the prolonged drag of excessive fees and tax issues.

NOW, If you know you are going to live a long life then MAYBE an annuity is a good fit. But if you have those psychic abilities, maybe you'd still do A LOT better putting your money in an IRA.

Steve J. Casull, CEO & Founder