Quote:
Originally Posted by biker1
It goes beyond that. Some people just want a guaranteed income stream and annuities are one way to generate that. Diversification can be achieved through multiple annuities. I doubt those who have annuities have all of their money tied up in them so there will automatically be some diversification. They are not a vehicle that I would use but I can see how they might be attractive to some.
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So I divide my funds by 4 and get 4 annuities. That is still VERY limited diversification. Any decent mutual fund will have 30 to 100 stocks and the same number of bonds. Take 100K and one puts the money in an annuity and the other into say Vanguard Wellington fund. Person A has one, maybe two insurance companies. Person B has 50 plus stocks and even more bonds. Look at the rate of return for both products over the past 30 years. Pretty close. And the person in Wellington leave 100K plus to his heirs where the person with annuity has zero. And in my opinion, Wellington by itself is no where near diversified enough.
I personally see almost no situation where an annuity is a good option for anyone except the person selling it. Again, a gambler, someone not capable of managing any money, or someone who has a family history of over 100 year old relatives. There just is no good case to be made for them. Probably less then 1% of the retired population should be in an annuity.