Top Three Reasons to Avoid Variable Annuities

Brian Fricke, CFP®Asset Protection, Financial Planning

Variable annuities are popular in times of market turbulence because of extra fringe benefits like “guaranteed income for life” or “withdrawal benefits.” However, these are the three reasons why those fringe benefits don’t always mean variable annuities are a good investment option for you:

  1. High Cost – variable annuities are double or triple the cost of a mutual fund, which doesn’t outweigh those extra benefits
  2. Liquidity – they are subject to high early withdrawal penalties
  3. Less Tax Advantages – profits are taxed at ordinary income tax rates and there is no stepped-up tax basis for your beneficiaries

In this video, Brian will tell you what to do if you already have a variable annuity.