Maybe you should "resist"... before outing yourself as a dumbass. Your meaning is not clear. You suggesting I am/was "an annuity salesman"?... Someone who doesn't know "come here from sick 'em.... but will tell sucker investors ANYTHING to make a commission"? I never said I "sold 'em"... just that I was involved.
The whole point of a retirement account is not to bet on anything. Leave your trading mentality at the door. I would recommend you put together a high quality trench corp note portoflio of bonds YOU cherry pick. Do not buy a bond mutual fund, there is still principle risk. There are some fantastic bonds out there with decent coupons right now that you can snag at or just under par. And please do not buy into this inflation panic verbiage. Guess what, if inflation kicks in and the traded value of these bonds declines a bit, yields go up, so buy more of the same bond to elevate your yield. It sure beats getting 40% of your principle permanently wiped out. Bottom line is when your bond redeems you are made whole at $1000 per. You can not say this about stocks or mutual funds. I will give you a real life example actually. About 2 1/2 years ago, someone asked my opinion with respect to a qualified account. He was all hyped up on some analysts and researcher served him up on dividend paying stocks. So he ended up buying 1500 shares of AT&T for a total investment of $61,500. Present day, he has now lost nearly $20,000 in principle nearly 35%. I had pleaded with him to buy some longer term AT&T bonds with a 6% coupon instead. To this day, he still regrets not taking my advice. I really like immediate annuities in terms of simplicity and visibilty. Lets say you have $150,000 right now to invest and you are 40 years old. There are single life programs that will pay you roughly $725 per month for the rest of your lifetime. You can also elect an optional joint life program that wont eat up too much of your monthly income; will take it down to $680 per month range.
If it mattered, I might explain the pitfalls of such an arrangement. Annuities are "complex" because (1) insurance companies want you to think they're a really good deal, and (2) they want to obfuscate how they are a "really good deal for the company, NOT YOU"... Under the right conditions and for those who outlive the life expectancy of the average, they might be a good deal. Likely a "not so good deal" for everyone else. Unfortunately, annuities are WAAAAY too complex of an investment for the average gray matter of ETers...
My "complex" reference comment was not geared to you, or anyone in your discussion in this thread. I meant, within the context of the average prospect or individual on the street. Annuities are like a jungle for sure. I concur with you. If you were to really crunch numbers running present value vs. future value //lump sum/annual annuity payment illustrations, the actual return you are gettting in some of them is really for lack of a better word, lame.
First you complain that they suck you in with deceptive advertising. You state their 6% rate and their disclosed fees for various riders but complain about nickel and diming for fees. So it's less than 6% net. What's deceptive about that? If the numbers aren't acceptable, avoid the product. I have no clue what product your "friend" did nor do I have any intention of researching whether what he purchased was good or your friend was just stupid for buying a bad product. I also have no clue what you mean by losing control of your money. If you mean for the life of the contract then yes, that's true and is no different from buying a mutual fund with a redemption fee. You want out early, it costs. My experiences have been very different. I did a 3 year contract in '05 and it returned 36% in 3 years. Well, actually more but by the time I rolled it into cash in early '08 (1 year CD equivalent in another VA at another company), it netted 36%. A year later I put it back into the market. OK, if you call managed money "lost control" then I lost control of it for 3 years (assuming I didn't want to cancel it and pay a penalty). At the end of 3 years I could very well have taken the money and paid taxes on the 36% gain. I didn't. And yes, that's 36% after fees. Because your friend didn't do well in one doesn't mean all VAs are bad.
Investing in a VA is the same as investing in a mutual fund(s).... minus the insurance company's vig, of course. Over any given period they can be terrific... or lousy.... depends upon the market and which sub fund(s) your contract is invested in. But just like the stock market, there are no guarantees of return... regardless of what you believe or hope.
Your 1% cost is exaggerated and loss of investment without a death benefit rider is incorrect. Your heirs get the invested principal upon death (assuming no withdrawals, etc). Zero cost for that. Nada. Zip. Zilch. If you want your heirs to get potentialy higher contract values due to a good market, you'll need a step up, lock in death benefit rider which costs.