Thumbs Down: Not for Older Folks

Almost half of all new buyers ofvariable annuities (VAs) are overage 50. What's wrong with that, somefinancial advisors explain, is that mostVAs come with steep surrender feesthat can run from 8% to 10% or evenhigher. Combined with the likelihoodthat older investors are more apt toneed access to their money, theseredemption fees could spell fiscal disaster.Older, more conservative investorsare attracted by the guaranteethat comes with a VA—the deathbenefit will never be less than theoriginal investment, no matter howthe underlying accounts do. Brokerswho peddle the annuities are attractedby the outsize commissions, whichcan be up to 10% or more of the initialinvestment—several times whatthe broker would get for selling amutual fund or other investments.Before investing in VAs, ask questions,get clear answers, and dowhat's best for you.