Finding Affordable Annuities
As Baby Boomers head toward what could be long retirements, often without traditional pensions, variable annuities (VAs) might be able to provide attractive levels of lifelong cash flow if they come with friendly fee structures.
According to Morningstar, the VAs with the lowest fees for mortality, administration, and distribution are Fidelity's Personal Retirement contract (0.25%) and Vanguard's contract, issued by Peoples Benefit Life (0.3%). Those numbers are before expenses for the underlying investment accounts, though.
If you include average fund expenses, Vanguard's VA probably is less expensive than Fidelity's. Using a weighted average expense ratio, the Vanguard VA's total cost is 0.66%, followed by TIAA-CREF's Lifetime Select contract (0.84%) and Fidelity's contract (0.95%).
There is also an independent insurer, Jefferson National Life's Monument Advisor, that charges all buyers a flat insurance fee of $240 per year - which is an extremely low percentage on a large contract.
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According to Morningstar, the VAs with the lowest fees for mortality, administration, and distribution are Fidelity's Personal Retirement contract (0.25%) and Vanguard's contract, issued by Peoples Benefit Life (0.3%). Those numbers are before expenses for the underlying investment accounts, though.
If you include average fund expenses, Vanguard's VA probably is less expensive than Fidelity's. Using a weighted average expense ratio, the Vanguard VA's total cost is 0.66%, followed by TIAA-CREF's Lifetime Select contract (0.84%) and Fidelity's contract (0.95%).
There is also an independent insurer, Jefferson National Life's Monument Advisor, that charges all buyers a flat insurance fee of $240 per year - which is an extremely low percentage on a large contract.
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posted by Bob Moser at
8:44 PM
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