Prudential Annuities

[margerymermaid]

I am looking for ways to invest my savings. It's in a 1% IRA account right now.
Someone told me that I can get a safe 5% annuity with Prudential. What do people think about annuities? What are your experiences? I don't plan on using this money for at least five years, maybe longer.

[dado potato]

I would be very sceptical about claims of a "safe" 5% yield. Sounds like a teaser rate to me. Furthermore, annuities typically have very high sales charges (commissions).

I sometimes think that after I am 75, if I want to dissipate assets, annuities might do it for me. But in the current environment, fixed annuities payouts are quite low by historical standards, for the same reasons that interest rates are low.

[Rogar]

My best guess is that at 5%, you will get 5% annually based on you investment amount, but will loose the principal and not be able to withdraw it at any time...ever. That is generally how annuities work though they came in many different shades. There is enough on the internet to make an informed decision, but I'd definitely suggest some research. They are slightly complicated. It's something I just went through. Annuities have gotten a bad rap over the years due to their high fees, but have a fit for certain people needing a certain fixed income or a boost to their income.