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We've detected you are on Internet Explorer. For the best Barrons.com experience, please update to a modern browser. CHROME SAFARI FIREFOX We've detected you are on Internet Explorer. For the best Barrons.com experience, please update to a modern browser.GoogleFirefox Search News & Quotes Barron's TopicsStock PicksMagazineDataAdvisorPenta100 Years Subscribe Now |Sign In Barrons The 100 Best Annuities for Today’s Market Next: Under Armour Is Tumbling After Earnings Miss. Worries About Asia Remain. * * * * Share This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com. https://www.barrons.com/articles/best-annuities-51627068402 * Retirement * Best Annuities THE 100 BEST ANNUITIES FOR TODAY’S MARKET * * * * -------------------------------------------------------------------------------- By Karen Hube Updated July 26, 2021 / Original July 23, 2021 * Order Reprints * Print Article BARRON'S NEWSLETTERS THE BARRON'S DAILY A morning briefing on what you need to know in the day ahead, including exclusive commentary from Barron's and MarketWatch writers. I would also like to receive updates and special offers from Dow Jones and affiliates. I can unsubscribe at any time. I agree to the Privacy Policy and Cookie Policy. Enter your Email SIGN UP You have been successfully subscribed to The Barron's Daily. Your first delivery will arrive within two days. Continue Reading Text size Your browser does not support the audio tag. Listen to article Length 16 minutes AD Loading advertisement... 00:00 / 16:21 1x This feature is powered by text-to-speech technology. Want to see it on more articles? Give your feedback below or email product@barrons.com. thumb-stroke-mediumthumb-stroke-medium Illustration by Lars Leetaru There are many ways in which 2021 feels like the complete opposite of 2020 ANNUITIES CAN HELP YOUR PORTFOLIO STAY AFLOAT. HERE ARE THE 100 BEST ONES RIGHT NOW. Barron’s compiled 100 of the best annuities based on assumptions such as age, gender, size of investment, and time horizon. Continue reading , and the annuities business is no different. After one of the most challenging years on record—during which annuity providers raised fees, scaled back benefits, and saw sales drop more than 9%—it’s as if a switch were flipped. Investors are pouring money into these insurance contracts as the fallout from the pandemic, the recession, and political turnover makes retirement-income planning more daunting than ever. Consider the myriad looming threats, each of which alone could be the bane of any retirement plan: potential tax increases, inflation, an overstretched stock market, and bond yields so low they’re useless for income and no longer serve as ballast during a stock market tumble. It’s no wonder that investors in or nearing retirement are seeking alternatives to the traditional stock-and-bond portfolio. Annuities, a form of insurance with underlying investments, have the unique capacity to address these issues—when used wisely. Their insurance component can protect against investment losses or guarantee lifetime income, like a traditional pension, and investments within them grow tax-deferred, like assets in an individual retirement account or 401(k). They also can offer considerably more income than would be generated by Treasuries or certificates of deposit, and their returns can be linked to stock-market indexes. Eager to lock in these protections, investors are driving some of the biggest annuity sales increases on record. In this year’s first quarter, sales of a type of contract called a registered index-linked annuity were up 89%, according to Limra’s Secure Retirement Institute, an insurance research firm in Windsor, Conn. Overall, investors put $61 billion into annuities in the period, producing the strongest quarterly sales since the second quarter of 2019. As interest in annuities revs up after a tough 2020, product selection can be overwhelming. Insurers have been churning out new types, each designed to address a particular aspect of investors’ unease. So, while one contract might be a good fit for one person, it could be a costly mistake with long-term consequences for another. To help give a sense of the marketplace HERE ARE THREE STRATEGIES FOR BUYING ANNUITIES FOR RETIREMENT INCOME WHEN RATES ARE LOW There are some strategies for people who want the guaranteed income of an annuity but are worried about taking the plunge when payouts are so low. Continue reading , Barron’s looked at 100 competitive contracts across different annuity categories, based on a set of assumptions about an investor’s profile. Contract terms—guarantees, benefits, rates, fees—change frequently, particularly in times of volatility or fluctuating interest rates. A contract’s competitiveness—or lack thereof—can change just with the tweak of a single factor, such as age, size of investment, length of surrender charge, or how remaining principal is paid to heirs at death. This year’s tables introduce more key information on variable annuity contracts with guaranteed income riders. We included fees and, where applicable, limitations on stock allocations because these factors affect underlying account values. One of the tables also includes a new section, Variable Annuity Variations, to reflect an explosion in both product development and consumer interest. BEST ANNUITIES: GUARANTEED IMMEDIATE INCOME. NO FRILLS. Income annuities are tools that turn a lump sum into a lifelong income stream, either immediately or sometime later. Single-life payouts for women are generally lower because their life expectancies are longer. IMMEDIATE-INCOME ANNUITIES: Called SPIAs, these contracts turn guaranteed income on right away. Assume a $200,000 investment at age 70. Payments for “joint life” assume a man is 70 and his spouse is 65. 10-YEAR CERTAIN: IF AN INVESTOR DIES WITHIN 10 YEARS OF STARTING INCOME, PAYOUTS GO TO HEIRS FOR WHAT'S LEFT OF THE 10 YEAR PERIOD. CompanyRatingAnnual Income For LifeAnnual Payout RateTotal Income By Age 90Single Life ManCUNA MutualA$13,4376.72%$268,740Single Life ManAIGA13,3896.69267,780Single Life- WomanPenn Mutual LifeA+12,7446.37254,880Single Life- WomanCUNA MutualA12,6586.33253,160Joint LifeAIGA10,5375.27210,740Joint LifeMinnesota LifeA+10,4725.24209,440 CASH REFUND: WHEN AN INVESTOR DIES, ANY REMAINING PRINCIPAL IS PAID TO HEIRS IN A LUMP SUM. CompanyRatingAnnual Income For LifeAnnual Payout RateTotal Income By Age 90Single Life-ManCUNA MutualA$12,0856.04%$241,700Single Life-ManMinnesota LifeA+11,9755.99239,500Single Life - WomanCUNA MutualA11,5305.77$230,600Single Life - WomanMinnesota LifeA+11,3875.69227,740Joint LifeAIGA$10,2875.14205,740Joint LifeCUNA MutualA10,1155.05202,300 Note: AM Best rating. "Single life" pays for one person's lifetime; "joint life" pays for both spouses' lifetimes. Source: Cannex Annuities are the Swiss army knives of financial tools. Each type is designed for a specific task. The best way to make sense of them is to assess what problem or concern you’re trying to address, and then decide which category of annuity can best do the job, says Tamiko Toland, director of retirement markets at Cannex, an independent research firm specializing in retirement products. Then you can begin to sort through which specific contract best addresses your needs. How Annuities Could Protect Your Retirement Income Skip Ad in 15 You may also like CloseCreated with sketchtool. Up Next CloseCreated with sketchtool. Your browser does not support HTML5 video. 0:00 PlayCreated with sketchtool. Paused Sound OnCreated with sketchtool. 0:00 / 2:20 ShareCreated with sketchtool.Closed Captions InactiveCreated with sketchtool. How Annuities Could Protect Your Retirement IncomePlay video: How Annuities Could Protect Your Retirement Income Annuities have a reputation of being problematically pricey, and it’s not entirely unwarranted. Many are sold on commission and come with seven-year surrender charges, which means you’ll owe additional fees if you make a withdrawal during that period. What’s more, because of their tax-deferred status, assets in annuities are treated like those in an IRA—withdrawals before the year in which you turn 59 ½ are subject to a 10% penalty. So consider annuities as long-term commitments, and be price-conscious when shopping for them. The illiquidity, along with costs and complexity, is fodder for critics. But advisors who use annuities generally recommend doing so for just a portion of assets, and argue that insurance always comes at a cost, and that, if this kind of investment helps give a client peace of mind, it’s worth considering. VARIABLE ANNUITIES: TAX-DEFERRED INVESTMENT GAINS Capital-gains taxes are expected to rise under President Joe Biden’s administration, especially for investors in the top income bracket. That’s led to a resurgence of interest in variable annuities used purely for tax-deferred asset accumulation, without guarantees on income. Sales of these investment-only variable products had “been a pretty flat line between $7 billion and $8 billion for the past few years, but in the first quarter this year, sales hit $9 billion, the highest level since 2015,” says Todd Giesing, Limra’s assistant vice president of annuity research. Variable annuities are similar to 401(k)s—they have a menu of underlying investments and defer taxes on gains. The fees for most of them should give investors pause, however: Average contract costs are 1.4% a year, and expenses for underlying investments average 1%. And most are sold with guaranteed income riders that take, on average, another 1.3% a year, and the all-in cost can be 3.7% or more. But in their most basic form, they serve as a cheap tax-deferred investment wrapper. Consider three of the least expensive on the market—Lincoln National Life’s Investor Advantage Advisory Pro, Jackson National Life’s Elite Access Advisory Il, and Nationwide’s Monument Advisor. On a $200,000 investment, their average annual contract fees are 0.1%, 0.12%, and 0.12%, respectively. Combined with the average costs for their underlying investments, investors will pay a total of about 1.07%, 0.96%, and 0.77%. BEST ANNUITIES: GUARANTEED FUTURE INCOME. NO FRILLS. DEFERRED-INCOME ANNUITIES: Called DIAs, these contracts are purchased now, but pay out later. PERSONAL PENSION: ASSUMES A 60-YEAR-OLD INVESTS $200,000 AND TURNS INCOME ON AT AGE 70. ANY REMAINING PRINCIPAL AT DEATH IS PAID TO HEIRS. JOINT LIFE ASSUMES A MARRIED MAN AND WOMAN ARE AGES 60 AND 55. CompanyRatingAnnual Lifetime IncomeTotal Income By Age 90Single life ManCUNA MutualA$17,923$358,460Single life ManSymetra LifeA17,904358,080Single Life WomanNew York LifeA++17,516350,325Single Life WomanCUNA MutualA17,194343,880Joint LifeNew York LifeA++14,569291,380Joint LifeCUNA MutualA14,087281,740 PERSONAL PENSION AS LONGEVITY INSURANCE: ASSUMES A 60-YEAR-OLD INVESTS $200,000 AND TURNS INCOME ON AT AGE 80. ANY REMAINING PRINCIPAL AT DEATH IS PAID TO HEIRS. JOINT LIFE ASSUMES A MAN IS 60 AND HIS SPOUSE IS 55. CompanyRatingAnnual Lifetime IncomeTotal Income By Age 90Single Life ManSymetra LifeA$45,595$455,950Single Life ManIntegrity LifeA+41,361413,610Single Life WomanSymetra LifeA38,212382,120Single Life WomanIntegrity LifeA+37,149371,490Joint LifeMass MutualA++26,546265,460Joint LifeGuardianA++25,282252,820 PERSONAL PENSION WITHIN IRA: UP TO $135,000 OF IRA ASSETS CAN BUY AN ANNUITY AND BE EXEMPT FROM REQUIRED DISTRIBUTIONS. ASSUME A $135,000 INVESTMENT AT 70, INCOME AT 84; WHAT'S LEFT AT DEATH GOES TO HEIRS. JOINT LIFE ASSUMES A MAN AND WIFE ARE AGED 70 AND 65. CompanyRatingAnnual Lifetime At Age 84Total Income By Age 90Single Life ManMass MutualA++$25,128$150,768Single Life ManAIGA24,754148,524Single Life WomanMass MutualA++22,834137,004Single Life WomanAIGA22,047132,282Joint LifeIntegrity LifeA+16,840101,041Joint LifeAIGA16,683100,098 Note: AM Best rating. "Single life" pays for one person's lifetime; "joint life" pays for both spouses' lifetimes. Source: Cannex “A thin layer of fees essentially pays for the tax deferral and maybe a death benefit to protect your principal,” says Ron Brown, president of R.L. Brown Wealth Management, a Lexington, Ky., advisory that uses variable annuities for clients looking to sock big sums into tax-deferred accounts. For 401(k)s, the Internal Revenue Service caps annual contributions at $19,500 (or $26,000 for individuals 50 or older). For IRAs, the limit is $6,000 (or $7,000 at age 50). But there is no IRS cap for variable annuities. Insurers set their own limits—typically well over $100,000. RILAS: DOWNSIDE PROTECTION, PLUS GAINS Insurers never stop tinkering, hoping to come up with products for investors who want to grow their assets, but aren’t sure they can stomach downside risk. For years, the fixed indexed annuity was the golden child in this area: Fixed indexed annuities offer 100% protection of principal, plus investment gains linked to the performance of an index. These annuities, however, also limit the gains that investors can capture—current caps are between 4% and 5%. If the index rises 8%, investors only get up to the cap. If the index falls 8%, investors don’t lose a dime. Now, registered index-linked annuities, or RILAs, are stealing the spotlight. They became very popular last year because their pricing is far less sensitive to interest rates and volatility, says Adam Brown, Allianz ALV +1.34% Life’s senior vice president of actuarial product development. RILAs are particularly appealing to investors willing to forgo 100% principal protection in exchange for more return potential. RILAs are typically classified as either buffer or floor annuities. Buffer RILAs absorb a certain amount of loss on the downside—say, 10%, 15%, or 20%—and cap returns on the upside. On Great American Life Insurance’s Index Frontier 7 RILA with a 10% buffer and a 19.5% cap on the S&P 500’s return, the insurer absorbs the loss if the market drops 8%. If it slides 12%, the insurer absorbs 10% and the investor takes a 2% hit. On the other hand, if the index returned an annual 25%, the investor’s return would be 19.5%; the company would pocket the rest. BEST ANNUITIES: GUARANTEED INCOME WITH SOME LIQUIDITY AND GROWTH POTENTIAL FIXED-INDEXED ANNUITY INCOME GUARANTEES: These are riders with a seven-year surrender charge period purchased on S&P 500-linked fixed-indexed annuity contracts. Assumes a $200,000 investment by a 60-year-old. Payout begins at age 70. Joint life assumes spouses are age 60. BEST GUARANTEED MINIMUM ANNUAL INCOME: THE MINIMUM INCOME IS PAID FOR LIFE REGARDLESS OF THE VALUE OF THE UNDERLYING INVESTMENTS CompanyRatingAnnuity ContractRiderAnnual Income At Age 70Income Paid By Age 90Single Life American NationalAStrategy Indexed Annuity Plus 7Lifetime Income Option 1$22,046$440,920Single Life Eagle LifeA-Select Income FocusLifetime Income Benefit Option 222,000440,000Single Life Protective LifeA+Income BuilderGuaranteed Income20,700414,000Single Life Minnesota LifeA+SecureLink Future 7Achiever Lifetime Income20,000400,000Joint LifeAmerican NationalAStrategy Indexed Annuity Plus 7Lifetime Income Option 120,042400,840Joint LifeEagle LifeA-Select Income FocusLifetime Income Benefit Option 220,000400,000Joint LifeProtective LifeA+Income BuilderGuaranteed Income18,900378,000Joint LifeMinnesota LifeA+SecureLink Future 7Achiever Lifetime Income18,400368,000 Note: AM Best rating Source: Cannex VARIABLE ANNUITY INCOME GUARANTEES: These riders are sold as add-ons to variable annuities. Assumes a $200,000 investment by a 60-year-old. Payout begins at age 70 and is the same for a man or a woman. BEST MINIMUM GUARANTEED ANNUAL INCOME FOR LIFE: EVEN IF THE VALUE OF UNDERLYING INVESTMENTS DECLINES TO ZERO, THE ANNUITY KEEPS PAYING THE MINIMUM GUARANTEE FOR LIFE. THERE IS POTENTIAL FOR HIGHER PAYOUTS DEPENDING ON PERFORMANCE OF UNDERLYING INVESTMENTS. CompanyRatingAnnuity ContractRiderTotal Annual Contract And Rider Fees(3)Maximum Allowable Stock Fund AllocationAnnual Guaranteed Income For Life Starting At Age 70Income Paid By Age 90Single LifeDelaware LifeA-Accelerator Prime VAIncome Control2.55%N/A(1)$18,700$374,000Single LifeDelaware LifeA-Accelerator Prime VAIncome Boost2.70100%16,000320,000Single LifeNationwideA+Destination Navigator 2.0L.inc Core2.606015,750315,000Joint LifeAIGAPolaris Platinum IIIIncome Max Option 32.60%56%(2)14,030280,600Joint LifeNationwideA+Destination Navigator 2.0L.inc Core2.906013,950279,000Joint LifeSecurianA+MultiOption Guide BMyPath Horizon2.85N/A(1)13,764275,280 BEST POTENTIAL AVERAGE INCOME: THESE HAVE LOWER MINIMUM INCOME GUARANTEES FOR LIFE, BUT ALLOW GREATER EXPOSURE TO GROWTH INVESTMENTS. IF UNDERLYING ACCOUNT VALUES GROW, ANNUAL INCOME CAN GO UP. CompanyRatingAnnuity ContractRiderTotal Annual Contract And Rider Fees (3) Single/Joint LifeMaximum Allowable Stock Fund AllocationAnnual Guaranteed Income For Life At Age 70 Single / Joint LifeIncome Paid By Age 90 Single/Joint LifeJacksonAPerspective IILifeGuard Freedom Net2.8%/2.9%100%$14,250/$12,000$285,000/$240,000AIGAPolaris Platinum IIIIncome Plus Daily Flex 32.6/2.69014,250/13,050285,000/260,100LincolnA+ChoicePlus Signature 1Market Select Advantage2.8/2.98014,250/12,450285000/249,000 BEST UP-FRONT INCOME: THESE GUARANTEE THE HIGHEST PAYOUTS, BUT ONLY AS LONG AS THE UNDERLYING ACCOUNT HAS A POSITIVE VALUE. ONCE THE VALUE HITS ZERO, THE MINIMUM PAYMENT FOR LIFE IS RESET TO A LOWER LEVEL. CompanyRatingAnnuity ContractRiderTotal Annual Contract And Rider Fees Single/Joint LifeMaximum Allowable Stock Fund AllocationAnnual Income At Age 70 Single/Joint LifeGuarantee When Account Drops To Zero Single/Joint LifeNationwideA+Destination Navigator 2.0L.inc + Accelerated2.6%/2.9%100%$20,150/$17,050$11,625/$11,625LincolnA+ChoicePlus Signature 1Max 6 Select Advantage2.8/2.98021,000/16,5009,000/8,250BrighthouseASeries VAExpedite Rider2.65/2.657019,547/19,54711,402/8,959 Note: AM Best rating. (1) Assets must be invested in balanced or managed volatility funds, which may include up to 60% to 80% in stocks, but allocation is not controlled by investors. (2) Percentage can be higher or lower as a result of portfolio's volatility management strategy. (3) Includes the contract mortality and expense charge and the rider fee; does not include costs on underlying fund-like investments. Sources: Cannex; Bloomfield Hills Financial,; Valmark Financial Group; anonymous advisors; company information RILAs with floor protection are similar, but the floor is set under an investor’s losses. With a 10% floor, if the market falls 12%, an investor eats a 10% loss; the insurer, 2%. The fees on RILAs are usually embedded in the caps and in the fact that the index returns don’t include dividends. A gusher of new RILAs has erupted over the past year, as insurers try to differentiate their products. Allianz has added a rate-lock feature on its RILAs. Normally, a RILA’s upside is credited to an account at the end of its term, which is typically one, three, or six years. Allianz allows investors to lock in the performance up to the cap at any point during a RILA’s term. Great American added a RILA, called Frontier 7 Pro, that offers a 26% cap on the S&P’s gain, for a 1% annual fee. In contrast, the Index Frontier 7 RILA, with its lower cap, has no explicit fee (although one is embedded in the cap). -------------------------------------------------------------------------------- NEWSLETTER SIGN-UP RETIREMENT Barron’s brings retirement planning and advice to you in a weekly wrap-up of our articles about preparing for life after work. PREVIEW SUBSCRIBE -------------------------------------------------------------------------------- Allianz and CUNA Mutual have introduced guaranteed-income riders on their registered index-linked annuities—possibly a hint of where the industry is headed. Insurers are also adding the RILA concept to other annuities. F&G Annuities & Life introduced the first fixed-indexed annuity with a RILA investment option this year. Among variable annuities, Equitable’s Investment Edge Variable Annuity, CUNA Mutual’s Horizon Annuity, and Lincoln’s Investor Advantage Pro also offer RILA-like options. New York Life has introduced a variation on this theme: Its IndexFlex Variable Annuity has both regular, fund-like investments whose value fluctuates with performance, and a RILA-like option with full principal protection and, on the upside, the option of either a flat fixed rate or a cap on the S&P 500 or Russell 2000. “It’s our fastest-growing annuity product ever in the history of New York Life,” says Dylan Huang, the firm’s head of retail annuities and wealth management solutions. DEFERRED FIXED ANNUITIES: BOND SUBSTITUTES Investors can’t count on traditional bond portfolios for safety or yield these days, so they’re turning to the simplest annuity of all—the deferred fixed annuity, similar to a CD. Sales of these products soared 46% in this year’s first quarter. “The Agg [Bloomberg Barclays U.S. Aggregate Bond Index] lost 4% in one day during Covid, and it’s supposed to be safe,” says Brian Bowen, founder and president of Integrity Financial Planning, a Roanoke, Va., advisory. “A client had a muni-bond fund, and our software analyzed the portfolio as high-risk—it lost 28% during Covid. That’s high risk for the yield you’re getting.” BEST ANNUITIES: DOWNSIDE PROTECTION WITH STOCK-LIKE RETURNS REGISTERED INDEXED-LINKED ANNUITIES (RILAS): These annuities provide some loss protection and returns tied to an index on the upside with limits set by caps or participation rates. Assume a $200,000 investment tied to the S&P 500. BUFFER-STYLE: PROTECTS AGAINST A CERTAIN PERCENTAGE LOSS; INVESTORS ARE EXPOSED TO ANY LOSSES LOWER THAN THE BUFFER. TypeCompanyRatingContractSurrender Charge PeriodSeparate FeeProtected LossCap On S&P 500 ReturnCommission-BasedGreat American LifeA+Index Frontier 77 yearsNone10%19.50%1 yearCommission-BasedSymetraATrek Plus6 yearsNone1015.501 yearCommission-BasedBrighthouse FinancialAShield Level Select6 yearsNone1015.001 yearCommission-BasedGreat American LifeA+Index Frontier 7 Pro7 years1.00%1026.001 yearCommission-BasedAllianzA+Index Advantage6 years1.251018.251 yearCommission-BasedProtective LifeA+Market Defender II6 yearsNone1512.501 yearCommission-BasedEquitableASCS Plus6 yearsNone10uncapped6 yearsCommission-BasedLincoln NationalA+Level Advantage6 yearsNone10500.00%6 yearsCommission-BasedBrighthouse FinancialA+Shield Level Select6 yearsNone1590.006 yearsCommission-BasedSymetraA+Trek Plus6 yearsNone2070.006 yearsCommission-BasedLincoln NationalA+Level Advantage6 yearsNone3035.006 years FLOOR-STYLE: GUARANTEES INVESTORS WILL NOT LOSE MORE THAN A CERTAIN AMOUNT TypeCompanyRatingContractSurrender Charge PeriodSeparate FeeMaximum Possible LossCap On S&P 500 ReturnRate TermCommission-BasedSymetraATrek Plus6 yearsNone-10%8%1 yearCommission-BasedCUNA MutualAZone6 yearsnone-10%7.80%1 yearCommission-BasedAtheneAAmplify6 years0.95%-10%15%1 yearCommission-BasedProtective LifeA+Market Defender II6 yearsnone-20%18%1 yearFee-BasedAllianzA+Index Advantage6 years0.25%-10%9.25%1 year VARIABLE ANNUITY VARIATIONS: Contracts that provide downside protection and upside in unique ways. CompanyRatingContractSurrender Charge PeriodSeparate FeeProtected LossUpsideNew York LifeA++Premier VA FP Series7 years1.7%(1)100%(2)Full returns on underlying stock or bond fundsNew York LifeA++IndexFlex VA7 yearsNone1003.55% cap rate or 3.2% flat rate based on the S&P 500Great American LifeA+Index Summit 66 yearsNoneHalf of any loss12.5% cap or 77% participation in S&P 500's annual return; 1-year termGreat American LifeA+Index Summit 6 Pro6 years0.75%Half of any loss16% cap or 90% participation in S&P 500's annual return; 1-year termEquitableASCS Plus Dual Direction6 yearsNone10%S&P 500 annual losses within -10% give the equivalent positive return: -8% turns into 8%. Cap of 150%/300% (commissioned/fee product) over six yearsSymetraASymetra Trek Plus6 years1.00%10Uncapped; participation in 110% of S&P 500's six-year returnCUNA MutualAZoneChoice6 yearsNone10Uncapped; participation in 108% of S&P 500's six-year returnEquitableASCS Plus S&P Step-Up6 yearsNone10If S&P 500 annual return is flat or positive, you get a full 7.5% gain on commissioned contract or 8% on fee-based version.LincolnA+Level Advantage6 yearsNone10If the S&P 500's annual return is flat or positive, you get a 7% gain.AtheneAAmplify6 years0.95%10Investors get 105% of S&P 500 or MSCI EAFE return, or a 33% cap on the Russell 2000 index return; one-year term. Note: AM Best rating (1) 1.2% M&E fee applies to contract value; 0.5% applied to amount guaranteed by a rider with a 15-year holding period. (2) Also potentially protects some growth. Source: company information Deferred fixed annuities protect principal and generally pay higher interest rates than Treasuries and CDs. Recently top-paying guaranteed five-year annuity rates were 2.25% to 2.5%, compared with 1.25% to 1.35% for five-year CDs and around 0.80% on a five-year Treasury. Registered index-linked annuities should also be sized up alongside plain fixed options, says Alexis Zuccaro, a wealth advisor at Bloomfield Hills Financial in Bloomfield Hills, Mich. “We’re using the RILAs as a substitution for a bond component, for maybe 30% of the overall fixed-income investment,” she says. “Bonds are for lowering volatility and risk. In this rate environment, another way we are achieving that is with RILAs—and there is the possibility for growth.” Zuccaro uses Brighthouse Financial BHF –1.92% ’s Shield Level Select RILA with a 25% buffer and a 55% cap on six-year return. “It would be really rare in a six-year period for the S&P 500 to have negative returns,” she says. “PENSION” ANNUITIES: GUARANTEED LIFETIME INCOME Annuities used as pensions—these can be basic income annuities or fixed-indexed or variable annuities sold with income riders—are the most sensitive to interest rates, because future income is guaranteed based on the current fixed-income market. “When rates are low, it takes a lot more investment to get the income,” Allianz’s Adam Brown observes. That sensitivity has been on display since the pandemic began. “I’ve been in the variable annuity industry since 2008, and this was by far the highest level of product [pricing] changes in my history at an insurance company,” says Alison Reed, executive vice president of sales operations at Jackson National Life Insurance. “For example, average withdrawal rates were at 5.17% at the beginning of 2020 and by the end they were at 4.89%. Deferral bonuses started at 6.5% and were reduced to 5.22%.” BEST ANNUITIES: TAX-DEFERRED SAVINGS TRADITIONAL VARIABLE ANNUITIES: These annuities are used for accumulating assets on a tax-deferred basis using a menu of underlying investments, much like a 401(k). There is a 10% penalty for withdrawing assets prior to age 59 1/2. These fees assume a $200,000 investment. CompanyRatingAnnual Contract Fee*Avg. Expense Ratio On Subaccounts**Surrender ChargeTotal Inv. Options (Total Alternative Options)5-Yr Avg. Annual Return For Best-Performance U.S. Growth Fund***Lincoln National LifeInvestor Advantage Advisory Pro0.10%0.97%None130(13)Jackson National LifeElite Access Advisory II$240(1)0.84None114(10)25.10%NationwideMonument Advisor240(1)0.65None355(65)33.60NationwideAdvisory Retirement Income (NARIA)0.20%0.61None155(15)25.00Fidelity Investments LifePersonal Retirement.25 (2)0.60None61(2)33.50EquitableInvestment Edge Series ADV0.250.93None105 (14)22.90Lincoln National LifeChoicePlus Advisory0.30(3)0.91None112(3)24.70Lincoln National LifeAmerican Legacy Advisory0.30(3)0.87None3425.10Pacific LifePacific Odyssey0.300.75None96 (2)24.83TIAAIntelligent Variable Annuity0.35(4)0.46None65(5)23.60Northwestern MutualFee-Based Select0.350.64None3320.20 *Fee includes: administrative and mortality and expense charges. There is no added fee on these contracts for return of contract value at death. **Asset-weighted average expense ratios on underlying mutual fund-like investments ***Through June 30, 2021 (1)Flat annual fee for any size investment; equivalent to 0.12% on a $200,000 investment (2) Drops to 0.10% when assets reach $1 million (3) 0.50% if issue age is 81 or above (4) Drops to 0.25% at $500,000 and to 0.10% after 10 years on all account values Source: company information FIXED ANNUITIES WITH A MULTI-YEAR GUARANTEE: These are tax-deferred contracts similar to certificates of deposit in that they lock in an interest rate for a specified period. Assumed minimum is $200,000. Basic income annuities, which turn a lump sum into lifetime income either immediately or sometime in the future, make cost comparisons fairly simple—they are built in and reflected in income guarantees. Payouts are about level with where they were 12 months ago. A 70-year-old man can turn $200,000 into an immediate lifetime annual stream of $13,437 using CUNA Mutual’s so-called single premium immediate annuity. If the investor dies within 10 years, payouts continue to go to heirs throughout whatever is left of the 10-year period. Women’s guaranteed payments are usually lower than men’s, because their life expectancy is longer. The current highest payout for a 70-year-old woman is from Penn Mutual Life: $12,744. Far more complicated are variable annuities with guaranteed income riders. “These products are a big financial commitment, relatively expensive, and hard to compare,” says David Lau, founder of DPL Financial Partners, a marketplace for lower-cost annuities sold by fee-only advisors. “Think about a typical commissioned annuity. All in with fees for the contract, the rider, and investments, the average is about 3.5%. On a $200,000 account, you’re paying [almost $600 a month] to own the product. How many other things do you pay that much for that you won’t do price comparisons on?” Fixed indexed annuities are also typically sold with income riders. They currently guarantee more income than variable annuities, but their underlying account values don’t have the potential to grow as much as assets in variable annuities because they are fixed-income investments. Variable annuities can be invested in stock funds. But even here investors should dig into the details: To manage the risk of providing guarantees, most annuities set limits on how much stock exposure you can have. For the highest guaranteed-for-life income, no matter what happens to your underlying account value, you might have to accept a 60% to 70% limit on your stock allocation. That, of course, limits your potential investment gains. And fees, withdrawals, and poor market performance can draw the underlying account down to zero. If that happens, you continue to get your income for as long as you live, but there will be nothing left for your heirs. If you want more stock exposure, your minimum guaranteed income will likely be lower, but the contract has the potential to produce more annual income—and generate some assets for your heirs. Keep in mind that some of the highest initial payouts last only as long as the underlying account value is positive. “These are for those who want to spend more in their younger retirement years—travel more or do repairs on their house,” says Jacob Soinski, a financial planner at Valmark Financial Group in Akron, Ohio. If these contracts’ account value hits zero, a much lower minimum guarantee kicks in. As with any annuity, investors must carefully evaluate the trade-offs, to determine if they are worthwhile. Email: editors@barrons.com -------------------------------------------------------------------------------- * Retail * Earnings Report UNDER ARMOUR IS TUMBLING AFTER EARNINGS MISS. WORRIES ABOUT ASIA REMAIN. * * * * -------------------------------------------------------------------------------- By Teresa Rivas Updated May 6, 2022 11:49 am ET / Original May 6, 2022 11:48 am ET * Order Reprints * Print Article Under Armour is plunging after a surprise loss. The athletic apparel and footwear maker’s results were disappointing, perhaps not to the degree Friday’s selloff suggests, but the stock has a tougher road from here. Early Friday, Under Armour (UAA) said it lost a penny a share, compared the four-cent profit analysts were expecting, on in-line revenue of $1.3 billion. Its full-year revenue guidance also met expectations but its earnings per share range of 63 cents to 68 cents is below the 78 cent consensus. Under... Subscribe or Sign In to continue reading -------------------------------------------------------------------------------- Close THE 100 BEST ANNUITIES FOR TODAY’S MARKET There are many ways in which 2021 feels like the complete opposite of 2020, and the annuities business is no different. From To Message SEND An error has occurred, please try again later. Thank you This article has been sent to Privacy Notice Cookie Notice Do Not Sell My Personal Information Copyright Policy Data Policy Accessibility Your Ad Choices Subscriber Agreement & Terms of Use Barron's Archive Corporate Subscriptions Manage Notifications Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. Barron's Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. 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