Annuities must be yet another finance scam

Annuities are barely a cut above funeral insurance plans.

And whole life insurance and life insurance for kids.

Agree, OP, but I think you meant $200K in your example, not $20K.

Sorry, yes, $200k.

Another calculator says if you put in $200k, you get $6250 per year. You would start at age 65. If you die early, I believe you get nothing more.

If you just kept 200k in savings, you could take out 6250/year yourself for 32 years. Even a small interest rate would give you enough to take out a few more years. If you die early, your heirs get the money.

What advantage does an annuity offer? ??

[quote]What advantage does an annuity offer?

It's a legal way for disreputable financial salesmen to act as gypsies, come around to your loopy mother's house to do the third asphalt re-seal job on the driveway in one month.

Some annuities pay off for the rest of your life. So if you can outlive the predicted term, then it is free money.

But some are just what you describe - you don't get the interest and your money loses value by COL increases each year. So yeah, it's not a smart move. They get your money to invest and you get a flat amount that isn't much more than if you held on to it yourself.

Financial analysts will say annuities are good only if a, b, and c.

The problem is one would have to wade through too much to figure out how if an annuity had a, b, and c

I guess it’s a way to be sure your money is saved if you don’t have the discipline to do it yourself.

That said, how do you know the insurance company will even still be around when you’ve retired?

Don’t financial advisers say that you must diversify? Placing a huge chunk in one insurance company is the opposite of diversifying.

Financial advisors exist to come up with ways to transfer your money to them via crazy commissions and such

OP, annuities have been around since the beginning of time.

I've been reading quite a few personal finance books lately. If taking out 4% if considered reasonably prudent by most, one should be able to take out $4,000 per year for every $100,000 you have invested. So, putting $200,000 in something like an immediate annuity or your own asset allocations (which should include a decent percentage in bonds as well as stocks), you should be able to take out $8,000 per year without running out of money over about 30 years. I recommend Jane Bryant Quinn's "How to Make Your Money Last" -- very good book.

[quote]OP, annuities have been around since the beginning of time.

And they've been a bad idea since then.