How to Shop for Variable Annuities

There are several options to buy variable annuities on your own, but understand the pros and cons before you do.

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Vanguard's decision this summer to stop selling its low-fee variable annuity means one less option for investors who like to buy annuities directly, especially ones that are more complex than immediate annuities. You still have plenty of choices when shopping for a variable annuity, but carefully do your homework before locking up your money.

Also, decide what features are important to you. Options may include a rider for guaranteed income or to benefit heirs. If leaving a bigger legacy is a priority, it may be worth paying a little more to get a guaranteed death benefit, Hawley says. But watch out for costly options that are “sophisticated and richer” than what you are looking for, he says. The fewer bells and whistles an annuity has, the less it should cost.

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Mary Kane
Associate Editor, Kiplinger's Retirement Report
Mary Kane is a financial writer and editor who has specialized in covering fringe financial services, such as payday loans and prepaid debit cards. She has written or edited for Reuters, the Washington Post, BillMoyers.com, MSNBC, Scripps Media Center, and more. She also was an Alicia Patterson Fellow, focusing on consumer finance and financial literacy, and a national correspondent for Newhouse Newspapers in Washington, DC. She covered the subprime mortgage crisis for the pathbreaking online site The Washington Independent, and later served as its editor. She is a two-time winner of the Excellence in Financial Journalism Awards sponsored by the New York State Society of Certified Public Accountants. She also is an adjunct professor at Johns Hopkins University, where she teaches a course on journalism and publishing in the digital age. She came to Kiplinger in March 2017.