IMHO the cost of these annuities is so high, and the fact that companies are pulling them from the shelves, should be a concern. That a company is doing a recall on a product doesn't make me feel good about it to be honest.

On the costs, typically you will only be told the cost is x%. You're not told that % in large part is applied against a make-believe value that does not go down even when your account is down, or that the % goes up after a certain event.

To repeat Steven's great comment, typically that 'guaranteed growth' does not apply to the actual money in the account. It applies to the make-believe amount that has to be turned into income. Your account can still go down with the market, and the excessive fees won't help that.

I have to admit, it sounds good to hear you can draw money based on an account that goes up 7% per year. However, most agents won't tell the amount you can draw is significantly less than you can get from more traditional income sources. In other words, you pay more for less income.

I find there are reasons agents are selling these income annuities now, where they hadn't been concerned about income annuities in the past, and it isn't that they provide you the best income for your money.

Last edited 8 months ago by Robert Schmansky, CFP®

First of all the "IRA" is an annuity. The guaranteed 7% surely comes with qualifiers and additional costs. Saying that Metlife is pulling the opportunity July 1 smells like an unscrupulous sales technique. Before agreeing to this you must ask for detailed information regarding the product, determine all ongoing costs (and don't believe it if he tells you there are none), the amount of time you are locked-into the annuity (and the amount of the early redemption penalties) and what you need to do to keep the guarantee. Some annuities require you to annuitize the contract at the end of the guarantee period in order to keep the 7%. Often if you make excess withdrawals during the guarantee period you forfeit the guaranteed 7%. Be very careful before signing on the dotted line.

Robert nailed it on the head. Why would they be pulling the product if it was so good? Perhaphs because they are worried about their own risk in fulfilling their obligations when they come due.

Also, as Robert mentioned, that "Guaranteed" percent is only on a fake, paper account value that you will never ever see, because even if you annuitize the contract at that amount, you will only be paid in small monthly installments for the rest of the contract.

Basically, you are giving them all of your good, valuable dollars, paying them a heafty commission of up to 10%, (plus annual fees and surrender charges) for the guarantee that they will pay you back small amounts of increasingly worthless dollars for the rest of the contract's life.

Talk to an adviser who doesn't sell annuities and ask them why they don't just to get another perspective on the matter.