Why Annuities Are Such a Tough Sell

The Fidelity study outlines basic building blocks of complete retirement income portfolios:

• Lifetime income annuities with fixed or variable payments (some inflation-adjusted). These lifetime payments represent longevity insurance. Social security is an example of an inflation-adjusted fixed annuity.
• Variable annuities with guaranteed living income benefits. The study focuses on variable annuities with guaranteed minimum withdraw benefits for life, which, again, represents longevity insurance. These annuities allow allocations in stocks and bonds that provide some protection against inflation.
• A traditional systematic withdrawal plan. This is the traditional way of self-funding retirement by withdrawing a percent of the total assets per time period. It provides the greatest liquidity and access for withdrawals. It has higher growth potential than the other two options but has no protection from longevity risk or market risk.

TheStreet.com Financial Strength Ratings of the largest annuity providers are:

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