This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Deathmatch: IRAs vs Annuities

If you pit two retirement-investment options against each other, which one earns the knockout?

Variable annuities boasted net assets of close to $1.5 trillion in 2007, according to the Insurance Information Institute. That figure pales in comparison to the staggering $4.75 trillion invested in IRAs last year, according to the Employee Benefit Research Institute .

There is a little wiggle room in the figures, however: Most of the growth in IRA assets comes from rollovers of other retirement accounts, such as 401(k) plans. Meanwhile, actual sales of variable annuities totaled $160.4 billion in 2007. The top sellers include major players like Hartford Life (HIG) ($5.1 billion), Pacific Life (ISIN) ($3.8 billion) and AXA (AXA) ($2.6 billion).

To ensure a fair fight, it's important to define the terms: A variable annuity is a contract with an insurance company that guarantees you either an immediate payout or a series of periodic payments from a specific date of your choosing until your death. IRAs, on the other hand, are tax-advantaged investment vehicles from which you can withdraw money to support yourself in retirement.

Which one comes out ahead? Read on for a blow-by-blow account.

Fees

Most IRAs charge fees equivalent to about 0.7% of your account. Some, like Vanguard's Target Retirement 2040 Fund, are much cheaper, with an expense ratio of just 0.21%.

Variable annuities, on the other hand, generally come with a laundry list of standard fees that can total more than 2% a year. They include annual administrative fees, surrender charges, an annual mortality and expense risk charge, and underlying fees and expenses from the mutual funds in which your annuity is invested.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,493.37 -69.93 -0.42%
S&P 500 1,925.15 -5.52 -0.29%
NASDAQ 4,352.6390 -17.1340 -0.39%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs