In a volatile stock market, variable annuities make some very attractive promises. Who wouldn’t want to put their money in a vehicle that guarantees a 5 percent return. But just how real are they? Moneywatch columnist Allan Roth examines the following scenario: A 60 year-old man buys $100,000 of product, which promises a five percent annual return of your lifetime income and the ability to double your lifetime income over 12 years. At age 72, his value for income purposes would be $200,000, entitling him to a $10,000 annual withdrawal. Supposing the man reaches age 81, the average male life expectancy, he’ll have collected $90,000 — which generates no income nor even the sum total of his investment. Roth’s conclusion: variable annuities have lifetime income in their favor, but deliver relatively little value.

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