Best Overall Variable Annuity: Nationwide Destination Future
Nationwide Destination Future
Product Details
- Minimum Premium: $15,000
- Maximum Premium: $1,000,000
- Issue Age: 90 y/o maximum age for annuitant and annuitization; Other optional benefits may have age restrictions.
- Product Fees: 0.95% (0.85% M&E, admin 0.1%) and a $30 annual charge (waived over $50,000 contract value); investments have separate fees. Administration charge waived for over $1M contract value
Pros
- Base product fees are lower than other comparable variable annuities and can fall further at certain premium tiers
- Over 100 investment options are available to choose from
- Five optional riders available for further customization
Cons
- Rider fees vary depending on the timing of issuance and whether the ownership is single or joint
- Investment expense ratios are high relative to alternative options available in the typical brokerage account
- If a GMIB rider is attached, the income is often lower than what a FIA with an income rider would provide
Our Take
The Nationwide Destination Future annuity was selected as the “Best Overall” variable annuity because it offers a blend of premium variable annuity features, including broad investment options and various optional riders for income and death benefits. Some investment-only variable annuities have lower product costs but do not offer any added features or riders for protection which are the heart of why investors should choose a variable annuity over a retirement account like an IRA.
Product costs for the Nationwide annuity are more affordable than most competitors. Like most variable annuities, the mutual funds available carry higher expense ratios than comparable mutual fund classes in a brokerage account. This can add to the overall cost of the investment and should be incorporated into any cost assumptions before purchase.
Overall, the Nationwide Destination Future variable annuity is an excellent option for investors seeking tax deferral, growth and optional income or death benefit protection.
Variable annuities for my clients have provided the balance between risk and growth potential while still providing a level of protection, especially using guaranteed minimum income benefit. A variable annuity is a good fit amongst other financial products and I generally include them in the planning process.
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Best Variable Annuity for Lifetime Income: MassMutual Envision
MassMutual Envision
Product Details
- Minimum Premium: $5,000 (qualified) and $10,000 (non-qualified)
- Maximum Premium: $1,500,000
- Issue Age: Age 90 with no minimum age; Age 45 to 80 with RetirePay rider
- Product Fees: 1.30% (1.15% M&E and 0.15% administration fee); $40 maintenance fee on contracts under $100,000
Pros
- Low $5,000 minimum initial premium for qualified accounts
- The RetirePay rider offers high payout rates, increasing with each year that income is deferred
- Investment earning withdrawals are not subject to the surrender schedule
Cons
- Product costs are higher than comparable variable annuities
- Income rider limits investment options and additional premium payments after first year
Our Take
The MassMutual Envision annuity was chosen for its guaranteed income-producing capabilities. Income payout rates increase with each year that income is deferred following the purchase of the contract. Investors who can plan years ahead can expect competitive payouts that rival income-only annuities.
Product costs for MassMutual are average, but investment costs are below average for similar variable annuities. The costliest fund expense is 1.50% which is well below the costs of other variable annuities. Investors who may be interested in actively managed mutual funds focused on growth, sectors or tactical strategies will find these options less costly within this product than other variable annuities. All annuity costs should be considered holistically, including base product, investments and riders.
Overall, the MassMutual Envision variable annuity offers a healthy mix of protection, income and strong financial backing from a quality insurer.
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Best Variable Annuity for Cost-Sensitive Investors: Fidelity Personal Retirement Annuity
Fidelity Personal Retirement Annuity
Product Details
- Minimum Premium: $10,000
- Maximum Premium: Fidelity Discretion
- Issue Age: 18 years old
- Product Fees: 0.25% product fee (0.10% for $1M+). Fund costs average 0.66% and range from 0.09% to 1.48%.
Pros
- Low costs are the best reason to choose this investment-only variable annuity
- Investment options are broad and fund costs are below average compared to the typical variable annuity
Cons
- The contract offers no riders or additional features
Our Take
No other variable annuity could claim the title of lowest-cost variable annuity. The Fidelity Personal Retirement Annuity starts out with a product cost of only 0.25%, which falls to 0.1% for contracts over $1M. While this annuity offers no riders or additional features, it is perfect for investors comfortable investing in the market without guarantees. This annuity is ideal for investors who want to shield taxable money from investment income or have maxed out all other retirement savings vehicles and want to contribute more.