Fixed annuities


Q. I am under FERS and considering retiring in 2016 at age 66 with 32 years of service. I recently attended a retirement class through work, and they recommended rolling over my TSP ($400,000) into an Allianz Fixed Index Annuity with a guaranteed 6 percent growth and no downside. It has a .95 percent annual fee, so I’d lose almost $4,000 from Day One.

Being a skeptic I feel there has to be even more of a downside, but there seems to be as many people online that favor as oppose. What is your opinion of these fixed annuities?

A. What you attended wasn’t a class; it was a sales pitch. The only annuity you should consider is an immediate fixed annuity – and those aren’t very attractive in this interest rate environment. What was recommended to you was a deferred indexed annuity, which is too expensive, too complicated to clearly understand, and a sucker’s bet, in the end.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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