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Kiplinger: What Retirees Need to Know About 3 High-Cost Financial Products

Annuities

Seniors are often bombarded with pitches for annuities, and there's a reason for that: Annuities can be extremely profitable for the agent who sells them. That's particularly true of variable and deferred annuities, which are often riddled with complex terms and high fees. In fact, variable and equity-indexed annuities are by far the most common products associated with unfair and deceptive sales practices targeted at seniors, the CFP Board of Standards says.

Immediate annuities are more straightforward, and thus less popular with shady operators. When compared with variable annuities, immediate annuities are "less prone to abuse and generally much more stripped of costs," says Michael Kitces, a certified financial planner in Columbia, Md.

But even immediate annuities can be overhyped. Consider these caveats:

(iStock)

More From Kiplinger:
QUIZ: Are Annuities Right for You?
10 Least Tax-Friendly States for Retirees
10 Things You Must Know About Social Security



The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.

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