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GAO gives annuities good grade; investors still wary
Monday - 7/18/2011, 5:39pm EDT
A recent Government Accountability Office report reviewing retirement strategies looked favorably on immediate annuities for retirees. But that may be a hard sell for professional investors.
In light of the new report, Charles Farrell, a principal with Northstar Investment Advisors, discussed the benefits and drawbacks of annuities, a subject he also wrote about last week for CBS MoneyWatch.com.
"The reason many investors shy away from annuities is because they don't produce that much retirement income," he wrote. "Moreover, to create the modest income payments, the investor has to give up ownership of and access to their retirement savings. While the concept of guaranteed income sounds nice, the results for investors are not that impressive and come at a high cost."
Farrell told Federal News Radio why investors are so apprehensive about annuities and, ultimately, who should look into them and who should stay away.