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5 Easy Ways to Squander Your Retirement Nest Egg in 2014

Don't fall prey to these retirement plan-killing plans

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Squander No. 4: Sign on the dotted line for nice annuity

checkbox_pen.png.publicdomainI’ll never forget when my 75-year-old father called to see what I thought about putting his retirement money—already in an IRA—into an annuity per his bank’s insistence. The mere thought that someone my father had trusted to make investments in his best interest had turned him in that direction made my skin crawl.

Keep in mind, annuities are investment vehicles packaged in insurance wrappers. You don’t buy annuities; someone sells them to you, and—as such—they often deliver handsome commissions to the broker. Among the most expensive products you can own, fees can be as high as 15%.

For example, if you put $100,000 into an annuity, $15,000 of that can come right off the top and into the salesperson’s pocket. Plus, if you need to tap into your money before an annuity matures, expect to pay another 3% to 5% to access it…which is why an annuity would have been an absolutely nightmarish move for my father. Make sure it isn’t one for you.

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