Are the high fees on variable and indexed annuities worth it?

Variable and indexed annuities often carry layered costs, mortality and expense charges, rider fees, and fund expenses, that can total 2% to 4% a year, plus long surrender periods that penalize early withdrawals. Those fees quietly erode the returns you're counting on. Indexed annuities also cap your upside and use participation rates and spreads that limit how much of the market's gain you actually keep. For many retirees, a low-cost immediate annuity for guaranteed income plus a simple index portfolio for growth accomplishes the same goals at a fraction of the cost. If an annuity is pitched to you, ask for every fee in writing and compare it against a plain SPIA before signing.