Annuities are bad for you?

Article I found on Yahoo Finance says:

"If you’re unfamiliar with annuities — you give an insurance company your money and in return they pay you an income stream, usually for the rest of your life. In some annuities, if you die before you’ve received all of your money back, too bad for you. The insurance company keeps the money."

"Essentially, you’re betting the insurance company that you’re going to live longer than they think you will. They take your money, invest it and give it back to you in dribs and drabs (with steep penalties if you want to withdraw more than the contract states)."

If your biased journalism spidey sense is tingling, that makes perfect sense. The author, while badly biased, is sort of correct, things to consider:

- Annuities come in many flavors, in general, the more complicated one is, the farther you should stay away from it.
- Some of these do have very high commissions, the 5 - 7% the salesman pockets comes directly out of the money you need to live on. The salesman needs to eat, but maybe hamburger instead of filet mignon, make sure you understand the commission structure.
- Kathy and I both have one from AARP/NY Life, you pay a lump sum, you receive a payment for life. Seems like a reasonable part of a retirement strategy to me. Simple, you know exactly what you are going to get. Highly recommended if you can afford it.
- Because it is a fixed payout, things like the interest rate environment impact your payout. In general, if you are in a rising interest rate climate, look for the guaranteed payouts to increase.

In closing, let me use an example. Supposed you invested $35k in Amazon in September of 2015 @$500 a share. And you are still holding it today at $1,500 a share and change. Is it likely to triple again? Certainly not that quickly? Do some people feels stocks are currently overvalued? Yes, in March 2018, many analysts feel stocks are on the high end of valuation.  And suppose you are between 55 and 65 years of age. Is it dumb, to take that money, buy a one time premium annuity, and start getting checks for ~$500/month for the rest of your life?

Seems like part of a rational portfolio to me.