What are your annuity fees actually costing you?
Annuity costs arrive in four separate layers, disclosed in four separate places, and nobody ever adds them up on one line for you. This does that — in dollars, for year one and for as long as you plan to hold the contract. Including the rider detail most illustrations leave out.
Your contract
Every figure below is in your prospectus fee table. Defaults are typical — replace them with yours.
Typically 0.50%–1.50%
Typically 0.10%–0.30%
Index options ~0.25%–0.50%, active 1.00%+
Income riders commonly 0.50%–1.25%. Set to 0 if you have none.
Not sure which? Ask your carrier in writing. Toggle between them to see why it matters.
The guaranteed growth on the income figure
Before any fees
Dropping sub-account expenses to 0.35% over 20 years. Usually a reallocation inside the same contract — no surrender charge, no guarantees lost.
What you keep by removing the guarantee — which is exactly what you would be giving up. Usually irreversible, so only worth it if you will never switch the income on.
That's every layer added together: mortality & expense, administrative charges, sub-account expenses, and any rider. Each line looks small on its own. On $250,000, together they come to $8,125 this year alone.
The fee is charged against the benefit base, which rolls up at 5% a year regardless of what markets do. Your account value grows at whatever's left after fees. As those two numbers separate, the same "1.00% rider" takes a steadily larger bite of the money you could actually withdraw — and the benefit base itself is not cash you can take.
Over 20 years that gap compounds into $404,865 of ending value — $396,918 instead of $801,784. Total fees paid across the period: $234,133.
At 0.85%, your fund expenses are toward the higher end. Many contracts include index sub-accounts around 0.25%-0.50%. Switching inside the same contract usually requires no surrender charge and forfeits no guarantees — it's a reallocation, not an exchange. On today's balance that's roughly $1,250 a year.
You're paying for a guarantee. If you intend to switch that income rider on and hold the contract long enough to collect, the cost can be entirely rational. If you bought it for market growth and never plan to activate the rider, you're funding insurance you won't claim.
Variable annuities are securities, so a prospectus with a standardized fee table is required — it lists M&E, admin, the sub-account expense range, and each rider charge with its contractual maximum. If you already own the contract, ask for an in-force illustration; it uses your actual values instead of the hypothetical from the sale.
Want someone to read your actual prospectus with you?
These are your numbers as you entered them. A licensed specialist can pull the real fee table and in-force illustration for your contract and total the actual cost. Free, 15 minutes, no product pitched.
A copy of your numbers plus the notes above — useful to have in hand when you call your carrier. Optional; the calculator already showed you everything.
Educational tool. Results are estimates based on the figures you enter and a constant assumed return; real contracts deduct charges on their own schedule and real markets do not return the same percentage every year. Actual fees, riders, and contract terms vary by carrier and product — confirm every number against your prospectus fee table or in-force illustration. Not a solicitation, recommendation, or quote.
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Frequently asked questions
What counts as a "normal" total annuity fee?
For a variable annuity, all-in costs commonly land between 2% and 3.5% per year once M&E, administrative charges, sub-account expenses, and any riders are stacked. A contract with low-cost index sub-accounts and no riders can come in near 1%. Fixed annuities and MYGAs typically have no explicit annual fee at all — the rate you are quoted is the rate you get. The number that matters is your total, not any single line.
Why does the rider fee basis change the result so much?
Many income riders are charged against the benefit base — the bookkeeping figure used to calculate guaranteed income — rather than your account value. The benefit base often rolls up at a stated rate no matter what markets do, while your account value grows only on what is left after fees. As the two separate, a rider quoted at 1% can consume a materially larger share of the money you could actually withdraw. Toggle the basis in the calculator to see the gap on your own numbers.
Where do I find these numbers for my contract?
Variable annuities are securities, so every one comes with a prospectus containing a standardized fee table near the front. It lists M&E, administrative charges, the range of sub-account expenses, and each optional rider with its contractual maximum. If you already own the contract, request an in-force illustration — it uses your actual values rather than the hypothetical shown at sale.
Can I lower the fees on an annuity I already own?
Sometimes. Moving to lower-cost index sub-accounts inside the same contract is usually a reallocation rather than an exchange — no surrender charge, no guarantees forfeited. Dropping an optional rider removes that charge but is typically irreversible. A 1035 exchange into a lower-cost contract is a third route, though it can restart a surrender schedule, so the math needs running first.
Are high annuity fees always bad?
No. Fees buy guarantees — lifetime income, a death benefit floor, principal protection. If those guarantees are load-bearing in your plan and you will hold the contract long enough to use them, the cost can be entirely rational. The cost is hard to defend when you are paying for a rider you never intend to switch on, or when lower-cost sub-accounts were available and nobody mentioned them.