Before You Can Retire, You Need to Save This Much

NEW YORK (MainStreet) — Most guaranteed variable annuities aren't generating enough income to cover the cost of their riders, according to a new report.

"The benefit of the annuity is the tax deferral but there's lots of product in the marketplace that have been developed to guarantee retirement income when in fact most investors don't utilize the benefit they are paying for," said Mitch Caplan, CEO with Jefferson National.

The Jefferson National study found that 89.9% of the time investors pay more in fees for a guarantee than they ever receive in income.

"The best way to save for retirement is to use an annuity solely for low cost deferral rather than guarantees, benefits, riders and income, because the annual fee wipes out the benefit of tax deferral," Caplan told MainStreet. "Lifetime income, retirement income and death benefits all require additional costs."

In response, Jefferson National launched the JNF SSgA Retirement Income Portfolio which charges a flat fee.