Review: Prudential’s Retirement Red Zone

Corey —  February 3, 2010

       I’m not sure if you’ve seen the commercials for Prudential’s Retirement Red Zone website, but I had and decided to see what it’s about. The commercial claims there’s a video on the website that will help you learn how to plan for a successful retirement when you’re near or just entering retirement.

       But when you get to their website, all you’ll find is one huge sales pitch for variable annuities – probably one of the worst choices you can make when it comes to retirement investments. Not only will you pay high expenses for the insurance side of things (the guarantee of income for life), you’ll pay high expenses on the investment side of things as well (the variable part of the annuity). Variable annuities, especially deferred variable annuities, are only suitable for a small number of people – and it’s not usually retirees (or those near retirement). Annuities can have a place in retirement planning but they’re not for everyone (which is what Prudential and other insurance companies would like you to think).

       The video you’ll find at Prudential’s Retirement Red Zone is not educational either. If you want to learn about annuities, you need to go somewhere else. They’re not something I’ve discussed yet on Provident Planning, but I’ll get to them eventually. Just know that there are some good reasons you probably shouldn’t be buying a variable annuity any time soon:

  1. High Fees – The fees for most annuities are quite high, and this is even more true with variable annuities. Costs do matter, so it’s important to consider them when making investment choices.

  3. Complexity – Each annuity comes with a prospectus, which is supposed to explain the product and costs to you, the buyer. But trying to read one of these documents is almost impossible. First, they’re HUGE. I downloaded a prospectus for one of Prudential’s annuities and it was 264 pages (8.5″ x 11″)! Second, they make up their own meanings for words so you must check their definitions, but even those can be difficult to parse out. And third, they’re not laid out in a way that’s easy to understand – even for financial professionals, much less the average consumer.

  5. Better Options – Finally, there are better ways to secure guaranteed income in retirement than variable annuities. As I said before, I’ve not explored these options so far, but I will as time goes on. Just know that you really need to consult a trusted financial advisor before purchasing an annuity. Once you buy it you can’t change your mind. (You can switch to another annuity, but you generally can’t get your money back without huge penalties.) And when I say trusted financial advisor, I don’t mean your stock broker or insurance agent. You need to find someone who is held to a fiduciary standard – which means they are legally required to put your best interests first when advising you.

       So that’s my public service announcement for today. If you want to continue learning about personal finance without the sales pitch, then sign up for free updates to Provident Planning today!



Corey is currently pursuing a Master of Arts degree in religion. While he enjoys learning and writing about Christianity, another one of his new passions is writing about personal finances in order to help others make wise decisions with their money.