Are annuities right for you?

I saw an ad touting how annuity investments protect and guarantee retirement income for life. There are two types of annuities: fixed or variable. A fixed annuity provides a specific amount of money each month for the rest of your life. A variable annuity is either immediate or deferred.

My question is what type of individuals reap the most benefits from annuity investments, particularly given the high fees and cost associated with them.

In Mark Henrick’s article Attraction of Annuities Is in the Eye of the Beholder, I found an answer compatible to what I’d always thought: Annuities best serve people, usually in their 30’s who are looking for tax-deferred breaks and that have already maxed out their 401K and IRA contributions. And of course if you’re in a high income bracket.

My suggestion is that before you’re persuaded by a sharp advertisement, learn the pros and cons of annuities and consider how they will affect your individual situation. Learn how the benefits work; find out what protection and REAL guarantees come with your annuity. And by all means get a clear understanding of what you can expect to pay out in fees.

Annuities are complex. But they can also be a very smart and low-risk investment. I’m finding out more about them in the book Annuities for Dummies.

Plus I recommend you check out this free online annuity tutorial here.

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More on this topic (What's this?)
‘Peace Of Mind’ Investing With Stock Indexed Annuities (Contrarian Profits, 12/5/08)
Couch Potato Portfolios + Annuities (Canadian Business Blog, 2/2/10)
What is an Annuity (Investing School, 2/23/10)
Read more on Annuity at Wikinvest

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This entry was posted on Wednesday, October 22, 2008 at 7:34 am and is filed under Financial Goals, Retirement Planning. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Are annuities right for you?”

  1. fahmi087 Says:

    October 23rd, 2008 at 5:26 am

    I am planning to start saving for my old day when I start working. I am planning to open a gold account since it is more reliable than conventional banking right now. Moreover the gold price is stable.

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