Annuity Warnings
Image Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Annuity Warnings

Annuities are a powerful vehicle for saving for retirement and guaranteeing regular streams of income upon retirement. They are often used for tax deferral and savings. At the same time, annuities can be very tricky to manage for maximum returns since the cost of insurance features can eat into the return you get on your initial investment. Annuity contracts are complicated, and those who do not understand them may end up paying a great deal of money for an instrument that does not serve its intended purpose. To reap the benefits of reduced taxes, stabilized returns and invaluable peace of mind which fixed annuities can offer, investors need to thoroughly research and consider these instruments in light of other retirement income such as pension payouts and other IRAs.

Annuities are a powerful vehicle for saving for retirement and guaranteeing regular streams of income upon retirement. They are often used for tax deferral and savings. At the same time, annuities can be very tricky to manage for maximum returns since the cost of insurance features can eat into the return you get on your initial investment. Annuity contracts are complicated, and those who do not understand them may end up paying a great deal of money for an instrument that does not serve its intended purpose. To reap the benefits of reduced taxes, stabilized returns and invaluable peace of mind which fixed annuities can offer, investors need to thoroughly research and consider these instruments in light of other retirement income such as pension payouts and other IRAs.

Moreover, many insurance companies that are writing annuities are increasingly coming under scrutiny, especially following the 2008 financial industry meltdown.   Regulators and observers are concerned about the insurance industry’s ability to maintain credit ratings, to preserve capital cushions and meet guarantees in annuities.

Your code to embed this article on your website* :

*You are allowed to change only styles on the code of this iframe.

Comments

Add your Comment