Investing into your retirement can be a little confusing to anyone. There are many different investment options to select from. Many people, especially those without a pension, consider investing into an annuity for guaranteed retirement income. Variable annuities are the most popular annuity product on the market right now.
Understanding the pros and cons of variable annuities will help you make the right financial choice.
On the pro side of variable annuities, when the market is doing great – so are you. Your account is based on the market and your payments will reflect any changes in the market. Variable annuities are tax deferred so you save a considerable amount of taxes over the years. Finally, variable rate annuities have a death benefit. This benefit will provide your beneficiary a specified amount if you die before any disbursements are made on the policy.
The con’s to having a variable annuity is that when the market is doing bad – so are you. Since your account is based on market performance any down turn can hurt your plan. Another thing to consider is that these annuities have very large fees attached to them. There will also be monthly maintenance fees charged. The way to get the best deal is to shop around for this type of financial product.
An annuity can be a very large asset to your retirement portfolio. It however, should not be your only investment into your retirement. As with any other investment based purchase, you should evenly spread your investments for the greatest protection.
When looking into annuities make sure you ask your broker a lot of questions. After all, it is your money and your retirement. The more information that you have available the more likely you are to select a product that will fit your retirement needs.
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