One of the things that I always hear I need to do but have never actually done much of is saving for the future. I’m not talking about saving money for a future item or need, I’m talking about retirement income. I have no savings for retirement whatsoever at this point. I need to start some sort of retirement plan, but I don’t know what kind.
A friend of mine suggested I look into http://www.annuityadvantage.com and see whether or not a fixed annuity would be right for me. So I did a little research and came up with the following information.
There are a few problems with fixed annuities. The first problem is that they simply are not flexible. Once purchased, you can’t dig into it like you can a 401k or 403b. Another issue is that you could get a lower return on your invested money than with other types of retirement plans. This is because since your money is in a fixed state instead of a fluctuating state like it would be if you invested in the stock market, you won’t have the option of “selling high” and making a mint. Plus, not all annuities are equal – while fixed annuities might be considered good, other annuities might be bad, and even some fixed annuities might be considered bad.
However, I think the pros actually outweigh the cons. For example, fixed annuities are tax efficient because you pay taxes only on the income provided by the annuity, not on the money you roll over from a retirement plan such as a 401k to purchase the annuity. Your initial investment is also protected, so you can be assured that you will receive at least the amount you originally put into the annuity back. Plus, an annuity provides lifetime income, which makes it a perfect option since 401k/403b plans and pensions can run out of money after a period of time.
All in all, I’d say getting a fixed annuity would be the best option for a retirement fund – now to get the money to actually purchase one.