There is an ongoing argument in the financial world about which is better: an annuity that guarantees a lifetime payout* or a 4% withdrawal scheduled from your retirement savings or investments. George Mason University’s Mark Warshawsky (1)...
An annuity is a contract between you (the annuity owner) and an insurance company. In return for your payment, the insurance company agrees to provide either a regular stream of income, the right to withdraw up to a certain percentage per year, or even a lump sum payment at some future time (generally, once you retire or pass age 59 1/2).
For some, annuities can complement a total retirement income strategy to supplement other sources of money during retirement. Annuities have advantages such as allowing you to pay in unlimited premiums and they grow compound tax-deferred. (Upon withdrawals,** you will pay taxes on interest earned and the principal if the annuity was purchased with pre-tax dollars.) However, annuities are not for everyone.
There are different types of annuities to meet the specific needs of individual retirees and pre-retirees. Annuity FYI can help simplify the selection process.
Help me determine which may be the best annuity for my financial situation.
What type of retiree or pre-retiree are you? Take this self-assessment consisting of ten statements designed to help you decide what may be the best use of your retirement dollars.
You want to be well-informed to put your money to work in the best way for your situation. Annuity FYI suggests that, prior to making a purchase decision about an annuity, you consider some ideas about the product, the insurance company behind it, and the licensed professional selling it.
Annuity FYI regularly publishes warnings about potential pitfalls in purchasing an annuity. Read this before you purchase!
What type of annuity might best suit your situation? This guide explains the main types of annuities and identifies what to look for in each.
This web page has been reviewed for compliance.Document reference: #1500261-2
** Withdrawals are subject to income tax and prior to age 59 1/2 a 10% federal penalty tax may apply.
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ARTICLES & GUIDES
Single-Life Income Annuity Part of Pfau’s Retirement Strategy
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