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Compare Equity Linked CDs, Fixed Equity Indexed Annuity Products

In the article “How to Use Annuities for Retirement Income,” by Philip Moeller, the author offers 15 bits of information about annuities.  The U.S. News & World Report article confirms that the guaranteed lifetime stream of retirement income offered by annuities is more popular than ever in these uncertain economic times.  One benefit of annuities is the tax deferral savings if you don’t take your payments as an immediate annuity.  There is no limit to how much money you can put in an annuity, but there is for other investments like IRAs.  Annuity investors are essentially in a pool together, so they can get higher annuity rates.  While some may live very long lives and put a strain on the insurance companies, others may not.

It is crucial to comparison shop when looking at annuities.  You not only want to compare different annuities and those from competing insurers, but also compare equity linked CDs and other investments.  Be sure to include the safety of annuities to the risk you take with some other investments.  All annuities have fees and service charges attached to them because that is how the insurance companies make money.  Comparing the fees is another crucial step to take in your annuity research process.  This article says that annuities and Social Security are very similar in style.  Social Security is essentially a flexible premium deferred annuity because your payments vary based on your income and you wait to receive monthly payments until a later date, usually after retirement.

Annuities can be purchased through a lump sum payment or a series of payments over time.  Fixed annuities offer a fixed payment over time whereas variable annuities are invested in market subaccounts and can offer the potential for a greater return.  The fixed equity indexed annuity combines the fixed returns with some market upside potential and has become increasingly popular.  Annuities can be very complicated investments and are best purchased with the help of an expert.  Some investors worry that their money will be wasted if they die prematurely.  There is the option available to receive payments for a fixed period of time or even to last throughout your spouse’s lifetime.  With each guarantee you will be charged accordingly, so finding the best annuity for you can be like putting together a puzzle.  You’ll want to work with an expert to get the right options with the right payments and costs for you.

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