In our most recent blog, we very briefly went over annuities. We discussed what they are, how they work, and how they could be a good option for retirement. However, there is a lot of information surrounding annuities and sometimes they may not always be the best option. Before you invest in an annuity, whether it is a fixed annuity or a hybrid annuity, it is critical to do the necessary research and become familiar with all of the advantages and disadvantages of having an annuity.
Annuities allow you to put away a larger amount of cash that is tax-deferred
Unlike a 401(k) or an IRA, there is no annual contribution limit for an annuity, which means you can put more money away
All of the money you invest in an annuity compounds year after year with no tax bill
You can decide how you want your cash. You can either take it out in a lump sum or set up a series of payments
The main disadvantage of annuities is the potential for hidden fees that can cut into your profits. Hidden fees may include any of the following:
Surrender charges for pulling money out of your annuity within the first years of purchasing it
High annual fees are a possibility. These fees can include an annual insurance charge or investment management fees
Early withdrawal penalties if you take out money before a certain age. This is also common with 401(k)’s and IRA’s.
At Annuity Genius, our team of specialists can help provide you with a greater understanding of annuities and help you decide if an annuity is right for you. We will help you sort through the mountains of information available so you can make the best and most educated decision regarding your retirement. Call us today to speak with one of our specialists.