Annuities are life insurance contracts sold by brokers, insurance companies, and other institutions. They are normally bought as a way to invest toward one’s retirement. Because it is paid for before a person retires, they can look forward to receiving lifetime payments. If you’re considering getting them, here are the pros and cons of annuities.
Those concerned with their financial future following retirement know they can’t expect the same type of employer-sponsored pensions that their parents enjoyed. Their only option has been to find other means of saving and one of those options is annuities.
The Pros: Prepaying for annuities before retirement with after-tax dollars means you can look forward to:
The Cons: There are some disadvantages to prepaying for annuities prior to retirement. Those include:
Consider how old you’ll be when you retire in order to determine how much you’ll need to pay into an annuity to receive its full benefits. To ensure you have all the information you need, speak with a financial counselor, tax accountant, or another financial expert. They will be able to look at your current situation and make recommendations based on the knowledge they gain from speaking with you.
Investing for the future doesn’t have to be confusing or mind boggling. With help from a professional, you can learn the pros and cons of annuities. Then, after you have listened to sound advice, you can rest assured knowing your financial future is being taken care of.