Annuity Investment: Does It Make Sense For You?
These days a lot of people are interested in adding an annuity investment to their portfolios. We previously discussed how annuities work; today we'll talk more about deciding if an annuity is right for you.
Annuities are similar to whole life insurance (which we never recommend) in that they mix an investment with an insurance component. Normally we recommend keeping the two separate - buy your insurance where it makes the most sense and invest your money where it makes the most sense. However, we're normally concerned with insuring health or property. Annuities are something different - they insure against longevity.
One popular option for retirement savings these days is an annuity. There are several types, but they all have one thing in common: you're putting money down now to buy a promise from the insurance company to make regular payments to you at some point in the future. Annuities provide guaranteed income for either a fixed period or for the life of the policyholder. Read the rest of this entry »