The Ultimate Guide To AnnuitiesYour One-Stop Resource for Retirement
How do I know if buying an annuity is right for me?
Before buying an annuity, you need to consider if it’s really the best option for your plan. Usually this strategy comes after common investments, such as 401(K) or individual retirement accounts. If you have set aside the money for your retirement, the purchase of an annuity could be a logical move. But before buying it you need to know these things:
Annuities represent a long-term commitment. Your money will not be fully available for years and the withdrawals before a specific date will cause surrender charges, as we explained before. Also, annuities usually imply other high charges, like commissions of 10% over investments.
Annuities are under complex fee structures and sales agents often highlight the benefits while minimizing the drawbacks of owning an annuity. That’s why is important, before doing an investment of this kind, to study the costs that will come with the purchase of one of this contractual product and compared with another no-load mutual fund that are not subject to charges such as commissions, surrender charges and other fees. Equally important is to understand that the earnings that we get from annuities will be taxed under an ordinary come tax rate.