I have been reading a lot of articles about retirement annuities, both by those who really like the products, and by other financial experts who are not fans. It is important to find the middle ground when researching fixed annuities, because many writers have biases. Those who like stocks, for instance, will be likely to highlight the disadvantages, while broker types will be bigger fans of fixed annuities.

Who Do Fixed Annuities Serve Best?

It will always be the premise of any articles I write that no one solution is the best answer for everybody. But you do have lots of choices. Here are some things to think about if you are considering annuities for retirement planning.

• Would You Like a Guaranteed Income?
• Will You Benefit from Tax Deferred Accumulation?
• Can you Commit to Putting Money Aside for Years?
• Would you be willing to sacrifice some upside for the guarantee of less risk?

So fixed retirement annuities tend to work well for people who can commit to leaving their money in the account. Most plans have penalties for early cashouts, unless it is for one of the reasons specified in the contract. Some examples of these exceptions to the penalty might be a severe illness or confinement to a nursing home. And the tax advantages may evaporate if you need to take your money out before retirement age.

But do not overlook the chance to guarantee that your money will not evaporate. In addition, the tax deferred accumulation can really help you grow savings.

Learn More About Retirement Annuities

This article is not really meant to discuss every detail of these types of savings.  You can find a lot more information online.

Visit Here: Explain Fixed Annuities or here: Free Online Annuity Quotes

Immediate vs Deferred Annuities

There are 2 ways to build your cash account. An immediate contract means that you deposit a lump sum, and payouts can start right away. Deferred contracts mean that the cash will grow over a period of years. Sometimes these are funded with a lump sum, but often they are funded with periodic contributions made over a period of years.

Why Are Fixed Annuities Safe?

They will either have a fixed payout, or they will be pegged to a market index. It is easy enough to understand a fixed payout of say, 6%. This amount will be returned in up market years and down market years. Equity indexed contracts, on the other hand, will have returns pegged to a major market index like the S&P500. In up years, the owner will earn  some percentage of the gains. In down years, the cash account is guaranteed not to lose money, and may even be guaranteed to have a small gain (i.e. 2 – 3%).

So annuities can be atractive when compared to lower paying bank savings accounts or riskier stocks. So what’s the catch? Well, again, you need to think in the long term. You often have to commit to keep your money locked up for several years. You can find a variety of terms from a few years, to over a decade though. Of course, the longer you will commit your money, the more favorable terms you will get.

Who Sells Annuities?

Fixed annuity products come from insurance companies. Indeed, they combine features of investments with other features of insurance. For instance, if you choose a contract with a guaranteed payout of 10 years or a lfetime, that may come from an insurance feature, or the cash value of your account.