As with any investment, annuities have pros and cons. They are extremely safe places to put your money, and they tend to provide a guaranteed return. However, they rarely offer the same opportunity for outpaced gains that a well-placed stock market bet might provide. Also, your money is usually tied up until the annuity’s term is complete.
If you are considering purchasing an annuity, you’ll want to consider your investment goals, time horizon and risk tolerance.
– Tyler Meyer, CFP, founder of Retire to Abundance and QED Wealth Solutions
Pro Tip
When shopping for an annuity, plan first, buy second. Annuities are some of the most complex insurance products out there, so ensuring that you have built a robust financial plan and knowing what guarantees you need to buy in an annuity first can save you from a financial headache later. Let your financial plan for retirement dictate the annuity you buy, rather than building your financial plan around an annuity you’ve already bought.
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Forbes Advisor’s Rae Hartley Beck, a deputy editor of investing and retirement, contributed to this article.