Annuities are a type of investment that can be used to create an income stream in retirement. They are different from other investments because they guarantee returns. For some people, annuities make sense, but for others, it is better to invest in something else. This guide will explore the advantages and disadvantages of annuities versus other investments so you can decide which is best for your situation.
Annuities Vs. Other Investments
| Investment Type | Tax Treatment | Liquidity | Risk | Guarantees |
|---|---|---|---|---|
| Certificate of deposit | Taxable | Low | No | FDIC |
| Money market funds | Taxable | High | Minimal | No |
| Passbook savings | Taxable | High | No | FDIC |
| Mutual funds | Taxable | High | Moderate | No |
| Stocks | Taxable | Moderate | High | No |
| Bonds | Taxable | Moderate | Moderate | No |
| Commodities | Taxable | Low | High | No |
| Options | Taxable | Low | High | No |
| Limited partnerships | Taxable | Low | High | No |
| Promissory notes | Taxable | Low | High | No |
| Real estate investment trusts (REITs) | Tax-Deferred | Moderate | Moderate | No |
| Viatical settlements | Taxable (Unless Terminally Ill) | Low | No | No |
| Fixed annuities | Tax-Deferred | Low | No | Guaranty Fund |
| Variable annuities | Tax-Deferred | Low | High | No |
Advantages Of Annuities
Disadvantages Of Annuities
Conclusion
Request a quote to determine if other investments are better than annuities. Annuities have no contribution limits and provide a guarantee on investment, principal protection, and a guaranteed income for life. Other investments have no guarantee on investment and can lose money and no guarantee of income in retirement.
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Frequently Asked Questions
What is better than an annuity in retirement?
Annuities have no contribution limits and provide a guarantee on investment, principal protection, and a guaranteed income for life. Other investments have no guarantee on investment and can lose money and no guarantee of income in retirement.