Investments called annuities are the same as Individual Retirement Accounts and employer-sponsored 401(k) plans in that your money can grow tax-deferred until you take a pension income from your account. However, retirement annuity is a complex subject and some products are not appropriate for everyone near or in retirement. Here’s a video overview, including tips to consider and questions to ask before you invest.
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The FDIC does not insure an annuity, even if they are sold through a bank. How secure your principal is very much depends on the financial backing of the annuity issuer. If it fails, you might have $100,000 to $500,000 of coverage by your state’s annuity guaranty association. The vast majority of the individual states only offer the $100,000. For a full list of states and the amounts they guarantee go check out Life Annuity.
For more good tips watch the video:
Those with fixed incomes or living on their retirement savings are often looking for a safe, low risk place to invest their money. They will often turn to annuities, which are sold through insurance companies. Basically, an annuity is a contract between you and the insurance company that provided for tax-deferred earnings.
Watch the video.