Trio of Annuities

Physician's Money Digest, August 2005, Volume 12, Issue 12

Wall Street Journal

Journal

As you approach retirement age, youmay be hearing insurers and banks singthe praises of annuities. However, annuitiescan be good or bad, depending onwhich type you choose and what yourfinance needs are. A recent article in theidentified three typesof annuities—immediate, fixed deferred,and variable—and explained their prosand cons. Immediate annuities are idealfor retirees who want income right awayand are afraid of outliving their money.With this type of annuity, the retiree putsa sum of money into the account and ispaid off monthly for the duration of theirlife. Fixed deferred annuities are forretirees who may work part-time anddon't need the money just yet. Although,as the article points out, a CD isa similarly effective option for this situation.Variable annuities are generally nota wise investment for a retiree. Becauseof the long holding periods and shakystock earnings of variable annuities, thechances of you seeing a decent return inyour lifetime are very slim. Also, yourheirs will be slapped with a huge tax onthe account.