Annuities appeal to baby boomers seeking guaranteed, lifelong income during retirement, available through upfront or monthly premiums. However, potential investors should be wary of missed opportunities in bull markets, as well as complications buried in fine print that can lead to financial losses. Understanding the types of annuities—fixed and variable—is crucial. Fixed annuities provide stable, predictable income, while variable annuities involve more risk but the chance for higher returns, appealing to those willing to accept market fluctuations.
However, as with many things, annuities are great on paper until you read the fine print. Any member of the baby boomer generation who hasn't read the fine print may find that the same fine print is causing them to lose more money than expected.
The reality is that annuities can have some real downsides if you don't read the fine print. The biggest concern with annuities is that you can miss out on big returns during bull market runs.
For many, guaranteed income makes an annuity a desirable retirement choice. The idea that you can purchase guaranteed, lifelong income with either an upfront or monthly premium feels like the deal of the century.
For this conversation, an annuity is a contract you agree to with a life insurance company that will provide you with guaranteed income. This income can be purchased upfront or through monthly payments.
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