An annuity can provide guaranteed income in retirement and tax-deferred growth, making it appealing for investors, but high fees and complex contracts pose significant drawbacks.
Fixed annuities offer a consistent payout and lower risk, but variable annuities, linked to investments, carry higher fees and lack guarantee on returns. Indexed annuities balance between these two.
When choosing an annuity, it's essential to evaluate your financial goals and understand that they should complement your overall retirement planning strategy.
Annuities can suit some investors well; for instance, immediate annuities start payouts quickly and are favored by those nearing retirement, but they come with trade-offs in terms of fees.
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