I get asked this question a lot. Is a fixed indexed annuity better than a variable annuity? Some people would say yes! I say - MAYBE. It depends on what you are using each annuity for in the grand scheme of things called your retirement.
If you are looking to retire soon and cannot afford for your principal to fluctuate or go down then a fixed indexed annuity might be better. And a fixed indexed annuity might offer an income guarantee as well.
But if you are several years from retirement or several years from even remotely needed money from the annuity then perhaps a variable annuity would be better for you. You could take advantage of the higher potential growth.
Most annuity decisions are about timing. When do you believe you will you need make withdrawals from your annuity for your retirement income or to supplement your retirement income? The answer to that question definitely leads the way to which annuity is best for you.
A lot of investors and new financial advisors have learned the hard way that your income needs are what drive your investing needs. The investment itself is only a tool to get you to your goals. If you use the tool correctly then you will succeed. If not then you might not succeed in your retirement.
Be sure to take a look at the new article that compares Fixed Indexed and Variable Annuities in more detail. Which is better? You decide.
Image by Carl Puentes at Flickr.com
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