Your first annuity purchase is oftentimes confusing and worrisome for investors. Annuities are long term investments and unless you are a natural long term planner you might be a little nervous tying your money up for 10 years or more. If you are investing for the right reasons it should not be a problem but your nervousness is understandable.
Investing in long term investments requires a bit of different thinking that when you were putting monthly amounts back into your 401k or other retirement accounts. It is more like buying a house than mutual fund, stock, or bond. There is more paperwork and it is a more permanent investment. Some solace should come from that knowledge. You will no longer have to make investment decisions on the money you are considering putting into the annuity.
Now consider that you are likely going to add the guaranteed income benefit rider to your annuity as well. Not only will you not have to make decisions on the annuity but you will also, as long as you follow the rules, never have to worry about where your income is going to come from again.
But what if you want to move your money? Unfortunately, annuities have high surrender charges and moving your money will be difficult without incurring high fees and penalties. One option is to move the free withdrawal amount each year, usually 10%. During this time you could use your other investments for income. Or maybe just using the entire free withdrawal amount would be just a good while using your other investments a little less.
Are you still nervous about your first annuity purchase? Read - Your First Annuity
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