” pension plans were once common. You could work for a company for 30 years and retire with 60% of your salary — perhaps with inflation increases and healthcare benefits to boot. Today, most employers have shifted to “defined-contribution
” plans, such as a 401(k). You contribute over the course of your career, and then try to manage your nest egg well enough later in life to cover expenses.
In light of this change, annuities have a strong appeal. Buying an annuity is, in essence, buying a steady pension. Here’s how to determine if one is right for you.
Guaranteed income. Those words sound so appealing, so reassuring. With a promise like that, is it any wonder that annuities hold a lot of appeal for retirees and those getting close to retirement age?
But there is more to consider, such as illiquidity, high fees, and complexity. With issues like these, is it any wonder that annuities make many potential buyers skeptical?
Somewhere in between the compelling promise and the cautionary tales lies the truth about annuities.
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