Top Retirement Annuities: A Guide to Smart Investing

Top Retirement Annuity Options for a Secure Future

Choosing the Right Retirement Annuity

Annuities involve investing a lump sum to receive regular payments over a specified period. Immediate annuities start payouts right away, while deferred annuities delay payments, allowing for more growth through the insurance company's investments. Often misunderstood, annuities can be expensive but are crucial as pension coverage declines. Proper research ensures you select the best option tailored to your needs.

Expert advice reveals that thorough understanding and market timing—particularly purchasing when interest rates are high—are vital for maximizing benefits. Additionally, transferring existing retirement funds to an annuity can enhance financial security.

Since quality annuities are often hard to find, it's essential to conduct comprehensive research before investing. Understanding contract terms like “surrender charges” and “withdrawal rates” is critical. Remember, annuities are not inheritable assets and typically cannot be passed on to heirs without significant costs.

Types of Annuities

Immediate annuities: Payments begin immediately after investing, but they usually offer lower returns compared to deferred options.

Deferred annuities: Investment accumulation occurs over a set period, after which regular withdrawals can be made.

Ideal Candidates for Annuities

Best suited for individuals who have maximized their contributions to 401(k) and IRA accounts.

No investment cap, allowing flexible contributions.

Top Retirement Annuities to Consider

Fixed rate options include Sentinel Security Life, Colorado Bankers, Minnesota Life, and North American.

Immediate annuities recommended in 2018: Minnesota Life, Integrity Life, Nationwide.

Deferred annuities of 2018: Mutual of Omaha, New York Life, Lincoln Financial Group.

Low-minimum income deferred options: Guardian Life, MassMutual, Principal Financial Group, Blueprint Income.

Timing for Investing in Annuities

Prioritize contributions to other retirement plans with matching or tax benefits first.

Invest in annuities only after maximizing other retirement accounts (around 15% of gross income).

Advantages of Annuities

Provide lifelong fixed income.

Offer tax-deferred growth until withdrawal.

Fixed annuities protect against market fluctuations, ensuring steady returns.

Disadvantages to Consider

Generally more costly than mutual funds.

Many impose surrender fees that can be significant.

The complex terms may be difficult for some investors to understand.