I’ve always had a problem with annuities and the main reason is its name. I always thought the name told me what it DOES not what it IS:
“a form of insurance or investment entitling the investor to a series of annual sums.”
But ok, I got over that. What I needed was a Primer on Annuities, so let me share: there are some good reasons to buy annuities and some reasons not to.
Here are my reasons why you shouldn’t buy an annuity:
- If you can invest your own money and enjoy doing it.
- If you are already pretty conservative with your spending. (An annuity will accomplish this for you).
- If you don’t like paying a lot of fees. ( Watch out – many fees in annuities are hidden).
- If you don’t like guarantees. (Remember annuity guarantees come at a steep price).
- If you are a type A investor that wants control. (Annuities are more of a lock it and leave it play for retirees).
- If you like freedom of investing, and to get in and our easily, and you don’t like long term commitment.
- If you don’t need to defer taxes (most folk who retire don’t have that need).
- If you like individualism (you like things tailored to you).
- If you haven’t seen all the annuities out there (there are a zillion).
- From your insurance agent if you went to see him to buy insurance.
- If you don’t understand it thoroughly.
- If you don’t think you will outlive your money.
- If you don’t like being trapped into one type of investment.
- From a pushy salesman.
- If you feel uneasy about it