If you’re at the age where you should start considering your retirement options, then you’re probably craving some non-bias un-spun information that isn’t trying to get you to go one way or another. You’ll be surprised to learn that there are tons of businesses out there that feed off of uneducated adults who are looking for a route to go for their retirement and don’t want to spend the time selecting the smartest option, so they just go with the first one they see and often time it’s a horrible plan in the first place. The best thing to do when shopping for your retirement plan is to do loads and loads of research. Know the ins and outs of how annuity works along with the different types of annuity (fixed, indexed, and variable), which annuity is best for you, what types of rates you’re being offered, and also whether you should go with an IRA, a 401k, or a Roth IRA.
When learning about annuity, a lot of businesses will try to confuse you with big words and mumbo-jumbo that they probably don’t even understand. Basically, there are two types of annuities: deferred and immediate. As you might have guessed, deferred annuities are when you put your money in and take it out when you’re ready to start making withdrawals (when you’re in retirement). There’s some time between when you put your money in and when you can take it out, so don’t go with a deferred annuity unless you’re willing to wait a while and don’t instant cash. On the other hand, immediate annuity is when you get payments sooner after you make your initial investment.
One of the biggest things people don’t realize is that the money that grows in your annuity is tax-deferred, meaning it is unaffected by taxes. So the money you contribute to the annuity isn’t taxed, but your earnings are. When comparing IRAs and 401ks the real take away is the matching components. 401Ks are generally done through an employer and/or plan administrator so a lot of the details are configured by them; such as the matching component. An IRA does not have a matching component while 401ks do.