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Should You Buy an Annuity?
Is an annuity the right choice for you?
Annuities have long been an important part of the retire-
ment income strategy of many retirees. However, years of
low interest rates have dampened the enthusiasm for an-
nuities. After all, why would anyone want to lock in a good
chunk of their retirement capital in an annuity if doing so
basically guarantees you ultra-low interest rates for years to
come?
While that’s certainly a valid point, there are other reasons
to purchase an annuity – and those reasons shouldn’t
necessarily be dismissed out of hand. In fact, recent product
Finance
innovations and increased flexibility from the companies
that issue annuities (typically, insurance companies) have
led to something of an “annuity renaissance.” For some
investors, an annuity can be an exceptionally attractive way
in which to generate a guaranteed level of income from a
portion of their portfolio.
Should you purchase an annuity? And, if so, what kind?
Before we get to that question, it makes sense to consider
what an annuity is, as well as some of the pros and cons of
annuities.
By James Dolan
To annuitize or not to annuitize: that is the question