A Roof Over My Head – Annuities

52 Simple Ways to Manage Your Money – 34. A Roof Over My Head – Annuities

What it is …

An investment through an insurance company that provides a guarantee of principal and an interest rate set for a certain time period.

The guaran­ tee is backed by the insurance company, not by the United Stares Government.

When mutual funds are used in place of a set interest rate, the annuity is a variable annuity.

How it helps…

Money grows while tax is deferred. Taxes are paid at the time of withdrawal, which cannot be before the age of 59 1/2 without penalty.

Can be used as an Individual Retirement Account, in which case a predetermined amount must be withdrawn by age 70 1/2

Many withdrawal options are available, including a lifetime annuity.

Key items to look for…

The expenses of the annuity, such as fees, commissions, etc.

The strength of the insurance company.

The history of interest paid

The track record of the mutual funds, if variable.

The competency of the advisor with whom you work.

Time …

Two hours to compare and analyze funds.

A half an hour annually to review statements.

Keys to action…

Review your goals and objectives.

Review your tax situation. s Determine an amount to invest.

Meet with a financial advisor.

Ask for a sample contract or prospectus to read.

Review expenses. Compare between companies.


Reexamine your retirement plan beyond Social Security.


If your employer does not offer a plan, this may be a good choice.


It’s hard to start too young when planning for retirement.


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Your reaction co investing money for the long term.

Your reaction co a fixed or variable (but potentially higher) return.

But what if …

The insurance company has financial difficulties?

  • Keep your investments diversified.
  • Watch your company’s position regularly.

Thought primers…

The good thing about planning for tomorrow…

When I invest money for a long period of time, I…

At the idea of reading a contract or prospectus, I…

When I listen to an advisor, I…

At the thought of making my own decisions, I…

A Roof Over My Head - Annuities
A Roof Over My Head – Annuities