An annuity may be a good investment if you want to ensure guaranteed income for the rest of your life and don’t mind the drawbacks, such as higher fees and rigid contracts. Although annuities are not for everyone, the assurance of guaranteed income in retirement and tax-deferred growth can be very attractive for certain people looking to invest their money. Meanwhile, the high fees and mind-numbingly detailed contracts are a big drawback.
—Indexed annuities offer payouts based on an index such as the S&P 500 or Dow Jones Industrial Average. Indexed annuities often include a minimum guaranteed return to mitigate market losses but carry higher fees than fixed annuities.—Deferred annuities pay out money at a later date, often during retirement.
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