From
Your Perspective:
Managing your retirement nest egg
Selecting an annuity
You can transfer your retirement savings account to an individual retirement
annuity
when you retire, rather than to a
rollover IRA.
Experts argue for and against each option.
Pros
Cons
Annuity
Guaranteed lifetime incomeDeath benefitChoice of fixed or variable income
Higher feesMore restricted investment choicesPotential penalties for changing your mindLoss of buying power with fixed annuity
IRA
More control over investments
Greater responsibility for investment choices
More control over withdrawals
More responsibility for following rules
More control over fees
The basic difference between the two is that an annuity guarantees
you lifetime income. Though the actual amount is guaranteed only if
you choose a fixed annuity, knowing you can’t outlive your assets
may be a major selling point. An annuity also guarantees that if you
haven’t begun to collect income from it, your beneficiaries
will get back at least the amount you invested.
You might want to discuss the role an annuity could play in your
retirement plans with your financial adviser.
