If you’re looking for ways to save for retirement,
you’ll want to compare
annuities with other investment opportunities
that may provide similar benefits.
Traditional
individual
retirement accounts (IRAs)
and employer-sponsored
savings plans, such as
401(k)s,
403(b)s,
and 457s,
share the benefit of tax-deferred earnings with annuities. In
addition, contributions to employer-sponsored plans are tax deferred,
and contributions to IRAs may be tax deductible.
Roth
IRAs
offer tax-exempt withdrawals once your account
has been open at least five years and you’ve turned 59 1/2.
Employer-sponsored plans may offer a broader range
of investment alternatives than variable annuities. You have even
more extensive choices with an IRA, where you can choose your
own investments.
However, all employer-sponsored plans and IRAs
have annual contribution limits, something that’s not the
case with annuities. Employer plans and traditional IRAs have
minimum
withdrawal requirements
beginning at age 70 1/2.
And, in the case of IRAs, you usually have to manage those withdrawals
on your own rather than being able to arrange a lifetime income.
Further, IRAs don’t guarantee that your income will last
for your lifetime.
Many experts recommend contributing as much as
you’re allowed to a 401(k) or IRA, and then considering
an annuity for any additional money you want to shelter from current
taxes and use to provide regular retirement income.
