Thursday, Oct. 02, 2008

Understanding annuities for retirement

Looking for a relatively safe tax-deferred or tax-free retirement saving plan? An annuity offers one possible option.

An annuity is a long-term retirement contract between an individual and an issuer, namely an insurance company.

A person contributes to a fund over time, which the issuer later provides back to the individuals in payments during retirement years.

The decision to establish an annuity and which type to go with requires careful consideration. If you’re interested in this retirement income vehicle, you might want to visit one of these sites to learn about the pros and cons of different annuities:

AARP (www.aarp.org/money/financial—planning/sessionsix/variable—annuities.html): Examines annuity types, and benefits and risks involved with a variable annuity.

AnnuityFYI (www.annuityfyi.com/annuity-basics.html): Offers overview of annuities and types.

Investopedia(www.investopedia.com/articles/retirement/05/063005.asp): Discusses how annuities work, different types and tax considerations.

U.S. Securities and Exchange Commission (www.sec.gov/investor/pubs/varannty.htm): Focuses on a wide range of variable annuity related topics and issues.

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