Annuities: Weighing the Benefits and Drawbacks

When looking at annuities, pros and cons are likely to show themselves. Every type of investment has some good and bad about it and annuities are no exception. Here are the pros and cons of investing in annuities.

1. Passive Investment 

The biggest advantage of this type of investment is that it provides you with a "hands off" way to plan for retirement. You will pay a certain amount for an annuity and then the annuity will pay you a regular payment for the rest of your life once you reach retirement. This makes planning for retirement very simple for the average investor.

2. Professional Money Management

With an annuity, you also get to take advantage of professional money management. You have a professional money manager looking over the investments of the annuity and making decisions on your behalf.

3. Lose Control

One of the disadvantages of investing in an annuity is that you lose control of your retirement dollars. You are giving your money to someone else to invest for you instead of doing it yourself. If you are the type of investor the likes to oversee everything, this will not be for you.

4. Risk

Another disadvantage with annuities is that you have to invest with an insurance company. If the insurance company goes out of business, you could potentially lose your money.