Here at AnnuityGator.com we’re often asked, “which annuity is best?”
Truth is, it really depends on specifically what you’re looking for, as well as what works best within your specific financial plan. Anyone who says otherwise most likely has an ax to grind – or is trying really hard to sell you something.
That said, certain financial products/strategies really are better than others at realizing specific objectives. Below, is a table that helps illustrate this pretty well:
[emaillocker]
| Feature | Fixed Indexed Annuity | Variable Annuity | Non Annuity |
|---|---|---|---|
| Highest Minimum Guaranteed Return |  | ||
| Highest Potential Return | |
||
| Highest Income Guarantee (via riders) | | ||
| Lowest Cost | |
||
| Most Flexibility | |
||
| Most Potential for Loss | |
What we did here is looked at various things that might be important to an investor, and then identified with a simple check mark the very general investment strategy/product that works best. By no means is this exhaustive, but it does provide some key takeaways when considering the options you have as an investor.
So What is the Best Annuity?
As you can see from the table, if you’re looking for:
- The highest minimum guaranteed return
- The highest guaranteed income for life
Then there’s probably a fixed or fixed indexed annuity that will work best. Variable annuities have these features too, they just don’t offer quite as high guarantees as fixed type annuities at this time. The main reason for this is variable annuities do offer (potentially) substantially more upside, but usually also can have much larger fees.
The key is knowing which annuity will work best for you; or, if you should be using an annuity at all. It’s important investors know that not all annuities work best in all situations. Some will work best if you’re older, others if you’re younger, others if you’re single, etc, etc, etc. The only way to know is to have all of them tested for your specific goals so you can see the results in advance on how they will work for you.
Sounds simple enough, but most annuity salespeople don’t really work that way.
While we can’t promise anything here at Annuity Gator – if you have questions about which annuity would work best for you, or if you should have an annuity at all – just use our free contact form and we’ll do our very best to at least point you in the right direction.
For Some People – You’re Better off with no Annuity at All
The table above also helps illustrate that depending on what you’re looking for, maybe an annuity is not the best solution at all. If it’s important for you to:
- Keep costs as low as possible
- Keep investment flexible and able to change as markets change
- Get maximum returns
- Don’t mind taking more risk than annuities
Well, then non-annuity solutions might be a good fit.
The really important thing for investors to understand is pretty simple: If you want guarantees and safety, then annuities are probably a solution worth looking into. Other than CDs, non-annuity solutions (think stocks, bonds, real estate, commodities, funds, etc) always have more potential – but always have a risk – including the risk of losing invested principal.
In the end, this is why for many investors some combination of fixed annuities and non-annuities works quite well. They use guaranteed solutions that help make sure all the core expenses of retirement are guaranteed and then use non-annuity solutions for the balance. In some ways, this is what variable annuities try to do all in one – but in our opinion, often fail to do because of the rather high expenses required to do so.
Have Questions – Wonder What Solution is Best for You?
Feel welcome to reach out. We do our best to respond to questions via email within 24 hours, and while we can’t guarantee we’ll be able to help everyone, we do our best to at least get you the answers you need so you don’t make a long term commitment to a complicated financial product you might later regret. Just use this form to ask a confidential question to the Annuity Gator team: or, feel free to leave comments below the post.
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Best,
Annuity Gator.
