Investing can be scary, especially in the short term. When you retire, it’s hard to watch the value of your lifetime of savings fluctuate as financial markets bounce up and down. Fear is a powerful sales tool.
Immediate annuities are an insurance product that prevents you from losing money and offers the benefit of guaranteed payments. However, there is a catch with those guarantees. Many annuities aren’t guaranteed to keep up with inflation, so the purchasing power of those guaranteed payments could decline over time. Tying up a significant portion of your money in an annuity also takes away some of your financial options and flexibility, because you can’t always get the money back out easily. And some annuities are outright expensive.
Here are some of the issues you could face if you invest your retirement savings in an immediate annuity.
BrightScope recently identified the industries with the best 401(k) plans. Which industries came out on top?
Our rating system is based on how quickly the average participant in a given 401(k) plan is going to accumulate the money we believe someone needs to retire comfortably within his or her industry. Law firms, utilities, mining companies and airlines were top scorers because they typically offer plans with low fees and some form of profit-sharing. Employees in these industries are highly educated and well paid. They tend to contribute at a higher rate than do employees in lower-ranked plans, and they let those dollars grow over time.
How can I tell if my company’s 401(k) plan isn’t up to snuff?
Lindsay bought a memory foam mattress from a store that guaranteed no interest financing for two years. Fourteen months after the purchase, interest charges surfaced on her bill.
A credit card David did not open showed up on his credit report as delinquent. The debt, which he discovered because he kept getting denied new credit, will remain on his credit history for seven years.
Joyce’s son purchased a wedding band on her credit card without her approval. When she contacted the jeweler, the store refused to do anything about it.