Annuities are an investment option that allows a person to collect tax deferred payments for a predetermined amount of time. Just as there are pros and cons with any investments, the annuities pros and cons are certainly something to be researched before you make, what can potentially be a very large purchase. More and more people are living into their 80ies and that could mean spending nearly a third of their lives in the retirement phase.

So what are some of the annuities pros and cons? Once you’ve invested as much as you can in your 401K, Roth IRA and Traditional IRA, an annuity is another option for tax deferred payments to be made for retirement. Tax deferred payments of an annuity are appealing due to their potentially high level of return. However, one of the cons of purchasing an annuity, that should be taken into consideration is that the fees can actually cancel out the tax benefits. There are setup and administrative fees to be aware of and if you need the money sooner than you expected, there are what’s called, “surrender fees” that are not surprisingly, expensive. All of these fees will add up quickly. It is vital to be aware of all of these types of fees when choosing your annuity.

A reverse annuity mortgage allows a person to take tax free payments borrowed against their mortgage. When considering the annuities pros and cons, this pro can be very appealing. Low income seniors can receive tax free payments until their death, giving them lifelong financial aid for any potential personal and medical expenses that may arise.

However, a con to be aware of is that upon an annuity holders death, the lending agency will get complete control of the real estate in a reverse annuity mortgage situation. Banks do have very strict requirements for those who apply for the reverse annuity mortgage. It is vital to understand the fine print of your annuity policy, so you are well informed as to what happens to the (in this case) reverse annuity mortgage upon the annuity holder’s death.

If you would like to know more about annuities pros and cons, in an effort to determine if an annuity is the right choice for your retirement financial planning, you should seek the advice of a qualified financial planner.  A financial planning professional will be able to explain the benefits and potential drawbacks in laymens terms, with the focus based on your individual needs.

article taken from:

http://www.bestannuitypro.com/