An annuity is like an Individual Retirement Plan (IRA) with two exceptions. One, you can not deduct the contributions to a non-qualified annuity and two, you are not limited to the amount of money you may contribute to an annuity. An IRA has contribution limits. Read More >> annuity information.

There are three types of annuities: Fixed, Variable and Immediate. A Fixed Annuity pays a fixed interest rate usually for one year and then adjusted up or down. A Variable Annuity is a mutual fund wrapped in a tax shelter. An Immediate Annuity pays the investor a fixed income for specific time period or a lessor amount for the rest of their life.

The Good, The Bad and The Ugly:

• The Good: Annuities allow your invested money to grow tax deferred.
• The Bad: Annuities historically have a lot of fees attached to them.
• The Ugly: We do not recommend the Immediate Annuities. The money that has been annuitized is lost when the specific time has been reached or at death. Nothing is left for the beneficiaries.