Are there any disadvantages to an immediate fixed annuity?
• Lost opportunity to access your principle. When you buy an annuity, you tie up a chunk of your savings. If you died suddenly, the savings would no longer be available for your heirs. Also, you can’t invest what you’ve used to buy the annuity to get better return on investment. • Fees/commissions. Payouts are net of fees. So you should look for the highest payout when selecting an annuity and insurance providers with good credit ratings. Q: Other than annuities, what other options are there for generating an income stream in retirement? A: To generate a periodic income stream, you can also use your savings vehicles [410(k) withdrawals, IRA withdrawals, life insurance, and income from investments] to make distributions. You should develop a strategy about which accounts to use first. Generally, you should deplete your after-tax savings first. You should not deplete your tax-deferred savings─such as 401(k) and IRAs until you’ve exhausted your other forms of savings. Keeping these accoun
