Like everything in life, there are advantages and disadvantages of annuities. These are explained in complete detail in our “2018 Annuity Guide,” but the following is a brief list of some of the advantages of annuities, as well as some drawbacks:
Advantages of Annuities
- Tax-Deferred Accumulation (this is a huge advantage over bank CD and money market investing, because it means greater profits to investors due to the accumulation of interest. Every investment becomes taxable upon withdrawal, with the exception of Roth IRA’s, but unfortunately there are contribution limits to Roth IRA’s. Tax-deferral is a very important element to consider when choosing an investment vehicle, because if you are accumulating interest tax-deferred (as with an annuity), your premium(s) earn interest, your interest earns interest, and the money you would have paid in taxes earns interest.