2018.08.24 14:30 | Sean Carter
Annuities and IRAs are two investment products that you likely know about if you are at all interested in your retirement. They couldn’t be more different though. An IRA is a retirement product that is often used after someone has reached the allowance for investing in employee-sponsored 401K plans.
With an IRA, you can elect to use pre-tax or after-tax income, but there are steep penalties if you decide to remove money from your retirement plan early. Additionally, you are in charged of your own investments, which may or may not be a good thing.
Annuities are preferred by some investors because they are consistent. You can select your own terms, including the amount you are paid with each installment payment, whether or not you want a beneficiary in the event that you die, whether the rate is fixed or variable depending on interest rates, and many others.
Of course, there are some issues with annuities as well. For one, they are strict once you agree to the terms of the deal. Also, you are not in charge of your investments, so there’s no telling if you could have made more doing it on your own. Finally, annuity fees can be on the steep side. In short, both offer their pros and cons, so it’s something to keep in mind as you decide on which product you should choose.
What If You Own Annuity Payments and Want to Sell?
Some people purchase annuities and find they want to get out of it. Unfortunately, as we mentioned above, annuities are notoriously difficult to get out of once a deal has been made. If you do want cash now, your best best is to sell your annuity payments to a third party. While you won’t be able to get as much money as you would if you held on to your annuity, the advantage is that you will get an annuity payout right away that you could use for whatever you wish.
One thing to keep in mind is that you may be able to get a higher or lower annuity depending on who you choose to work with. Some annuity buyers are better than others, so only seek ones out that are reputable and offer transparent services. It might not be a bad idea to get multiple quotes so you can find the best value for your annuity payments.