What Is an Annuity and How Does It Compare to a 401k?

Annuities come in several forms: immediate annuities start paying income right away, deferred annuities accumulate value over time before converting to income, and variable or indexed annuities tie returns to market performance or an index with varying degrees of protection. The primary appeal of an annuity is guaranteed income you cannot outlive, which addresses one of the biggest fears in retirement, running out of money. A 401(k), by contrast, gives you complete control and flexibility over your investments and withdrawals, with no guarantees. Annuities can carry high fees, surrender charges, and complex terms that require careful evaluation. They are not suitable for everyone, but for retirees who lack a pension and want to secure a predictable income floor, a portion of savings in an annuity may complement other income sources.

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Should I Roll Over My 401k?

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