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Deferred Income Annuities and Your Retirement: Are They Right for You?

Annuities have a bad reputation among many investors, with fees that often exceed what other types of investments charge. But some annuities can be extremely useful, and one type known as the deferred income annuity has gotten more popular lately.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at deferred income annuities and their pros and cons. Dan notes that by giving you pension-like monthly income in retirement throughout your lifetime, deferred income annuities take away the risk of your outliving at least portion of your money. The trade-off, though, is that if you die before you reach the age at which the deferred income starts, you can end up with nothing. Dan notes that you can choose annuity options that would leave something for your heirs, but you'll pay more in upfront costs for an annuity with those options. Dan concludes that for some, deferred income annuities make sense, but you need to weigh your own financial situation to make the best decision for you and your family.

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Annuities can help you be more financially secure, but they're not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.


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  • Report this Comment On June 15, 2014, at 12:08 PM, GetReady2Retire wrote:

    Deferred income annuities can be a very effective tool for creating retirement income. However, you must make sure that you can fill the gap until the deferral period is complete. That's why having a written retirement plan is so important. If you haven't already created a retirement income plan, you can get your free Retirement Readiness Kit, including The 12 Key Questions Every Retiree Must Answer, at http://www.RetirementReadyChecklist.com.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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