The Buckets of Money® Retirement Solution: The Ultimate Guide to Income for Life

Chapter 6. Take Another Look at Annuities

All types of annuities are being sold today because shell-shocked investors are seeking a guaranteed return on their money. Some may prefer a simple, immediate-payout annuity that provides a guaranteed income stream for life. Others want something as elaborate as a deferred variable annuity that gives them a shot at stock-market growth while protecting them from losses. Still others would like something between those two extremes.

Whichever, insurance companies are eager to accommodate with a sometimes-bewildering array of products. In fact, the chances are you may already own an annuity, should consider owning one, or will be pitched one someday. Yet with all the options available, buying the right annuity is not simple. So boning up on this investment concept is probably a really good idea, especially to see if they have uses within the Buckets of Money retirement strategy.

What's an Annuity?

Here's the pure definition: an insurance contract that provides guaranteed income for a specified period, usually for the life of the insured. But that hardly describes the vast majority of annuities being sold today. They might better be defined as tax-deferred investment contracts with guaranteed benefits, such as principal protection, death benefits, guaranteed interest contracts, or guaranteed income for life.

Basically, annuities come in only two types, fixed and variable. But the variations can be extremely complicated and difficult to understand. ...