How to Decide Between an Annuity or a 401(k)

Looking to supplement your Social Security payments after you retire? A 401(k) or an annuity can provide you with the funds you need to live, with no financial worries in your golden years. But 401(k)s and annuities aren’t the only options for people planning their post-career lives. Here are 8 of the best investments for retirees.

Both vehicles are popular and oft-used retirement savings schemes. Yet each is quite different. 401(k)s are offered by your employer as a workplace benefit. You put money into your 401(k) each paycheck to have a nice nest egg when you leave the workforce. Annuities, on the other hand, are life insurance products. You give your money to a life insurer, watch the annuity grow, and then receive guaranteed monthly payments during retirement.

A financial advisor can help you decide which is better for you. There are many factors to consider. If you’re worried about fees, 401(k)s charge lower fees than annuities. Annuity payments continue until your death, but that means you can’t leave the investment to your heirs unless you add a death benefit to the contract. With 401(k), you can name a beneficiary.

An annuity gives you a guaranteed income stream as long as you live. But those payments are pre-set and may not keep up with inflation. With a 401(k), you’ll have to make the money you get from your plan last throughout retirement.

24/7 Wall St. created this list of information needed to choose between an annuity or 401(k) for retirement investing, based on a report produced by financial technology company SmartAsset, entitled Annuity vs. 401(k): Which Is Better for Retirement?. Looking for a place to retire? Avoid the worst states to grow old in.

Click here to see how to decide between an annuity or a 401(k).

24/7 Wall St. created this list of information needed to choose between an annuity or 401(k) for retirement investing, based on a report produced by financial technology company SmartAsset, entitled Annuity vs. 401(k): Which Is Better for Retirement?.

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