Annuities are a common feature of retirement planning, though they may be used to manage settlement money, as well. Here are the top things you need to know now about annuities. We’ll also address a few of the common misconceptions about annuities.
What Is an Annuity?
An annuity is not an investment per se. It is a contract with an insurance company or other financial institution.
That is why they’re often able to guarantee a certain rate of return, whether they’re promising 4% annually or a variable rate with a floor of 2% with a maximum return of 6%.