Retirement & Financial Planning Report

Image: Monster Ztudio/Shutterstock.com

Variable annuities have received negative publicity in recent years, which may keep individuals from buying them. Although variable annuities have their drawbacks, as do all types of investments, they also offer advantages.

Variable annuities have been called mediocre investments, with high price tags. They may be compared, unfavorably, with mutual funds.

ADVERTISEMENT

However, many forms of variable annuities are available, with a variety of investment options. Performance has varied, as it has with mutual funds. If investors choose a variable annuity with high-quality investment options (“subaccounts”), and choose among those options carefully, the results can be comparable to those from a well-chosen portfolio of mutual funds.

As for cost, recent competition has been driving down the cost of variable annuities. Some have extremely low charges now while sales commissions also have dropped.

The advantage is that variable annuities offer tax deferral and withdrawals may be delayed until you retire and your tax bracket drops. They also may provide guarantees against investment losses.

As with any investment, consider carefully first.

Your Finances after Retiring from the Federal Government

Your Retirement: A Slope or a Cliff?

OPM Expects to ‘Revise’ FLTCIP Premiums, Could Temporarily Bar New Enrollments

Bid to Equalize CSRS, FERS COLAs Gets Boost in Senate

Common Mistakes in Federal Retirement Applications

Planning Ahead – Deferred and Postponed Annuities

Planning Ahead – CSRS Retirement

Planning Ahead: FERS Retirement

Thanks to a Pension, Feds Are Doing Better than Most in Retirement Preparedness

FERS Retirement Guide 2022