Annuity vs. Mutual Fund: What’s The Difference?
January 3, 2023 by Kat Tretina and Benjamin Curry
Worried about not having enough money for retirement? You’re not alone. In a recent a survey released by the Stanford Center on Longevity, 55% of pre-retirees said their finances were fragile or that they were just barely making ends meet.
Click HERE to read the full story via Forbes
Wink’s Note: It is not uncommon for freelance writers to think that indexed annuities have payouts that vary, based on the performance of an index. After all, they are normally left to their own devices, trying to figure out how a foreign financial services product works.
However, there is only one company that has had such an indexed income annuity product, Allianz Life, and they haven’t offered the InCommandDex since 2009.
Maybe they this writer is referring to indexed annuities with Guaranteed Lifetime Withdrawal Benefits that include the indexed gains?
Generally, when we talk about indexed annuities, we are not discussing an income annuity, but a deferred annuity that earns limited interest, based upon the performance of a stock market index.
When an indexed annuity is turned into an income stream, the payments are fixed, just like on a traditional fixed annuity.
While I am not a fan of comparing insurance products (like annuities) to investments (like mutual funds), this article has a pretty balanced message. One needs to remember, however, that because annuities have the insurance element of making guaranteed income payments for one’s lifetime, they are not intended to perform comparably against investments, which cannot offer a similar guarantee. -sjm
