What's better annuity or target retirement plan?

Question

I got about 12 years to go and 120000. to invest, what's better annuity or target date retirement plan

Answer 1

Both are good option, investing at 12% you can have $480 000 12 years from now. Your choice depends on one of two factors.

A) If this money is coming from your savings, earnings, profits etc...:

To invest the whole amount the only choice you have is an annuity. In this case choose a VARIABLE annuity with an step up rider that garantees the winnings on your investments on the anniversary date.

You can contribute $5 000 to your traditional IRA or roth IRA. Or $15 500  to you employers retirement account or $46 000 if you are selfemployed.

B) If this money comes from an old retirement account you can choose between the annuity and the target date fund.

You are better off with a VARIABLE annuity with a step up rider. Some companies offer variable annuities with the step up option and a guaranteed minimun rate of return per year.

Answer 2

Annuities are legalized robbery. And should be banned. Anything is better. Do not listen to those who advocate them. They are their sales men and annuities pay them the highest commission.

Answer 3

I'd skip the annuity - usually the rates of return are awful.  If you have $120,000 - I'd diversify it into several 5 star rated mutual funds.