What should I know before purchasing an annuity?

Before purchasing an annuity, it is essential to familiarize oneself with several key aspects to make an informed decision. First, individuals should understand the fundamental purpose of an annuity, which is primarily to provide a stream of income, often during retirement. This involves evaluating one's financial goals and determining how an annuity fits into the overall retirement strategy. There are different types of annuities, such as fixed, variable, indexed, and immediate. Each type has its own features, benefits, and potential drawbacks. For instance, fixed annuities provide guaranteed returns, while variable annuities can fluctuate based on market performance. Understanding these differences can guide an individual in selecting the right product based on risk tolerance and income needs. Another crucial consideration is the fees and charges associated with an annuity. These can include surrender charges, administrative fees, and investment management fees. It is vital to analyze how these costs may affect the overall returns. Additionally, individuals should pay attention to the annuity's terms and conditions, especially regarding payout options, penalties for early withdrawals, and the length of the payout period. Factors like the financial strength and reputation of the insurance company issuing the annuity can also impact long-term reliability. Finally, consulting with a financial advisor or conducting thorough research is recommended to ensure a clear understanding of how an annuity aligns with one's financial situation and retirement objectives. For more specific information or to explore products and resources, individuals might consider visiting the official Western & Southern Financial Group website for further guidance.