Columnists or financial gurus may mention high costs involved with certain annuities or mention that the benefits do not counterbalance the fees that investors are forced to pay.
However, much of that press is more specific to variable annuities, for which investors do pay higher fees in order to lock in specific guarantees for principal, investment return, etc.
Fixed annuities, on the contrary, are quite simply interest-based investments, such as an interest bearing account or a CD.
They are most often geared specifically to retirement savings, and brought up by financial advisors to clients who are planning a retirement portfolio (especially if there is an investment horizon that makes sense-that is, the annuity can grow without the need for that cash, but does not need to sit untouched for a long period of time).
Fixed annuities are purchased when an investor makes an initial deposit (the "premium") as either a lump-sum payment OR invests over a period of years (for instance, while working) to get tax-deferred savings benefits, in a conservative investment, that will then pay out a guaranteed stream of money upon its maturity.
A fixed annuity is low risk, like a CD, but (of course, depending on market conditions) it offers higher payouts than bonds or treasuries-it often offers a higher payout than that same safe CD.
One reason that a fixed annuity is a good option for retirees who are looking for a stable stream of cash is that distributions from a fixed annuity can be offered through either immediate distributions (in which payments are made right away) or through deferred distributions; there, payment is made starting on a certain date, but all interest is compounded until that payout date.
Though they do not share the high costs of variable annuities, fixed annuities still offer guarantees on principal and interest.
They are a good bedrock for a retirement portfolio, because they offer a dollar amount that can be planned for, to manage expenses and income.
Investors will be penalized (tax-wise) for early withdrawals and may also face fees from the issuer (the insurance company).
Missouri fixed annuities are offered through a variety of insurance companies; it is important to investigate the soundness of the firm through ratings and other measures of stability.
Ask your financial advisor for information about the firms you are considering, and compare them side by side.
Fixed annuities are a good for income post-retirement, in lieu of or in addition to a pension or IRA benefits.
Talk to your advisor to find out if they make sense for your portfolio.