But before we answer that all-important question, let’s make sure that you all understand what retirement annuities are. In a nutshell, annuities are investments that can be purchased with a single payment or in installment basis, and payouts can be either immediate or deferred, and with a fixed or variable rate or one that’s indexed. Annuities can also be for one or two persons.

How much your contribution is annually and how old you were when you purchased an annuity are just some of the factors that affect the expected rate of return from annuities.

Retirement annuities are simply annuities that are purchased for the sole purpose of having a comfortable supplementary source of income in your retirement years – supplementary being the operative word and which finally gives us the chance to answer our primary question.

If you have extra money, and you wish to earn from it in a no-nonsense straightforward manner, retirement annuities are for you. Furthermore, contributions made for retirement annuities are tax-deductible which allows you to save even more money for the future.

If you’ve already a retirement plan arranged and able to cover for your necessities and you’ll just need another source of income to fund for trivialities and recreational pursuits, a retirement annuity is again the answer to your problem.

BUT retirement annuities should only be considered as a supplementary source of income. Because of how it’s designed, people shouldn’t expect retirement annuities to be able to fully and easily cover for living and emergency expenses.

Basically speaking, retirement annuities can make your golden years fun, but they can’t guarantee to keep your golden years golden all throughout. You’d need a different investment for that.

[image from Flickr uploaded by km98_1]