Are 401k Annuity Costs Worth It to You?

When considering the costs of an annuity, 401k investors tend to be leery of this type of investment. Sometimes, you may not want to pay the costs that come with buying an annuity. However, this type of investment might be worth the cost depending on your situation.

Annuity Costs

In recent years, annuity costs have risen sharply. This rise in costs has been directly attributed to the increase in the average life expectancy in the world. Since most people are living longer because of advances in medicine, insurance companies have to account for this when pricing their annuities. Typically, a portion of each one of your payments for the annuity will go towards paying the annuity company.


Although it might seem like an expensive investment to make, an annuity can provide you with some value. Including this type of investment in your 401k can provide you with some certainty in your retirement. By purchasing an annuity, you will be able to guarantee a certain payment every month for the rest of your life. Many people do not get these assurances by investing their own money into the stock market or some other type of investment. Therefore, this really gives you a "hands off" way to invest your retirement dollars with confidence.

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