Should You Get Into Variable Annuities in 401k Plans?

If you are considering getting involved in variable annuity 401k plans, there are many different factors that you should think about. Here are a few things to consider about getting involved with a variable annuity in your 401k plan.

Investment Risk

With a variable annuity, you are going to be taking on all of the investment risk yourself. Variable annuities are not like the other types of annuity products that are commonly available. With this type of annuity, you are going to be in charge of making all of the investment choices and decisions regarding your portfolio. If the investments do not perform well, your retirement funds are going to suffer accordingly. This puts the entire risk of your retirement squarely on your shoulders. If you do not have the funds available for your annuity payments, there is no one to blame but you.

Working with an Insurance Company

When you purchase a variable annuity, you will be working directly with an insurance company. This adds another element of risk, as the insurance company could potentially go out of business.

Making the Decision

In most cases, there are better ways to invest your money in a 401k plan than with a variable annuity. If you want to take on all of the risks associated with choosing your own investments, you can always do that directly through your 401k. 


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