We have all heard that an annuity is a good thing to look into when starting a retirement fund or even setting one’s self up to leave something for your loved ones to clean up your untied ends after you pass.

While annuities offer maximum gain they also have a few niches that people are unaware of until they try to cash out that annuity being when your strapped for cash or simply wanting to end the annuity. Therefore when you enter into an annuity I want to make sure you know fully what to look for and what to watch out for. First, make sure that you read the fine print before signing anything. An annuity is like a financial contract, and many times hide fees that are charged on the back end and leave you with less money you had hoped for in the first place. Secondly, make sure you know up front what the penalities are for withdrawing early and at what time you are allowed to withdraw without penalty. If you know the penalities up front there should be no suprise when you get into a bind and need that money. You will know what percentage is being reported to the IRS to be tacked on in tax fees, and you will also be aware of how much of a penalty the financial institution will be taking from you as well. Many annuitites like IRA’s have age limitations as well. So be sure you are aware that you will not be able to take this money out without penalty until you are of age.

Annuities are very beneficial financial help aids to aid in retirement, but it is also important to know that facts and make sure you understand that this is a long term investment and your money will be locked away for potentially 10 to 20 yrs. Keep that in mind when shopping for investment options!