Annuities Give Income Security, but at a Price

With old-fashioned pension plans disappearing, Americans today often shoulder sole responsibility for managing their money throughout retirement. While some retirees take to the task with gusto, plenty of others may long for the days when all you had to do was go to your mailbox to pick up a monthly pension check.

For investors who crave income security, the financial services industry has an answer: the annuity, a contract sold by an insurance company that will guarantee you a regular income throughout your lifetime.

But before purchasing an annuity, you need to weigh the typically higher costs of the investment against the benefits, which include a guaranteed income stream, an assured inheritance for your family and tax perks. Depending on your situation, you may be better off investing in plain old stocks and bonds. ...