Annuities vs. 401(k): Which One is Right for Your Retirement?

Most people think a 401(k) is the best way to save for retirement, but it’s not the only option. Annuities provide guaranteed income for life—something a 401(k) can’t promise.

A 401(k) relies on market performance, meaning your retirement savings are subject to fluctuations. An annuity, on the other hand, guarantees a steady stream of income regardless of market conditions. This difference makes annuities particularly attractive for those who prioritize financial security in retirement.

Who Should Choose an Annuity?

• If you want guaranteed lifetime income.
• If you’re worried about outliving your savings.
• If you want protection from market volatility.
• If you’re looking for higher returns than bonds.
• If you prefer a hands-off investment approach with predictable payouts.

Who Should Choose a 401(k)?

• If you want employer matching contributions.
• If you are comfortable with market fluctuations.
• If you are looking for a tax-deferred way to grow savings with potential high returns.
• If you want flexibility in investment choices.

Combining Both for Maximum Security

Many financial advisors recommend using both a 401(k) and an annuity to create a balanced retirement strategy. While a 401(k) provides growth potential, an annuity ensures lifetime income and removes market risk from a portion of your portfolio.