When you're planning for retirement, you have options. Let's compare three of the most common strategies and help you understand which makes sense for your situation.
| Feature | Annuity | CD | 401k |
|---|---|---|---|
| Guaranteed Income | ✓ Yes (if annuitized) | ✗ No | ✗ No |
| Creditor Protection (FL) | ✓ 100% (FS 222.14) | ✗ No | ✓ Partial |
| Liquidity | Limited (surrender charges) | ✓ High | Limited (early withdrawal penalties) |
| Market Risk | ✓ Low (fixed) or Moderate (indexed) | ✓ None | ✗ High |
| Tax Deferral | ✓ Yes | ✗ No | ✓ Yes |
Annuities are best for people who want guaranteed income they can't outlive, who want asset protection from creditors, or who want to reduce market risk in their retirement portfolio. They're particularly valuable in Florida because of FS 222.14.
CDs are best for people who want safety and liquidity and don't need guaranteed lifetime income. They're FDIC insured, so your principal is protected. But they don't offer creditor protection or lifetime income guarantees.
401ks are best for people who are still working and want to save for retirement with tax advantages. They offer employer matching, tax deferral, and some creditor protection. But they expose you to market risk and don't guarantee lifetime income.
Most successful retirees don't choose just one strategy. They use a combination: maybe a 401k while they're working, a CD for emergency funds, and an annuity for guaranteed lifetime income. The right mix depends on your specific situation.
Our calculator shows you exactly what each strategy would look like with your specific numbers and current rates.
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