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The Comparison Series: Annuities vs. 401(k)s

Social Security alone probably won’t be enough to live on when you’re ready to retire, so it makes sense to prepare for your financial future ahead of time. While there are a number of smart investment options, important considerations including timing, amount of investable assets and strict regulations governing 401(k) accounts can make an annuity the better choice.


  • No limit on how much you can invest.
  • Choose between no risk or take advantage of potential market growth. Fixed-rate annuities provide a guaranteed rate of return on your investment. Indexed and variable annuities’ value reflects gains in the stock market while maintaining some protection against losses.
  • May be jointly owned.
  • You can invest at any age.
  • You can choose the schedule for receiving your payments.


  • Annual contributions are limited to $19,500. (2022)
  • 401(k)s are usually invested in mutual funds, which can be negatively affected by downturns in the economy, resulting in financial losses.
  • You can continue contributing to an employer-sponsored 401(k) past the age of 72 ONLY if you keep working for the same employer and own less than 5% of the company.
  • Only one owner.
  • Unless you keep working for the same company, there is a required minimum distribution from your account beginning April 1 following the calendar year you reach 70½ if you were born before July 1, 1949, or at age 72 if you were born after that date.

This article is for informational and educational purposes only. It should not be used to make a buying decision. If you would like to speak with a financial professional, please use Annuity Alliance’s contact form.