Let's look at some of the questions that you should ask yourself when deciding whether to invest in a variable annuity:

• Are you investing for the long term? You should have at least a ten-year time frame for this money. Also remember that withdrawals prior to age 59½ are subject to penalties.
• Have you considered the other alternatives that may be available to you? If you are eligible for a retirement plan at work that offers a company match or pre-tax contributions, you may want to first use this vehicle for your ongoing retirement investments.
• Are you contributing to a traditional or a Roth IRA? Again, you may want to consider this avenue before considering a variable annuity.
• Are you in a position to benefit from tax-deferred growth?
• Do you desire a guaranteed income for life in retirement? If so, an annuity would meet this need. On the other hand, you may have less available to leave to your heirs.
• Are you comfortable with the risk that your account value may decrease, and with making your own investment decisions (or working with a professional to help you)? If yes, then a variable annuity may be an appropriate choice.
• Do you have additional money in a taxable account that you can afford to invest for your retirement, or have allocated for retirement? If so, an annuity can be an excellent choice for such funds.
• Are you self-employed? If so, an annuity may be an additional source of retirement income other than Social Security. In the early years of a business, you may be investing all of your capital into the business and not have sufficient cash to contribute to a retirement plan. In later years, you may not want to establish a retirement plan for your business since you will likely have to cover all of your employees under such a plan. In this situation, an annuity offers a good alternative way to save for your retirement.

IMPORTANT NOTE: A self-employed individual can still choose to fund his/her personal IRA without having to contribute to the retirement plans of employees, if any.

• Do you expect to be in a lower tax bracket after retirement? If so, then an annuity would become more attractive.

If you are approaching retirement, or are already retired and want a steady income with the continued potential for growth, consider an immediate variable annuity. Income amounts can fluctuate with portfolio performance.

Consider all of these points in coming to your decision. It may well be that, depending on the specifics of your own situation, a deferred or immediate variable annuity may be an appropriate choice for a portion of your retirement savings. Remember that you should always keep at least three to six months of living expenses in liquid funds available for emergencies and shorter-term needs.