Should you buy annuities or bonds before retirement?

Annuities and bonds are both purchased ahead of retirement to secure retirement income but there are some critical differences. Choosing the right one depends on the investment and retirement goals of the individual. So what are the basics of these popular investment vehicles and which may be the right choice to help you plan a secure retirement?

Are fixed annuities better than bonds?

Both bonds and fixed annuities can create a steady stream of retirement income, but there are trade-offs to each. Bonds may yield higher returns but come with certain risks. Fixed annuities have a guaranteed interest rate for predictable growth. Understand their differences to help you structure a portfolio that aligns with your needs and goals.

What is the difference between a bond and annuity?

With a bond, you lend money to corporations, municipalities, or governments, which pay you regular interest payments for a fixed period, and then your principal investment is returned when the bond reaches maturity. Annuities vary in payment schedule and payment calculation methods, while bonds vary in maturity length and interest rates.