When you buy annuity, you’re investing in peace of mind. Retirement should be a dream come true, not an endless worry. Retiring with financial security is the key to a happy retirement. You’ll have all the time to enjoy in the world, but you need the dependable income to be able to enjoy the lifestyle you’ve grown accustomed to.

If you are already retired, but feel that you’ll outlive your capital, you should consider immediately buying an annuity. You’ll get a consistent stream of income, even if you outlive the annuity’s principle. The catch is that if you die tomorrow, the balance of the annuity goes right to the insurance company and not the inheritance of your loved ones. Like any financial product, there’s the element of risk, but sometimes it’s best to error on the side of caution.

It is kind of like buying homeowner’s insurance. You hope to never need it, but if a fire should happen, you’ll be covered.

It also makes sense to buy annuity if you are under 40. If you are trading mutual funds several times a year and have already maxed out your 401k and IRA, an indexed annuity may be a good idea. It helps if you’re young as you need at least 20 years for the benefit of an annuity’s tax-deferral to exceed the benefit of the 15 percent long term capital gains rate on profits from selling your mutual funds. Keep in mind that annuities are taxed like ordinary income tax rates, which can run as high as 35 percent at the federal level.

Annuities are also a good idea if you are a trader. With this sort of trading on a taxable account, you suffer short-term capital gains tax of up to 35 percent. With an annuity, your money continues to compound until you withdraw it.  Most annuities allow you to switch products a certain number of times for free. It’s best to pick an annuity with many attractive sub-accounts or one that has no surrender charges.

Annuities bring financial security and peace of mind to retirement. There’s no need to give up the steady paycheck even if you no longer go to work for it every day. You can better budget for the future knowing there will be solid money coming in, even if you’ve outlived the principle of the annuity. Your golden years deserve to be spent happily with a financial security you can depend on.