Many prospective annuity buyers are concerned about how they will get their money out of an annuity if they need it. Many prospective buyers are concerned with the penalty period and with the possibility of incurring a surrender fee, if they need their money in an emergency.

First, you need to evaluate what type of investor you actually are. Are you a conservative investor who invests money for long term, or are you an investor who gets in and out investments every year? If you are a conservative investor, then maybe annuities should be evaluated in closer detail.

Many prospective annuity buyers are hustled into believing that a "no-load" annuity will solve their fears of liquidity or surrender penalties. These annuities may be penalty free, but do not guarantee the accumulation account against loss of principal.

So what choices can I take if I invest in an annuity and I need my money? You have three options when it comes to liquidity for an annuity:
1) Annuitization
2) 10% Free Withdrawal
3) Guaranteed Return of Premium Rider

Every insurance company wants you to choose "annuitization." This basically means that your accumulation account is converted into an immediate annuity with a low internal rate of return of 65 basis points (that's less than 1%) and divided into equal payments over your theoretical life span. Annuitization may be penalty free but it will cost you dearly in the long run.

The second option is to take a penalty free withdrawal of 10% each year. This option allows you to withdraw money within the penalty period up to 10% of the account value (penalty free), while allowing your accumulation account to earn a specific yield or total return. This is a wise option to take if you need money in the penalty period for a deferred annuity. Once the penalty period has expired, which is 10-years or less for the majority of annuity products sold, you can take 100% of your principal and interest out.

The third option, a "guaranteed return of premium rider" is becoming a favorite amongst annuity buyers. This option allows you to withdraw 100% of your principal, even though your annuity penalty period has not expired. The downside to this option is losing 50 basis points (that's ½ of 1%) annually for the cost of the rider. For example, if you are earning 4% in your accumulation account, your net yield for the year would be 3.5%. This may be a wise choice for those who think they may have to liquidate 100% of their assets within the penalty period.

As you can see from the above choices, you can get your money out an annuity if you need it.

The annuity salesperson will hand you brochures (indorsed by the insurance company) stating that their insurance company is rated A+ (as example) by such and such a rating company. What they don't tell you is that the insurer is paying the rating company fees and commission for the actual rating. In addition, the contract between the rating company and insurer, states that the insurance company has a right to block any rating publication they don't like—thus suppressing the truth from the public.

The question should be: How safe are annuity companies in this economy? If you acquire data from an annuity salesman, he will tell you their company is A+ rated and that they have been around for 100-years. I estimate that in a sales presentation, 99% of all annuity salespersons are omitting key facts to the truth when they relate to the financial strength of insures that offer annuity products.

The annuity salesperson will hand you brochures (indorsed by the insurance company) stating that their insurance company is rated A+ (as example) by such and such a rating company. What they don't tell you is that the insurer is paying the rating company fees and commission for the actual rating. In addition, the contract between the rating company and insurer, states that the insurance company has a right to block any rating publication they don't like—thus suppressing the truth from the public.

In reality, the higher the ratings, the more annuities are sold by the salesperson, and the more money the ratings companies and the insurer make. Does this sound honest to you?

It states in the FTC guidelines: Section 255.5 that advertisers must disclose connections between themselves and their endorsers that might materially affect the weight or credibility of the endorsement. If you can't count on the rating, then who's protecting the public's best interests?

After analyzing 189 financial statements of the largest annuity insures I estimate that only 13% of the insurers are financially strong to withstand a prolonged recession. The 13% are not the annuity insurers sold by the majority of the annuity salespersons. In fact, the majority of annuity salespersons sell the top three annuity companies, whose financial strength may be questionable. Click the following FREE report: The Real Truth Concerning the Top 3 Annuity Insurers Sold by Agents

If you did purchase an annuity from a financial sound insurer and the accumulation account within the annuity is guaranteed against loss, then I would say you do not need to worry about the annuity product in this recession.

Many retirees are suckered into these products in retirement. The sound of guaranteed income sounds very appealing when you need income every month. But what many retirees don't know can hurt them in both the short and long-term.

The first problem is the internal rate of return. The average internal rate of return for immediate annuities is 65 basis points (less than 1%). The majority of immediate annuities will not return your original investment principal.

Let's say for example, you invest $100,000 in an immediate annuity with a life payout. Your monthly payout can be as low as $375 per month based on life annuitization. Your expected life expectancy for a male aged 65-years old is 22-years. Let's say the investor dies on his 87th birthday. He received a total of $99,000 ($375 x 12 x 22-years), which is less than his original investment principal!

The highest payout on $100,000 for an immediate annuity is $601 per month for life. Let's say by your calculation you figure on living 20-years. $601 x 12-months x 20-years = $144,240 over 20-years. But, let's say you die in a car accident after 12-months and the total income payout was $7,212.

Your spouse calls the insurance company wondering why she is not receiving payments of $601 per month. The insurance company explains that they insured her husband for his life, however short or long that life actually was. The spouse then sues for omission of material fact.

Many investors will be given a second choice, such as 20-year period certain. If you invest $100,000 in an immediate annuity with a 20-year period certain, the monthly payout is $584 per month. Wow! This sounds great until you do the math. $584 per month x 12-months x 20-years = $140,160 over a 20-year period. If you invested $100,000 @ 1.55% for 20-years, it would equal $140,267—that's still a larger value than receiving $584 per month. Are the insurance companies kidding?

What about life with a period certain (such as 10-years)? This type of immediate annuity pays an income for life to the investor, and when the investor dies the spouse will receive 10-years of additional payments. The better the deal, the smaller the monthly payment will be to the investor and spouse. But, that's not the primary problem to this payout option. The payments stop after 10-years once the investor has died—then the spouse is left with nothing!

What about an alternative choice, such as a quasi-immediate annuity, called an income-rider? Many people are buying into these riders as an alternative to immediate annuities. So, what is an income-rider? These riders offer a guaranteed income for life and the balance of the accumulated account (if there is one) will go to the spouse.

The payouts for an income-rider are based on an age range. Example: Age range of 55 through 59, the payout guarantee is 4.5%; age range of 60 through 64, the payout guarantee is 5%; age range of 65 through 69, the payout guarantee is 5.5%, and so on.

Let's say you are age 60, and your payout guarantee is 5%. Your estimated life expectancy is 20-years. Your principal is $100,000. $100,000 x 5% = $5,000 per year x 20-years = $100,000. Since your principal and your payout is the same, your recovery is $0.00. This means your spouse would get nothing! This doesn't sound like a great deal to me.

On the other hand, I invented a solution called "income-recovery planning." Let's say, for example, you invest $100,000 into a solution and it produces $71,854 after taxes and recovers $100,000 of the original investment principal over a 20-year period. This is 71.85% more money than an income-rider. The beauty of an income-recovery solution is that you can repeat the solution over and over again throughout retirement, theoretically never running out of money (if you hold the solution to term). And after your demise, your spouse can repeat the solution over and over again, so she will never run out money in her retirement. To learn more, go to: http://www.FixedAnnuityExpert.com

The key to retirement is not only solving for maximum income, but also for recovery of your original investment principal.