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An annuity is an insurance product that provides income in retirement, while a pension is a retirement savings plan that is typically offered by an employer. Both annuities and pensions can provide a stream of income in retirement, but there are some key differences between the two.
One key difference is how the income is taxed. With an annuity, the income is taxed as it is received, while with a pension, the income is taxed when it is withdrawn. Another key difference is how the money is invested. With an annuity, the money is typically invested in fixed-income securities, while with a pension, the money is typically invested in a diversified portfolio of stocks and bonds.
Finally, annuities typically have higher fees than pensions. This is because annuities are insurance products and pensions are not. For this reason, annuities are not always the best choice for retirement income.
One key difference is how the income is taxed. With an annuity, the income is taxed as it is received, while with a pension, the income is taxed when it is withdrawn. Another key difference is how the money is invested. With an annuity, the money is typically invested in fixed-income securities, while with a pension, the money is typically invested in a diversified portfolio of stocks and bonds.
Finally, annuities typically have higher fees than pensions. This is because annuities are insurance products and pensions are not. For this reason, annuities are not always the best choice for retirement income.
