The early-withdrawal penalty and the early surrender fees of an annuity make it useless for short-term saving. With a variable annuity you pay higher tax rates and expenses for your funds than you would pay elsewhere.
You would have to hold an annuity for about fifteen years for the benefits of tax deferral to outweigh the extra costs.
Annuity buyers should therefore exhaust all other tax-deferral options before considering that option. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)
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