We are all quick to make the best of our limited available resources. It is only logical that when looking to invest in annuities, we compare between the fixed annuities and variable ones. These would not prove to be very straight forward solution as it is dependent on very many factors. Generally fixed annuities are assumed to carry a lower risk as you know exactly what you are getting into, whereas variable annuities carries a varying interest rate which would fluctuate depending on the stock indexes.

The variable annuities would carry a higher risk and would also carry a higher interest when conditions are favorable.  It must be noted that these are two most common types of annuities, but there are many others which we will not go into.

Features of annuities
One of the most common features, especially of the pension annuities put forward by governments, is that payments are tax exempt. This is often debatable because when you pay in money you are not taxed, but when you withdraw your money you are taxed, thus in a nut shell governments only defer the tax and not exempt.

Period
The other important feature is the length of period that one has to make payments, and the longer the period, the better for the savings and interest. As for the retirement, many people start to think about their retirement when they are 50 plus; expecting that they will retire in the next 10 years. This would certainly not be adequate time to have accumulated enough money to cater for your retirement. There is no fixed age one should start saving up for their retirement, as it all depends on individual circumstances which are not identical.

Rate
The other feature to look out for is the rate, if it is fixed, then there would be no problem, but if it is variable, then it would be good to have a clue as to how the rates are calculated. It is often these fine details that actually dictate whether you are going to make a good bargain or not. For us to adequately compare the fixed and variable annuities, it is important that we start by briefly explaining each one of them.

Fixed annuities 
These are very simple and the rate is predetermined and agreed upon in advance. Insurance firms in a bid to be cautious would not offer a very attractive rate, as no one can predict the future markets with certainty. It is normally clear and very simple to understand, with little complications.

Variable annuities
These may prove to be hard to understand as the rate is not predetermined and would be set at a later date, depending on so many factors. The interest, though variable, is not randomly set but is guided by the stock exchange movements which are normally a good reflection on how the economy is performing.

Human behavior
Human beings are different and these differences display themselves even in our investment decisions. Whether or not to take a fixed or variable annuity is something that is highly subjective. There are those with high expectations and are willing to go an extra mile to achieve their goals. It is at times argued that they are the ones that actually make it. As they say no pain, no gain, or in business terms, no risk, no return.

The variable annuities are much more risky and at times bear a much higher rate, thus those that are ready to take risks would find it a far better option. Whereas, the ones who are cautious and want everything spelt out clearly in advance may not want to take lower risks and would certainly avoid the variable annuities and go for the fixed annuities.

Conclusion
The correctness of a decision, whether to take variable annuities or fixed, is dependent on the future happenings. If the market performs well and the insurance firm hikes up its interest rates, then one can conclude that the one that opted for the variable interest rate was indeed right. If on the other hand the market performed awfully badly, and the interest rates were very low, then the one who opted for the fixed annuities would be on the safe side. The unfortunate thing is that we all must just make guess work when we are making future projection. There maybe guidelines, but at the end of the day, they remain guess work.

Whether fixed or variable, it is important that we all take advantage of these financial instruments. They would prove to be very helpful in the near future. There are a few lucky people that have made a fortune from these annuities, but it is always a gamble. The popularity of variable annuities has gained momentum in the past two decades with customer opting for the variable annuities.

The decision lies squarely in your hands, but make an informed decision and never live to regret.