There has been a lot of talk lately promoting fixed annuities over certificates of deposit (CDs).
 This is due in large part to the extremely low interest rates being paid out by most CDs, bonds, and savings accounts at the moment but also to certain advantages fixed annuities have over certificates of deposit.
  Does that mean fixed annuities are always the best choice?  Absolutely not!  CDs and fixed annuities are completely different financial products meant for completely different circumstances.
When To Use Fixed Annuities Fixed annuities do only one thing, but they do it very, very well.
 Annuities are meant to provide income for a specified period of time (or for life, as the case may be).
 The payout is specified upfront, taking interest rates and certain assumptions about inflation and market returns into consideration, and is irreversible once the contract is executed.
 If you want to ensure you never outlive your savings, annuities are the way to go.
 They are very safe, insured by state regulatory agencies up to certain limits (akin to FDIC insurance), and are easy to understand.
 Since insurance companies compete pretty much exclusively on their products' monthly payout, annuities are also very easy to compare with one another.
 It is also possible to purchase inflation protection, continued payouts to heirs after you pass, and other riders of varying usefulness.
 Due to their nature, the older you are when you purchase a fixed annuity (and the lower your life expectancy) the higher your monthly payment will be.
 Thus, they are generally only appropriate for the elderly.
When To Use CDs Certificates of Deposit are safe, liquid investments suitable for investors of all ages and risk tolerances.
  Cash investments such as CDs are most useful when saving for short-term expenses where preservation of capital is of the utmost importance.
 CDs are also suitable investments for conservative retirees with little need or desire to take unnecessary risk with their portfolios.