Annuities are a popular investment option that helps one get a steady stream of income during retirement. It is essentially a contract with an insurer in which one pays premiums and, in return, gets a guaranteed stream of payments in retirement. There are several annuity options, and choosing the right one can help one meet their long-term financial goals with ease. Also, one should avoid the following common mistakes associated with annuities: 1. Overlooking future tax implications Annuities are not taxed during the accumulation period. However, these benefits are only available until one withdraws money from their annuity plans. So later, the retirement income earned in the form of annuities will be taxed. This can be an additional monetary burden at the time. To avoid this issue, one must not let all their retirement income be taxable. They must set aside certain percentages of their income and direct them to non-tax deferred retirement investment options. 2. Investing too much While an annuity is a good investment option for retirement, it also tends to be rigid and difficult to get out of after a certain point. One can even end up paying penalties for several years after purchase if they miss a payment or two in the interim.