What are Annuities?
Planning for retirement isn’t just about saving—it’s about ensuring those savings last as long as you do. Annuities provide a reliable stream of income that continues for life, helping you cover essential expenses no matter how long you live. With the security of guaranteed payments, you can enjoy retirement with greater peace of mind, knowing your financial future is protected against market downturns, inflation, and the risk of outliving your assets.
| Type | Growth Potential | Risk Level | Income Timing | Best For |
|---|---|---|---|---|
| Fixed | Low | Very Low | Deferred or immediate | Conservative savers who want guaranteed rates |
| Fixed Indexed | Moderate | Low | Deferred | Savers seeking safety with some growth tied to an index |
| Variable | High | Moderate–High | Deferred | Growth-oriented investors comfortable with market risk |
| Immediate | N/A | Low | Payments start right away | Retirees needing instant guaranteed income |
| Deferred | Income | Low–Moderate | Low | Payments start at a future date Longevity planning & income later in retirement |
| QLAC | Low | Low | Deferred to later life | Delaying RMDs, ensuring income at older ages |
Frequently Asked Questions (FAQs)
An annuity is a financial product issued by an insurance company that provides guaranteed income in retirement, either immediately or in the future.
Fixed and fixed indexed annuities are generally low risk because your principal is protected. Variable annuities carry market risk since they are tied to investments.
Some annuities, such as fixed annuities, have little to no fees. Variable and indexed annuities may include management fees, mortality and expense charges, or costs for optional riders.
You can choose an immediate annuity for payments right away, or a deferred annuity that grows over time and pays later.
Earnings grow tax-deferred, meaning you don’t pay taxes until you withdraw funds. This can help your retirement savings compound faster.
Yes, but withdrawals during the surrender period may result in penalties and fees. Many contracts allow up to 10% free withdrawals per year.
Many annuities include a death benefit option, ensuring your beneficiaries receive the remaining value or a guaranteed amount.
Unlike traditional retirement accounts, annuities don’t have annual contribution limits and can provide guaranteed lifetime income.
Annuities are best suited for people who want retirement income security, protection from market volatility, or a way to supplement Social Security and pensions.
Some annuities offer inflation riders that increase payments over time, but these usually come at an additional cost.
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