An annuity is a relatively low-risk insurance product that pays you money, either for the rest of your life or for a set number of years. They are a popular investment option for anyone who wants to have a steady flow of future income, especially as part of their retirement plans.
Annuities generally earn a higher interest rate than other comparably safe investment options. They also provide tax-deferred growth, so you won’t pay tax on the interest you earn until you withdraw the money.
You can structure your annuity to pay monthly income for a set period or for the rest of your life. No matter how uncertain the economy or stock market may be, an annuity offers a reliable, guaranteed income stream. If you worry about outliving your savings in retirement, an annuity’s stability and security might be the perfect solution for peace of mind, offering a predictable source of funds you can count on no matter what the future holds.
It can help cover essential living expenses, supplement Social Security, or simply provide financial confidence in your later years. With options tailored to your goals and timeline, annuities can be a powerful tool in building a secure retirement plan.
You can structure your annuity to pay monthly income for a set period or for the rest of your life. No matter how uncertain the economy or stock market may be, an annuity offers a reliable, guaranteed income stream. If you worry about outliving your savings in retirement, an annuity’s stability and security might be the perfect solution for peace of mind, offering a predictable source of funds you can count on no matter what the future holds.
It can help cover essential living expenses, supplement Social Security, or simply provide financial confidence in your later years. With options tailored to your goals and timeline, annuities can be a powerful tool in building a secure retirement plan.
After the 2008–2009 market crash, we saw a strong recovery, but recent volatility is making many investors uneasy. Some have shifted to safer options like CDs, savings accounts, and money markets to avoid losses.
The problem? These options pay less than 1% interest, and that interest is fully taxable.
A better choice may be a tax-deferred annuity from a reputable insurer, offering a guaranteed fixed interest rate up to 3%, helping your money grow safely and faster. Unlike taxable accounts, the growth in an annuity compounds without immediate tax consequences, allowing for greater accumulation over time.
| Feature | Annuities | 401(k) / IRA | Mutual Funds | CDs (Certificates of Deposit) | Pension Plans |
|---|---|---|---|---|---|
| Primary Purpose | Guaranteed income for retirement | Tax-advantaged retirement savings | Investment growth | Safe, predictable savings | Lifetime income from employer |
| Risk Level | Low to moderate (depends on type) | Moderate (market-driven) | Moderate to high | Very low | Very low |
| Growth Potential | Fixed, indexed, or market-based growth | Market-based growth | Market-based growth | Fixed interest | None — income is predetermined |
| Income Guarantees | Yes — can provide lifetime income | No guaranteed income | No guaranteed income | No income payout, only interest | Yes — lifetime income guaranteed |
| Tax Treatment | Tax-deferred growth | Tax-deferred or tax-free (Roth) | Taxable unless in IRA/401(k) | Interest taxable annually | Not taxable while accruing |
| Liquidity | Limited — may have surrender charges | High liquidity (penalties may apply before retirement) | High liquidity | High liquidity | No liquidity — payouts only at retirement |
| Best For | People who want guaranteed retirement income and longevity protection | Long-term savers seeking tax benefits | Growth-focused investors | Short-term savers wanting security | Workers with employer-sponsored retirement income |
| Downsides | Fees, complexity, limited liquidity | Market risk, contribution limits | Market risk, no guaranteed income | Low returns, not ideal for long-term income | Lack of control; depends on employer solvency |
If you’re looking for payments that begin right away and continue for the rest of your life or for a specified period of time (sometimes called a Single Premium Immediate Annuity or SPIA) might be right for you. This type of annuity is purchased with a single, lump sum amount. In return for your one-time premium, the insurance company promises to make regular payments to you (or another person you specify) for a chosen length of time or for the rest of your life.
A fixed deferred annuity (sometimes called a Single Premium Deferred Annuity or SPDA) helps you earn interest safely and allows you to postpone the payment of income taxes on your earnings until you begin taking payments.
Fixed differed annuities may have higher interest rates than competing investments, such as CDs.
An indexed annuity earns interest or provides benefits that are linked to an external reference. The S&P 500 is a commonly used index. The value of any index varies from day to day and is not predictable.
To learn more about this amazing financial product and talk with an experienced professional about which annuity is best for you, call (800) 442-9899.
An annuity is a financial contract with an insurance company that provides guaranteed income—either for life or for a set number of years. Many people use annuities to create predictable retirement income or protect savings from market volatility.
You make either a lump-sum payment or a series of premium payments to an insurer. In return, the insurer agrees to:
Grow your money tax-deferred, and/or
Pay you guaranteed income in retirement
Some annuities also offer death benefits and optional riders for enhanced protection.
Fixed and fixed indexed annuities are considered low-risk, as they protect your principal and offer guaranteed income. Variable annuities involve market risk. All annuities are backed by the financial strength of the issuing insurance company.
There are four primary types:
Fixed Annuities: Guaranteed interest rate and predictable growth
Fixed Indexed Annuities (FIAs): Growth tied to a market index with downside protection
Variable Annuities: Growth based on investments (higher risk, higher potential return)
Immediate Annuities: Start paying income right after purchase
Each type serves different financial needs.
Fixed annuities earn a guaranteed interest rate no matter what happens in the market.
Fixed indexed annuities (FIAs) earn interest tied to a market index (like the S&P 500) but never lose principal due to market declines.
Key advantages include:
Guaranteed lifetime income
Tax-deferred growth
Protection from market downturns (with fixed and indexed annuities)
Predictable retirement planning
Optional living and death benefit riders
They provide stability that traditional investments may not.
Annuities may be ideal if you want:
Reliable retirement income
Protection from outliving your savings
Guaranteed returns or principal protection
Tax-deferred growth
A safe alternative to stock market volatility
They’re often purchased in your 50s and 60s, but options exist for younger buyers too.
A variable annuity invests your premiums into subaccounts similar to mutual funds. Growth potential is higher, but so is risk, including possible loss of principal.
Annuities grow tax-deferred, meaning you only pay taxes when you withdraw funds. Withdrawals are taxed as ordinary income. Annuities purchased with qualified retirement funds (IRA, 401(k)) follow retirement account tax rules.
Fees depend on the type of annuity.
Fixed & fixed indexed annuities: typically low or no fees
Variable annuities: may include mortality charges, fund fees, and rider fees
Optional riders can also add to the cost
Always review fee disclosures before purchasing.
Yes. Many annuities are designed to provide guaranteed income for life, which helps avoid outliving your retirement savings.
Annuities are often worth it if you:
Want guaranteed income in retirement
Prefer stability over risk
Need principal protection
Want tax-deferred growth
Desire predictable long-term financial planning
They offer unique guarantees that other investment vehicles cannot match.
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