Annuities

A Paycheck for Life.
The Retirement Guarantee
Pensions Used to Provide.

With traditional pensions gone and market volatility an ever-present risk, annuities are the only financial product uniquely designed to guarantee income you simply cannot outlive — no matter how long you live.

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$0
principal at risk with fixed & indexed annuities
100%
of Americans now without a traditional pension
Tax-Free
growth inside the annuity — no annual tax drag
Lifetime
income guaranteed no matter how long you live
Why Consider an Annuity

Four Problems Annuities Are Uniquely Built to Solve

Annuities aren't right for everyone — but for the right financial situation, no other product does what they do. Here's what makes them distinctive.

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Income You Can't Outlive An annuity with a lifetime income rider functions as a personal pension. Once activated, it pays a guaranteed monthly amount for as long as you live — even if your account value hits zero.
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Tax-Deferred Growth Money inside an annuity grows without being taxed annually. You don't pay taxes on gains until you withdraw — allowing your money to compound significantly faster than a taxable CD or brokerage account.
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Principal Protection Fixed and indexed annuities contractually guarantee your principal. When the market drops, your account value is locked in. You simply can't lose money due to market performance.
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Legacy & Probate Avoidance Annuities allow you to name a beneficiary. At death, remaining funds transfer directly to your heirs — bypassing the time-consuming and public probate process entirely.
Annuity Types

Find the Right Annuity for Your Situation

There is no one-size-fits-all annuity. Each type is engineered for a different goal. Select a product below to understand how it works, who it's designed for, and the real trade-offs.

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Fixed Annuity

Guaranteed interest rate — the safety and simplicity of a CD, with better terms
Best for: Conservative savers who want a guaranteed, predictable return without any market exposure — and want to defer taxes on growth until retirement.

A fixed annuity credits a declared interest rate to your account for a specified period — similar to a bank CD, but typically with higher rates, tax-deferred growth, and more favorable terms. The insurance company assumes all investment risk; your principal and credited interest are contractually guaranteed.

Accumulation Phase

Your premium earns a fixed, declared interest rate guaranteed by the insurer. Growth is tax-deferred — no annual 1099, no tax drag on compounding.

Distribution Phase

At the end of the term, you can renew, withdraw, transfer, or convert to a stream of income. Most contracts allow penalty-free withdrawals of up to 10% per year.

  • Guaranteed interest rate — locked in for the full contract period, regardless of market conditions
  • Principal guarantee — your deposit cannot decrease in value due to market performance
  • Tax-deferred growth — no taxes owed on gains until withdrawal; ideal for non-qualified money sitting in low-yield savings
  • 10% free withdrawal — most contracts allow access to up to 10% of your account value annually without surrender charges
  • Surrender period — typically 3–10 years; early withdrawals beyond the free amount may incur a surrender charge (declining over time)

✓ The Upside

  • Zero market risk — fully guaranteed
  • Often higher rates than bank CDs
  • Tax-deferred compounding advantage
  • Simple and easy to understand
  • Probate-free transfer to beneficiaries

✕ The Trade-offs

  • No upside beyond declared rate
  • Surrender charges for early full withdrawal
  • 10% IRS penalty on withdrawals before age 59½
  • Rate resets at renewal — not locked forever
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Fixed Indexed Annuity (FIA)

Market-linked upside with a contractual floor of zero — you can't lose principal
Best for: Savers who want more growth potential than a fixed annuity offers, but still require a guarantee that they will never lose principal — a "best of both worlds" between safety and growth.

A Fixed Indexed Annuity credits interest based on the performance of a market index — like the S&P 500 — subject to a cap (maximum gain) and a floor (minimum gain, typically 0%). When the index rises, you participate up to the cap. When the index falls, you are credited 0% — your principal and previously credited gains are locked in and protected.

  • Index-linked growth — interest credited based on the performance of an index (S&P 500, Nasdaq, Bloomberg, etc.) during the term
  • 0% floor — if the index drops 30%, your account is credited 0%, not -30%. Your money never goes backward due to markets
  • Annual reset / lock-in — gains are locked in each year; the following year starts from that new, higher value
  • Multiple indexing strategies — choose from annual point-to-point, monthly sum, participation rates, and more based on your outlook
  • Income rider option — most FIAs can be paired with a Guaranteed Lifetime Withdrawal Benefit (GLWB) rider to create a personal pension income stream
  • Tax-deferred accumulation — no annual taxes on credited interest; ideal for repositioning savings or non-qualified assets

✓ The Upside

  • Market participation without market risk
  • Gains locked in annually — can never be taken back
  • Income rider option for lifetime paycheck
  • Tax-deferred growth
  • Probate-free beneficiary transfer

✕ The Trade-offs

  • Gains capped — won't match full index returns
  • Surrender charges for early full withdrawal
  • Income rider has a separate fee (typically 0.75–1.25%)
  • More complex than a basic fixed annuity
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Multi-Year Guaranteed Annuity (MYGA)

A fixed rate locked in for the full contract term — the annuity equivalent of a CD
Best for: Savers who want a predictable, locked-in rate for a specific number of years — particularly those looking to outperform CDs with tax-deferred treatment on a defined timeline.

A Multi-Year Guaranteed Annuity (MYGA) works like a bank CD but issued by an insurance company. You deposit a lump sum and receive a guaranteed fixed interest rate for a specific term — typically 3, 5, 7, or 10 years. Unlike a standard fixed annuity where the rate may change at renewal, the MYGA rate is locked in for the entire contract period.

  • Rate locked for the full term — the declared rate at contract issue is guaranteed through maturity, period — no resets, no surprises
  • Competitive rates — MYGAs frequently offer significantly higher rates than bank CDs for comparable terms
  • Tax-deferred growth — unlike a CD, there is no annual 1099; interest compounds without annual tax, creating a meaningful advantage over time
  • Term flexibility — available in 2, 3, 5, 7, and 10-year terms to align precisely with your financial timeline
  • At maturity — full flexibility to withdraw, renew, transfer, or 1035 exchange into another annuity without tax consequences
  • Penalty-free withdrawals — most contracts allow 10% annual access; interest-only withdrawal options available on many products

✓ The Upside

  • Rate guaranteed for the full term — no variability
  • Typically outperforms comparable bank CDs
  • No annual tax drag — full compounding benefit
  • Simple, predictable, and easy to plan around
  • Full flexibility at maturity

✕ The Trade-offs

  • No upside beyond the guaranteed rate
  • Surrender charges if you exit early
  • 10% IRS penalty before age 59½
  • Not suitable as a primary liquid emergency fund
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Income Annuity (SPIA & DIA)

Convert a lump sum into a guaranteed income stream — immediately or on a future date
Best for: Retirees or near-retirees who want to convert a portion of their savings into a guaranteed, predictable monthly income — eliminating the risk of outliving their money.

Income annuities convert a lump-sum premium into a guaranteed stream of payments. There are two main types: a Single Premium Immediate Annuity (SPIA) begins payments within 30 days and is ideal for those already in retirement; a Deferred Income Annuity (DIA), sometimes called a "longevity annuity," begins payments at a future date you select — locking in a future income guarantee at today's rates.

SPIA — Immediate Income

Payments begin within 30 days of the premium deposit. Ideal for retirees who need income now and want the highest possible guaranteed payout amount.

DIA — Future Income

Payments begin on a future date (e.g., age 75 or 80). A smaller premium today locks in a large, guaranteed income in the future — an efficient hedge against longevity risk.

  • Highest guaranteed payout — income annuities typically provide a higher monthly income than any other annuity type for the same premium dollar
  • Lifetime income options — payments can be structured for life only, life with a period certain, joint life (covering a spouse), or a fixed period
  • Mortality credits — the insurer pools longevity risk across many policyholders, allowing it to pay more than you could safely withdraw on your own
  • Partial exclusion ratio — for non-qualified funds, a portion of each payment is considered a tax-free return of principal, reducing your annual tax bill
  • DIA as longevity insurance — a DIA starting at age 80 with a small premium can guarantee substantial income precisely when self-managed assets may be running low

✓ The Upside

  • Highest guaranteed income per dollar
  • Completely eliminates longevity risk
  • Simplifies retirement income planning
  • DIA locks in future income at today's rates
  • Partial tax-free treatment on non-qualified funds

✕ The Trade-offs

  • Premium is irrevocable — limited or no liquidity
  • Inflation can erode fixed payment purchasing power
  • If you die early, remaining value may not pass to heirs (without a period certain rider)
  • Not appropriate for all or most of a person's savings
Side-by-Side

Quick Comparison: All Four Annuity Types

Not sure which direction fits your goals? This table summarizes the key differences at a glance.

Feature Fixed Fixed Indexed (FIA) MYGA Income (SPIA/DIA)
Principal Guarantee Yes Yes Yes Yes
Growth Potential Declared rate Index-linked (capped) Locked fixed rate None — converts to income
Market Upside No Yes — with floor/cap No No
Tax-Deferred Growth Yes Yes Yes Partial (exclusion ratio)
Lifetime Income Option Via rider or annuitization Yes — GLWB rider Via annuitization Yes — primary purpose
Liquidity 10% free annually 10% free annually 10% free annually Very limited / none
Ideal Use Case Safe savings, CD replacement Growth + protection, retirement accumulation CD replacement, defined timeline Retirement income floor, longevity hedge
The Income Rider Explained

How a Guaranteed Lifetime Withdrawal Benefit (GLWB) Works

The most powerful feature of a modern Fixed Indexed Annuity is the optional income rider. Here's how it turns your savings into a personal pension.

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The Accumulation Phase

Your premium grows in two ways simultaneously: your actual account value grows (subject to index performance), and a separate "income benefit base" grows at a guaranteed roll-up rate — often 6–8% per year compounded — whether the market goes up or not.

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Turning On Income

When you're ready, you "turn on" the income rider. Your guaranteed income payment is calculated as a percentage (called the payout rate, typically 4–6%) of your income benefit base — not your account value. This number can never decrease.

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Income for Life

Once activated, you receive that payment every month for life — even if your actual account value is eventually depleted to zero. The insurer contractually guarantees continued payment as long as you live.

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Joint Life Option

Most riders offer a joint life option covering both spouses. When one spouse passes, the surviving spouse continues receiving 100% of the same guaranteed income payment for the rest of their life.

Common Questions

Frequently Asked Questions

Here are the questions I hear most often. If yours isn't listed, just reach out — there's never any obligation or pressure.

Fixed and indexed annuities are held as general account obligations of the insurance company — not invested in the stock market. They are backed by the insurer's reserves and regulated by state insurance departments. Every state has a guaranty association (similar in concept to FDIC for banks) that provides a backstop — typically $250,000 per annuitant per insurer — if a carrier becomes insolvent. I only work with highly-rated, financially strong carriers, and I'll show you the ratings of every company I recommend.
Both offer a guaranteed return on your money, but annuities have several significant advantages over CDs. First, growth inside an annuity is tax-deferred — you don't receive a 1099 each year, and your money compounds without annual tax drag. Second, annuities (particularly MYGAs and FIAs) frequently offer higher rates than comparable bank CDs. Third, annuities allow you to name a beneficiary, so remaining funds bypass probate entirely. The main difference is that CDs are FDIC-insured by the federal government, while annuities are backed by the insurance company and state guaranty associations.
A surrender charge is a fee applied if you withdraw more than the free withdrawal amount (typically 10% per year) before the end of the surrender period. The charge is expressed as a percentage that declines over time — for example, 9% in year 1, 8% in year 2, down to 0% at the end of the term. Surrender charges exist because the insurer invests your premium in longer-duration assets to credit the guaranteed rate; early withdrawal disrupts that. It's important to only place money you don't need full access to into an annuity for the duration of the surrender period.
Yes — annuities can be held inside an IRA (called a "qualified annuity") or funded with non-retirement savings (called a "non-qualified annuity"). For qualified annuities, the tax-deferral benefit is redundant since IRAs already grow tax-deferred, but the principal protection, income guarantee, and death benefit features still apply. Many clients roll over a portion of a 401(k) or IRA into a fixed indexed annuity specifically to protect a portion of their retirement savings from market losses while still generating income.
There's no universal answer — it depends on your income needs, other assets, liquidity requirements, and timeline. A common approach is to use an annuity to cover your "essential expenses" floor (housing, food, utilities, healthcare) with guaranteed income, leaving the rest of your portfolio to grow in more flexible investments. I work through a full income needs analysis to determine what allocation makes sense for your specific situation. I never recommend placing money into an annuity that you might need immediate access to.
This is one of the most important concepts in a Fixed Indexed Annuity with an income rider. Your account value is the actual cash value of your annuity — what you'd receive if you surrendered the policy. Your income benefit base (also called the "benefit base" or "rider value") is a separate, hypothetical number used only to calculate your guaranteed income payment. The income base often grows at a guaranteed roll-up rate (e.g., 7% per year) even in down markets. When you turn on income, your payment is a percentage of this income base — which is why you can receive more income than your actual account value might suggest.
For accumulation-phase annuities (fixed, FIA, MYGA), your named beneficiary receives the remaining account value directly — bypassing probate entirely. For income annuities or those with income riders that have been activated, the outcome depends on how income is structured: a "life only" option pays the highest income but stops at death; a "period certain" option guarantees payments for a minimum number of years to heirs even if you pass early; a "joint life" option continues full payments to a surviving spouse. I walk through every beneficiary scenario carefully before recommending any product.

Let's Build Your Personal Pension.

With 21+ years of experience and access to dozens of the nation's top-rated carriers, I find the right annuity structure for your income needs, timeline, and risk tolerance — with no pressure and no jargon. Most people are surprised at how competitive today's guaranteed rates are.

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