Annuities & retirement
Annuities & retirement income
In plain EnglishA contract with an insurance company that protects your savings and can turn them into guaranteed income for life.
What it is
With an annuity, you give an insurance company a lump sum (or a series of payments), and in return it guarantees growth, income, or both. Growth is tax-deferred — you don’t pay taxes until you take money out.
You can start one with a single deposit or with ongoing payments over time, and choose a shorter or longer period that fits your plans. There are two main kinds: fixed annuities, which grow at a set rate, and indexed annuities, which grow based on a market index — both protect your savings from market losses. Either can be turned into a steady income stream in retirement.
Guarantees are backed by the financial strength of the insurance company that issues the annuity.
How it works
Step by step.
- Put money inOften a rollover from a 401(k) or IRA, or savings sitting in CDs or a bank account.
- It grows tax-deferredAt a guaranteed rate, or with index-linked interest protected by a floor.
- Take income when you’re readyLifetime payments, or withdrawals within the contract’s limits.
- Your beneficiaries are namedWhat’s left passes to them according to the contract.
The honest version
What’s good, and what to watch.
Every product has trade-offs. We’d rather you hear them from us now than discover them later.
What we like
- No losses from market drops (fixed and fixed indexed)
- Tax-deferred growth
- Guaranteed lifetime income options
- Named beneficiaries avoid probate for the annuity
What to watch
- Surrender charges if you withdraw too much in the first years (often 5–10)
- Withdrawals before age 59½ may carry a 10% IRS penalty
- Caps limit growth on indexed annuities
- Keep your emergency money somewhere else
- Some income riders have fees
Frequently asked questions
Straight answers.
Can I lose money?
Fixed and fixed indexed annuities don’t lose value from market drops. Surrender charges can reduce what you get back if you cash out early.
How much can I take out?
Many contracts let you withdraw about 10% a year without a surrender charge. We’ll show you the exact rules before you sign.
Is it FDIC insured?
No. Annuities are backed by the insurance company that issues them, and by state guaranty associations up to certain limits.
Often paired with
Related coverage.
Fixed annuities
A set interest rate for a set number of years, with a guaranteed minimum — steady growth with no market risk.
Learn more →Indexed annuities
Growth linked to a market index like the S&P 500, protected from index drops.
Learn more →Indexed universal life (IUL)
Lifelong protection plus cash value linked to a market index — with a guaranteed floor when the index drops.
Learn more →General information, not tax or legal advice. Features, availability and rules vary by insurance company, product and state — we’ll walk you through the details of any policy before you apply.
Is an annuity right for you?
Tell us a little about your family and goals. We’ll compare your options side by side — no pressure, no obligation.