Annuities
Retirement Income Built to Last a Lifetime
An annuity is a contract designed to pay you income every month for as long as you live — no matter how long that is.
What Is an Annuity?
A contract that turns savings into lifetime income
An annuity is a contract between you and an insurance company. You make a lump-sum payment (or series of payments), and in return the insurance company promises to pay you a stream of income — either for a set period or for the rest of your life.
The core problem annuities solve: you can't know in advance how long you'll live. A 65-year-old today has a 50% chance of living past 85, and a 25% chance of living past 90. If you spend down savings at a steady rate, you may run out. Annuities remove that risk — they pay for as long as you live, period.
Not every retiree needs an annuity. But for those without a pension and whose Social Security doesn't fully cover essential expenses, the right annuity can be a cornerstone of a secure retirement income plan.
Key Benefits
- Income designed to last as long as you live
- Principal protection (no market loss on fixed and FIA types)
- Tax-deferred growth — you don't pay taxes until you withdraw
- Potential for higher yields than bank CDs
- Optional death benefit passes value to your heirs
- Can be customized with riders for long-term care, inflation, etc.
Types of Annuities
The right annuity depends on your goals
There's no one-size-fits-all solution. Here are the three most common types for retirees.
A fixed rate, zero market risk
Fixed Annuity
A fixed annuity credits a declared interest rate for a set period — similar to a CD but issued by an insurance company. Your principal is protected and your growth is predictable. Good for conservative savers who want a safe place for a portion of their retirement funds.
Market-linked growth with downside protection
Fixed Indexed Annuity
A fixed indexed annuity (FIA) ties your interest credits to the performance of a market index — like the S&P 500 — while protecting you from losses when the market declines. In good years, you capture some of the market's gains. In bad years, you get 0% — but never negative. Your principal is never at risk.
Monthly income for life
Income Annuity (SPIA / DIA)
A Single Premium Immediate Annuity (SPIA) converts a lump sum into a predictable income stream — starting immediately. A Deferred Income Annuity (DIA) starts payments at a future date. Both are designed to pay you for as long as you live. Think of it as creating your own pension.
Common Concerns
Honest answers to annuity questions
What if I need the money early?
Most annuities have a surrender period (typically 3–10 years) during which early withdrawals may incur a surrender charge. However, most contracts allow penalty-free withdrawals of 10% per year, and emergency provisions exist for nursing home care. We never recommend putting money in an annuity that you might need in the near term.
What happens to my money when I die?
This depends on the type of annuity and options chosen. Many annuities offer death benefits that pass remaining value to your beneficiaries — often outside of probate. Income annuities can be structured with survivor periods or joint-life provisions to continue payments to a spouse.
Are annuities safe?
Annuities are backed by the financial strength of the issuing insurance company. We only recommend carriers with strong financial ratings (A or better from AM Best). Unlike bank accounts, annuities are not FDIC insured, but state guaranty associations provide a layer of protection (typically $250,000 in most states).
How does an annuity fit with Social Security and Medicare?
Annuity income counts as ordinary income for tax purposes and is included in your MAGI — which can affect Medicare IRMAA surcharges if it pushes your income above the threshold. We coordinate annuity planning with your overall retirement picture, not just in isolation.
Content reviewed against 2026 plan-year figures. Dollar amounts change annually — we'll confirm the current numbers in your consultation.
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Is an annuity right for your retirement?
We'll review your income sources, expenses, and goals — then show you whether an annuity makes sense and, if so, which type fits best. No pressure, no sales pitch.