What Is an Annuity?
An annuity is a contract between you and an insurance company. You make payments either a lump sum or over time and in return, the insurer provides you with a stream of income, typically during retirement.
Types of Annuities
Fixed Annuities
Fixed annuities provide a guaranteed interest rate over a specified period. Your principal is protected, and you know exactly what you'll earn.
Fixed Index Annuities
These annuities tie your interest credits to a market index, like the S&P 500. You benefit from market gains while protecting against losses.
Income Annuities
Also called immediate annuities, these begin paying income shortly after you purchase them. They're designed for people who are already retired.
Deferred Income Annuities
You purchase these now, but income payments start at a future date you choose. They often provide the highest payout rates because the insurance company has more time to grow your money.
Why Consider an Annuity?
- Guaranteed Income: Create a predictable income stream that you can't outlive
- Tax-Deferred Growth: Your earnings grow tax-deferred until you withdraw them
- Principal Protection: Many annuities protect your principal from market losses
- Death Benefits: Many annuities offer death benefits to protect your beneficiaries
Next Steps
Understanding annuities is the first step toward a secure retirement. Explore our education hub for more resources, or book a consultation with a licensed professional who can help you evaluate your options.