Investments & Savings
Explore annuity options for long-term retirement objectives.
Annuities are long-term insurance contracts that may include accumulation, protection, or income features depending on the product.
Annuities are long-term contracts with liquidity limits, fees, and conditions. Any guarantees depend on the claims-paying ability of the issuing insurer. Variable and index-linked products involve market risk, including possible loss of principal. Withdrawals may be subject to surrender charges and, before age 59½, tax penalties.
What an annuity is
An annuity is a contract with an insurance company. In exchange for premium payments, the contract may provide accumulation potential, certain protection features, or a stream of income — depending on the product type and the options selected.
Potential uses in a retirement strategy
- Supplementing other retirement income sources.
- Tax-deferred accumulation toward retirement, subject to contract terms.
- Converting savings into scheduled income payments in retirement.
Product types and major differences
Which product types apply to you depends on your goals, state, and the products available — but the common categories are:
- Fixed annuities — a stated interest rate set by the insurer.
- Fixed indexed annuities — interest credited by a formula linked to an index, subject to caps, participation rates, or spreads.
- Variable annuities — values tied to underlying investment options, with market risk.
- Registered index-linked annuities — index-linked crediting with defined levels of downside exposure.
What to review carefully before deciding
- Liquidity limits and surrender periods — withdrawals above allowed amounts during the surrender period can trigger charges.
- Fees and contract terms — including rider costs, caps, participation rates, spreads, and any market-value adjustments.
- Tax treatment — withdrawals may have tax consequences; consult a tax professional about your situation.
- Market risk — for variable and index-linked products, values can decline.
- Guarantees — any guarantee is only as strong as the issuing insurer's claims-paying ability, and applies only under the specific conditions stated in the contract.
An annuity is not a bank account and is not "market-proof" or universally safe. Understanding exactly what is guaranteed, by whom, and under what conditions is the core of any annuity conversation.
Frequently asked questions
Is an annuity right for everyone?
No. Annuities are long-term contracts with tradeoffs. Fit depends on your goals, time horizon, liquidity needs, and existing income sources.
Can I take money out early?
Most contracts allow limited withdrawals, but amounts above the allowed limit during the surrender period can trigger surrender charges, and withdrawals before age 59½ may face tax penalties. Review the specific contract terms.
What does "guaranteed" actually mean?
A guarantee applies only to the specific feature described in the contract, under its stated conditions, and depends on the claims-paying ability of the issuing insurance company.
Which carriers do you work with?
Carrier and product options are reviewed during a conversation and depend on your state, your goals, and current availability. Whatever the carrier, remember that guarantees rest on that insurer's claims-paying ability — carrier financial strength is part of the discussion.