Annuities
Turn savings into income you can't outlive
An annuity is a contract with an insurance company that can provide a guaranteed income stream — often for life. Used to cover essential expenses in retirement without worrying about market swings or running out.
The Basics
What is an annuity?
An annuity is a contract between you and an insurance company. You contribute money — either a lump sum or over time — and in exchange the company agrees to make payments back to you, either starting soon or at a future date. The defining feature is the ability to convert savings into a predictable income stream, in many cases guaranteed for as long as you live.
Annuities exist primarily to solve one specific retirement problem: longevity risk, the risk of outliving your money. Pensions used to handle this for many workers. As pensions have largely disappeared, annuities are one of the few tools that can replicate "a paycheck for life."
Annuities are also among the most varied and, frankly, most over-sold insurance products. Some are straightforward and useful; others are complex and expensive. The product only makes sense for specific goals, and the fees and surrender terms matter enormously. Our role is to be honest about whether an annuity fits your situation at all — and if so, which type and why.
The Process
How it works, start to finish
With annuities, the upfront analysis matters more than with any other product we offer.
Define the income gap
We look at Social Security, pensions, and savings to see whether a guaranteed-income product is even needed.
Match the type to the goal
Immediate vs. deferred, fixed vs. indexed — the right type depends entirely on your timeline and objective.
Compare carriers & terms
We compare payout rates, fees, surrender schedules, and carrier financial strength across multiple insurers.
Fund & activate
Once funded, the contract begins. Income either starts immediately or at the future date you selected.
Who Should Consider One
Who annuities fit best
Annuities suit specific situations — not everyone, and not as a default. Honesty here is the point.
Near or in retirement
Those within ~10 years of retirement looking to convert savings into reliable income.
No pension
Those without a traditional pension who want to recreate guaranteed lifelong income.
Worried about longevity
Those in good health with family longevity who fear outliving their savings.
Want to cover essentials
Those who want guaranteed income to cover non-negotiable expenses, with other assets for flexibility.
Risk-averse savers
Those who value predictability over growth potential for at least part of their portfolio.
Maxed other accounts
Some use deferred annuities for tax-deferred growth after maxing 401(k) and IRA contributions.
Main Types
The main kinds of annuities
"Annuity" is a broad category. These are the main types and what they're for.
| Type | How it works |
|---|---|
| Immediate (SPIA) | Lump sum now, income starts almost immediately. Simplest "paycheck for life" structure. |
| Deferred fixed | Grows at a fixed rate; income or withdrawals begin at a future date. Predictable and conservative. |
| Fixed indexed | Growth linked to a market index with a floor (no market loss) and a cap (limited upside). |
| Variable | Cash value invested in subaccounts with market risk and typically higher fees. Most complex. |
| Deferred income (DIA/QLAC) | Buy now, income starts much later (e.g., age 80+). Pure longevity protection. |
We'll explain which (if any) fits your goal — and we'll tell you plainly if an annuity isn't the right tool for you.
Common Questions
Annuity FAQ
Aren't annuities a bad deal?
Some are, some aren't — the category has a mixed reputation because complex, high-fee products have been aggressively sold to people who didn't need them. But simple products like a single-premium immediate annuity can be an efficient way to guarantee lifelong income. The honest answer: it depends entirely on the type, the fees, and whether it matches your actual goal. We'll tell you when an annuity doesn't make sense for you.
What is a surrender charge?
Many deferred annuities charge a penalty if you withdraw more than a set amount during an initial "surrender period" (often 5–10 years). This is one of the most important things to understand before buying — money in an annuity is generally not as liquid as money in a savings or brokerage account. We always review the surrender schedule with you in detail.
How are annuities taxed?
Growth inside an annuity is tax-deferred until withdrawn. Withdrawals of earnings are taxed as ordinary income, and withdrawals before age 59½ may incur a 10% federal penalty. The tax treatment differs for qualified (IRA/401k-funded) vs. non-qualified annuities. This is a situation where coordinating with a tax advisor is genuinely important.
What happens to the money when I die?
It depends on the payout option chosen. A "life-only" option stops at death (highest payout, nothing to heirs). "Life with period certain" or "joint life" options continue payments to a beneficiary or spouse. Some contracts include a death benefit. These choices significantly affect the payout amount and are central to the decision.
Is my money guaranteed?
Guarantees in an annuity are backed by the issuing insurance company's financial strength, not by FDIC. State guaranty associations provide limited backup protection up to certain limits. This is why carrier financial-strength ratings matter, and why we compare them as part of any recommendation.
Free Tool
Is an annuity even right for you?
Take our honest six-question self-assessment first — no projections, no numbers, no sales pitch. Just clarity on whether an annuity fits your situation.
Wondering if an annuity fits your retirement plan?
We'll look at your whole income picture first and tell you honestly whether an annuity helps — and if so, which type and why. Free, no obligation, no pressure to buy.
Get my annuity quote