Understand the role of an annuity

An annuity is a contract with an insurance company. It may address a long-term savings or income need, but it should be considered alongside the rest of your retirement plan.

Three types you may encounter

Multi-year guaranteed annuities

A MYGA offers a stated interest rate for a set period. Review renewal terms and withdrawal restrictions. It is an insurance contract, not a bank deposit.

Fixed indexed annuities

Interest credits are linked to an index using contract formulas and limits. You do not invest directly in the index. Caps, participation rates and other terms affect what is credited.

Immediate income annuities

A premium is exchanged for payments under the selected payout option. Compare lifetime or fixed-period payments, survivor provisions and access to the original premium.

Understand the tradeoffs

Review surrender charges, optional-benefit costs, withdrawal rules and any market value adjustment. Early withdrawals may reduce the amount received. Inflation can reduce the buying power of fixed payments.

Guarantees depend on the insurer’s financial strength and claims-paying ability. Annuities are not FDIC insured.

Questions to bring

What need would this contract address? How much money must remain accessible? What happens if circumstances change? What are the costs and alternatives?

Start a conversation about how an annuity may fit into your retirement planning.

This is general educational information, not a recommendation to buy a contract or personalized investment, tax or legal advice.

Annuities Made Simple