Retirement Income FAQs

You contribute a lump sum or series of payments. The money grows tax-deferred, and later you can receive income payments for a set number of years or for the rest of your life.

The main types include:

• Fixed Annuities – Offer a guaranteed interest rate.

• Fixed Indexed Annuities (FIAs) – Returns are linked to a market index (like the S&P 500) with downside protection.

• Variable Annuities – Invested in market subaccounts with potential for higher returns and higher risk.

• Immediate Annuities – Start paying income right away.

• Deferred Annuities – Payments begin at a future date.

Annuities are backed by the financial strength of the issuing insurance company. They are not FDIC insured, but state guaranty associations provide some level of protection.

Yes. Earnings grow tax-deferred. When you withdraw money, the earnings portion is taxed as ordinary income. If withdrawn before age 59½, there may be a 10% IRS penalty on gains.

A surrender charge is a fee for withdrawing more than the allowed amount during the contract’s surrender period, which often lasts 5–10 years.

Commissions vary depending on the type and length of the contract. Fixed and indexed annuities typically pay between 3%–8% upfront. The commission is paid by the insurance company and does not reduce your initial investment directly.

• Fixed and fixed indexed annuities generally protect your principal from market loss (if held to terms).

• Variable annuities can lose value because they are invested in the market.

They can be a strong tool for retirees who want:

• Guaranteed lifetime income

• Tax deferral

• Protection from market volatility

• Predictable cash flow

They are often used alongside investments like 401(k)s and IRAs.

Annuities are typically suitable for:

• Pre-retirees and retirees

• Individuals who want guaranteed income

• Those concerned about outliving their money

• People looking for conservative growth with protection