Annuities

What Is an Annuity?

An annuity is a financial product designed to provide a steady stream of income, typically during retirement. It is a contract between you and an insurance company: you contribute money (either as a lump sum or over time), and in return, the insurer pays you income either immediately or at a future date.

How Annuities Work

Annuities have two main phases:

1. Accumulation Phase
You fund the annuity through a lump sum or periodic payments. Your money may grow over time, depending on the type of annuity.

2. Distribution Phase
You begin receiving payments—either for a set number of years or for the rest of your life.

Types of Annuities

Fixed Annuities

Provide a guaranteed interest rate and predictable income payments. Ideal for those seeking stability and low risk.

Variable Annuities

Allow you to invest in market-based options. Your returns—and future income—can fluctuate depending on market performance.

Indexed Annuities

Offer returns based on a market index (like the S&P 500), with some protection against losses and potential for higher returns than fixed annuities.