Outliving your money
A lifetime income annuity pays until you die, however long that takes. It’s the only retirement tool that gets better the longer you live.
Annuities
Income that doesn’t stop when the paychecks do.
An annuity is a contract with an insurance company: you give them a sum of money, and they guarantee to pay you back on terms you agree to up front. That’s the whole idea. Everything else is detail.
Why people use them
Three problems an annuity is genuinely good at solving.
Market timing you can’t control
A downturn in the first years of retirement does disproportionate damage. Protected principal means a bad year is a flat year, not a permanent loss.
Not knowing what you can spend
A guaranteed floor tells you the number you can spend without doing math every quarter. That certainty is worth something on its own.
The types
Not all annuities are the same product.
The word covers several very different contracts. Here’s what separates them.
Fixed annuities
A set interest rate for a set term. Predictable, simple, and the closest thing to a CD that an insurance company offers. You know the number before you sign.
Best when: you want certainty over upside.
Fixed indexed annuities
Growth is credited based on an index’s performance, subject to a cap or participation rate, with a floor of zero. You give up some of the upside in exchange for never taking a market loss.
Best when: you want growth potential but can’t afford a drawdown.
Income annuities
You exchange a lump sum for a stream of payments, either starting now or at a future date you pick. The payment amount is contractually guaranteed.
Best when: you want a pension you didn’t get from an employer.
Annuities with living benefits
A rider added to the contract that guarantees a lifetime withdrawal amount, and in some cases increases the benefit if you need long-term care.
Best when: you want income guarantees and access to the balance.
The honest part
What an annuity gives up.
Anyone who tells you an annuity has no downside is selling, not advising. Here’s what you’re trading away.
- Liquidity. Most contracts limit how much you can withdraw during a surrender period, typically the first several years. Money you might need soon does not belong in one.
- Full market upside. Caps and participation rates mean you won’t capture an entire bull run. Protection has a price.
- Simplicity. Indexed contracts have moving parts — caps, spreads, crediting methods. You should understand all of them before you sign, and we’ll walk through every one.
- Carrier dependence. Guarantees are only as good as the insurance company behind them, which is why carrier financial strength is part of the recommendation, not an afterthought.
Find out whether one belongs in your plan.
Sometimes the answer is no. We’ll tell you either way, and show you the math behind it.