Annuities

Protect your future with annuities that offer predictable payouts and long-term financial security.

How an Annuity Can Help Create a Private Pension in Retirement

For many retirees, one of the biggest challenges is creating a reliable income stream that will last throughout retirement. While traditional pensions once provided guaranteed monthly income, they have become increasingly rare. As a result, many people are looking for ways to create their own private pension. One solution that may help is an annuity.

A group of three college students are laughing and looking at their phones.

What Is an Annuity?

An annuity is a contract with an insurance company designed to provide income in retirement. In exchange for a lump-sum investment or a series of contributions, the insurance company agrees to make payments according to the terms of the contract. Depending on the type of annuity, income can begin immediately or at a future date. The primary purpose of an annuity is to help provide predictable income and reduce the risk of outliving your retirement savings.

Creating Your Own Pension

A traditional pension provides regular income for life. Certain annuities can work in a similar way by converting a portion of your retirement savings into guaranteed income payments.

These payments can help cover essential retirement expenses such as:


  • Housing costs
  • Utilities
  • Food and groceries
  • Healthcare expenses
  • Insurance premiums



By creating a dependable source of income, an annuity can help provide greater financial confidence and stability during retirement.

Protection Against Outliving Your Money

One of the greatest concerns retirees face is longevity risk—the possibility of living longer than expected and depleting their savings.



With people living longer than ever, retirement can easily last 20 to 30 years or more. Annuities with lifetime income options can help address this challenge by providing guaranteed income for as long as you live, regardless of market conditions.


This can help ensure that a portion of your retirement income remains available throughout your lifetime.

Reducing Retirement Income Uncertainty

Many retirees rely on investment accounts such as 401(k)s and IRAs for retirement income. While these accounts can offer growth potential, they are also subject to market fluctuations.



An annuity can help balance that uncertainty by providing a predictable income stream that is not affected by daily market volatility. This can make it easier to budget and manage retirement expenses with confidence.

A group of three college students are laughing and looking at their phones.
A group of three college students are laughing and looking at their phones.

Complementing Social Security

Social Security provides an important foundation for retirement income, but it may not be enough to cover all living expenses. An annuity can supplement Social Security by creating an additional source of guaranteed income.



Together, Social Security and annuity income can function much like a traditional pension, helping retirees meet their essential financial needs.

Is an Annuity Right for You?

Annuities are not appropriate for everyone, but they can be a valuable tool for individuals seeking predictable retirement income and protection against longevity risk.



If your goal is to create a private pension and enjoy greater financial security in retirement, an annuity may be worth exploring. A financial professional can help determine whether an annuity fits your retirement income strategy and long-term goals.

Annuities

Frequently Asked Questions

  • What exactly is an annuity?

    An annuity is a financial product issued by an insurance company that provides guaranteed income, either right away or in the future. It can help supplement Social Security and other retirement savings.

  • Are annuities a safe investment?

    Fixed annuities offer guaranteed interest and predictable payments, making them low-risk. Variable and indexed annuities come with higher risk but also the potential for higher returns. Your risk level depends on the type you select.

  • At what age can I access the money in an annuity?

    You can technically access money from an annuity at any age, but withdrawals made before age 59½ may come with a 10% IRS penalty on earnings, along with income taxes. After age 59½, you can take withdrawals without the IRS penalty, and you’ll start receiving income based on your annuity contract — right away with an immediate annuity or later with a deferred annuity. Many annuities also have surrender charges during the early years of the contract, regardless of your age.

  • Are annuity payments taxable?

    Earnings inside an annuity grow tax-deferred, but withdrawals are generally taxed as ordinary income. The exact amount depends on how the annuity was funded.

  • Do I have to pay fees for an annuity?

    Sometimes, in particular for variable and indexed annuities. Fees may include administrative charges, investment management fees, and costs for optional riders. We can help walk you through your options, including the fee structure, before you purchase a plan.