Let's Talk About Your Money's Next Chapter
Annuities aren't one thing — they're a family of tools, each built for a different job. Some grow your savings with guaranteed rates and no market risk. Others turn a lump sum into income you can't outlive. The right one depends on two questions.
First: are you still growing your savings, or are you ready to turn them into income? Second: how much market risk are you comfortable with? Your answers point to very different products — and we'll walk through each one.
Growing Your Savings
Multi-Year Guaranteed Annuity (MYGA)
A CD from an insurance company — same simplicity, better rates, tax-deferred growth.
- Guaranteed rate locked for 3–10 years
- Top 5-year rates: 5.50–5.75% APY vs. CDs at 4.25–4.50%
- 100% principal protection — your balance cannot decline
- No annual fees — 0% explicit cost to you
Conservative savers 55+ who want predictable growth. People rolling over maturing CDs who want better after-tax yields.
Fixed Indexed Annuity (FIA)
Market-linked growth with a 0% floor — you participate in gains but can't lose to downturns.
- 0% floor — principal protected from market losses
- Growth linked to S&P 500 or other indices, 8–14% annual cap range
- Optional income rider (GLWB) for guaranteed lifetime income
- No annual fees on base contract — rider costs 0.95–1.25%/yr if elected
- Interest credit bonus available on select index strategies — the multiplier varies by which market you choose
Pre-retirees 50–65 who want growth without downside risk. Anyone who wants a personal pension through an income rider.
RILA (Buffered Annuity)
Accept a small cushion of risk for significantly higher growth caps than an FIA.
- Buffer absorbs first 10–20% of losses; you keep the rest protected
- Higher caps: 12–14% vs. FIA's 8–10%
- Multiple index options — S&P 500, Russell 2000, MSCI EAFE, Nasdaq
- Fastest-growing annuity category — 20% sales growth in 2025
Moderate-risk savers comfortable with: "I'll accept losing up to 10% in exchange for capturing up to 15%." A bond alternative with upside.
Turning Savings Into Income
Immediate Annuity (SPIA)
Hand over a lump sum, receive guaranteed monthly income for life — starting in 30 days.
- Income starts within 30 days — no waiting period
- Payments guaranteed for life, regardless of market conditions
- Higher payouts than bonds or CDs thanks to mortality credits
- No annual fees — cost embedded in payout calculation
Retirees 65–80 who need guaranteed income now. Anyone with a gap between Social Security and monthly expenses.
Deferred Income Annuity (DIA / QLAC)
Buy it now, income starts later — longevity insurance for your 80s and 90s.
- You choose when income starts — age 65 to 85
- QLAC option reduces your RMDs immediately — up to $210,000 excluded
- Higher payouts than SPIA for the same premium (longer deferral = bigger mortality credits)
- Return of Premium protects beneficiaries if you pass before payments begin
Pre-retirees 55–70 who want guaranteed income starting at 75–85. Anyone with a large IRA who wants to reduce required minimum distributions.
A Word About Variable Annuities
Variable annuities place your money directly in market sub-accounts — with full market risk and layered fees that typically total 2–4% per year. On a $200,000 contract, that's $4,000–$8,000 annually that doesn't compound in your favor. Worse: buying a VA inside an IRA means you're paying for tax deferral you already have.
We rarely recommend new variable annuities. If you already own one, a 1035 tax-free exchange to a lower-cost product may save you thousands annually. We'll run the comparison at no cost.
The Honest Guide to Annuities
Annuities have a reputation problem — and some of it is earned. High-fee products get sold to people who don't need them. But the category itself includes some of the safest, simplest financial tools available. Here's what each one actually does.
Who It's For
Conservative savers aged 55+ who want predictable, guaranteed growth. People rolling over CDs or maturing bonds who want better after-tax yields. Pre-retirees parking safe money for 3–10 years. Anyone who's maxed out IRA/401(k) and wants additional tax deferral.
MYGA vs. CD — The Real Difference
Same concept: lock in a rate for a fixed term. The differences — MYGAs currently pay 5.50–5.75% APY vs. CDs at 4.25–4.50%. Growth is tax-deferred (no annual 1099 until you withdraw). The tradeoff: not FDIC insured — backed by the insurer's claims-paying ability and state guaranty funds (typically $250,000). Most contracts allow 10% annual free withdrawals without penalty.
The rate locks both ways. If interest rates rise after you buy, you're stuck at your locked rate. And earnings are taxed as ordinary income on withdrawal — not capital gains rates. For money you might need within 3 years, a high-yield savings account is more flexible.
Who It's For
Pre-retirees (50–65) who want market participation without downside risk. Conservative savers frustrated with low CD returns but wary of stock market losses. People seeking guaranteed lifetime income through an income rider — like creating your own pension.
The Income Rider — What "7% Guaranteed" Actually Means
The "7% guaranteed" on FIA ads is the income base growth rate — a calculation number, not money you can withdraw. Your actual account value may grow much less. Example: $100,000 deposit, 7% roll-up, 10 years later — income base is $170,000 but your real account value might be $130,000. The $170,000 determines your guaranteed annual income ($8,500/year for life at 5%). If you surrender, you get $130,000 — not $170,000.
Rider fees (0.95–1.25%/yr) can erode your account value in flat or down markets. Always ask: "What is my projected account value at year 10 — not the income base?" If an agent can't show you both numbers side by side, that's a red flag.
Who It's For
Moderate-risk savers with 5–10+ year time horizons who want more growth than bonds but less risk than stocks. People comfortable trading a small amount of downside for higher caps. Tax-conscious savers using a RILA as a bond alternative.
Buffer vs. Floor — Two Ways to Limit Loss
Buffer: the insurer absorbs the first X% of losses. 10% buffer = market drops 15%, you lose only 5%. Floor: sets your maximum possible loss. -10% floor = market drops 40%, you still only lose 10%. Buffers protect better in mild downturns. Floors protect better in crashes. The tradeoff: floor options come with lower growth caps.
Unlike FIAs, you can lose money in a RILA. A 10% buffer means a 30% market drop costs you 20%. RILAs are SEC-registered securities — state guaranty fund protection may not apply in all states. Know your worst case before you sign.
Who It's For
Retirees aged 65–80 who need guaranteed income now to cover essential expenses. People with a gap between Social Security and monthly living costs. The sweet spot is age 70–80, where mortality credits produce the highest payout rates.
Why Payouts Beat Bonds
A SPIA pays more than bonds or CDs for the same deposit because of mortality credits — the insurer pools risk across thousands of people. Those who die early subsidize those who live longer. A 70-year-old male can receive roughly 8.9% annual payout on a life-only SPIA. No bond pays that.
The biggest hurdle: SPIAs are irrevocable. After the free-look period (10–30 days), you cannot get your lump sum back. Never annuitize money you might need for emergencies. Only convert the portion needed for essential expenses, and keep a separate liquid reserve.
Who It's For
Pre-retirees (55–70) who want to lock in guaranteed income starting at 75–85. People with large IRA balances who want to reduce RMDs — a $200,000 QLAC at age 70 can cut annual RMDs by roughly $8,000. Married couples who want spousal income protection deep into retirement.
How the QLAC Tax Benefit Works
A QLAC purchased with IRA funds is excluded from your RMD calculation until payments begin. SECURE Act 2.0 raised the limit to $210,000 per person ($420,000 per couple). Payments must begin by age 85. Return of Premium provisions protect your beneficiaries if you die before the income starts.
You're locking away money for 10–20+ years. If interest rates rise or markets boom, that capital can't participate. Only use a DIA for the portion of retirement income you want guaranteed regardless of everything else. The rest should stay flexible.
Questions I Hear Every Week
"My annuity guarantees 7% — isn't that better than the stock market?"
That 7% is the income base growth rate — a calculation used to determine your annual withdrawal, not a return on your savings. Your actual account value may grow much less. Always ask to see both numbers side by side.
"I heard annuities are bad."
Some annuities are badly sold — especially high-fee variable annuities pushed inside IRAs that already have tax deferral. But a MYGA with 0% fees and 5.50% guaranteed? That's one of the safest financial tools available. The product category is broad. The question is which type, not whether.
"I can't touch my money for years."
Most annuities allow 10% annual free withdrawals without surrender charges. Many also waive penalties for nursing home confinement or terminal illness. Full liquidity? No — but "completely locked away" is a myth for most contracts.
"Where are all the fees hiding?"
It depends on the product. MYGAs and SPIAs have 0% explicit fees. FIAs charge nothing unless you add an income rider (0.95–1.25%/yr). Variable annuities are the fee problem — 2–4% annually across stacked layers. Always ask for the total all-in annual cost.
Questions to Ask Any Annuity Agent
Including us. These protect you from the most common annuity mistakes.
- What is the total all-in annual cost — including every fee layer, not just the headline rate?
- Show me my projected account value at year 10, not just the income base.
- What is the guaranteed minimum cap or participation rate — not the current illustrated rate?
- If I need to walk away in year 5, what do I actually get back after surrender charges?
- Am I buying this inside an IRA? If so, what additional benefit does the annuity's tax deferral provide?
- What is the carrier's AM Best rating, and what is my state's guaranty association limit?
A good advisor will answer all of these without hesitation. We do.
Not Sure Where to Start?
That's exactly what the first conversation is for. No pressure, no jargon, no sales pitch — just a clear picture of where you stand and what makes sense for your situation.
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