The Simple Idea
You give an insurance company a lump sum. The company promises to pay you back later — as monthly checks for life, for a set number of years, or in one sum. In short: savings in, income out.
Every promise a carrier makes rests on one thing: the carrier's ability to pay claims. A promise is only as strong as the company behind it. No company is failure-proof. Keep that in mind through every page on this site.
Two Phases
Phase 1: growth. Your money sits with the carrier and grows. With a fixed annuity, it grows at a set rate the carrier promises. With an indexed annuity, growth links to a market index.
Phase 2: income. You flip the switch. The carrier starts paying you. You pick monthly checks for life or payments for a set term.
Who Annuities Suit
- You want steady income. Monthly checks you can plan around.
- You fear outliving your money. Some annuities pay for life, no matter how long you live.
- You have money you will not need for years. This is the big one — see below.
Who Should Think Twice
- You may need the money soon. Early withdrawals trigger surrender charges.
- You want full market growth. Annuities trade top-end growth for guardrails.
- You dislike lock-ups. This money sits still for years. If that itches, skip it.
The long-term warning, once more: annuities punish early exits. Only fund one with money you can leave alone for many years.
Frequently Asked Questions
How is an annuity different from a savings account?
A savings account lets you take money anytime. An annuity locks it up for years in exchange for promised growth or income. And bank deposit insurance does not cover annuities.
Can I lose money in an annuity?
In a fixed annuity, the carrier promises to guard your principal — a promise only as strong as the carrier. In a variable annuity, you can lose money to the market. I do not offer variable annuities.
What happens to my annuity when I die?
It rests on the contract. Some pay the rest to your beneficiary. Some stop. We will read the fine print together before you buy anything.
Are annuity payouts taxed?
Gains you take out are most often taxed as income. This is general information, not tax advice. Talk to a tax pro for your case.