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Welcome to Annuity Explainer, where we provide unbiased, educational content on how annuities work.
An annuity is a financial contract where you pay a premium in exchange for guaranteed future payments.
Annuities can be a valuable source of retirement income, but it’s important to understand the nuances.
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What are Annuities?
Types of Annuities
A fixed annuity provides you with a guaranteed return of the principal you paid into it, along with a minimum amount of interest. Your payments stay the same for the full contract length, so you will know how much income to expect.
Fixed
Take a look at seven mistakes people make when assessing whether to buy an annuity.
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Annuities
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Variable
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Variable annuities are somewhat different. Your principal investment into the annuity is guaranteed but your returns are not. When investing, you’ll be able to choose among different investments, and your returns will be dictated largely by how those investments perform. There is a degree of risk here.
Another important distinction among annuities is whether it’s an immediate annuity or deferred annuity. An immediate annuity will begin payments to you as soon as you make the initial investment. Deferred annuities are money you’ll receive starting in the future.
Related Resources
Annuities generally fall into two categories:
fixed annuities and variable annuities.
Annuities generally fall into two categories: fixed annuities and
variable annuities.
Variable
X
Variable annuities are somewhat different. Your principal investment into the annuity is guaranteed but your returns are not. When investing, you'll be able to choose among different investments, and your returns will be dictated largely by how those investments perform. There is a degree of risk here.
Another important distinction among annuities is whether it's an immediate annuity or deferred annuity. An immediate annuity will begin payments to you as soon as you make the initial investment. Deferred annuities are money you'll receive starting in the future.
Related Resources
