An annuity is a contract with an insurance company.

You pay one or more premiums, and in return, the insurer agrees to provide income payments in the future

(either immediately or deferred).

A fixed index annuity credits interest based on the performance of a market index (like the S&P 500), subject to a participation rate, caps, or spreads, while protecting your principal from market losses.

An annuity can provide a guaranteed, steady stream of income you can’t outlive supplementing Social Security, pensions, or other savings.

Fixed annuities (a guaranteed interest rate)

Fixed index annuities (growth tied to an index, with downside protection)

Immediate annuities (payments start almost immediately)

Deferred annuities (payments begin at a future date)

With a properly structured FIA, you should not lose your principal due to negative index performance.

However, there may be fees, caps, or spreads that limit gains

These are terms insurers use to limit how much of the index’s gain you’ll receive:

• Participation rate The percentage of index gain you are credited
• Cap The maximum rate the annuity will credit
• Spread (or margin) A fee subtracted from the gross gain before crediting your annuity

Yes.

Common fees include surrender charges (for early withdrawal), administrative fees, mortality & expense risk charges, and rider fees (if you add features).

A surrender period is a time during which you pay extra charges (surrender charges) if you withdraw more than an allowed amount. These charges often decrease over time

Yes, but only up to a limited amount (often ~10% per year) without penalty. Taking more may trigger surrender charges, loss of credited interest, or tax penalties.

Earnings are tax-deferred while inside the annuity. When you withdraw or begin income payments, earnings are taxed as ordinary income (not at capital gains rates).

Yes. Most annuities allow you to name a beneficiary who will receive remaining contract value or death benefit if you pass away before payments begin.

It depends on your goals, but many people consider buying in their 50s to 70s when they’re closer to needing income, or when they want to secure a portion of their assets for guaranteed income.

Look at financial strength ratings from agencies like A.M. Best, Moody’s, or S&P.

Because annuities are long-term contracts, the insurer’s ability to fulfill guarantees matters.

Annuity guarantees are backed by state guaranty associations, but coverage limits vary by state and insurer.

The strength and reputation of the issuing company are still critical.

Some annuities or riders may adjust payments over time, but many annuities provide fixed income.

If inflation is a concern, you’ll want a product or strategy that accounts for cost-of-living increases.

Some annuities allow 1035 exchanges (swapping one annuity for another) without tax consequences.

Always review your contract and consult a professional.

Yes. Many annuities allow you to “annuitize” or convert the lump-sum value into income payments for life or a defined term.

Riders are add-on features (for extra cost) like lifetime income guarantees, long-term care benefits, or enhanced death benefits. Use them only when they align with your goals.

Start with a consultation. We’ll assess your financial goals, risk tolerance, income needs, and help select and customize an annuity that fits your retirement plan.