Weekend Reading: A Reliable Income Choice You’re Probably Ignoring

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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Weekend Reading

Despite the protection they can offer the fixed-income portion of your portfolio, annuities have spent their fair share in the “no” pile. This is mainly due to the reputation of high-fee variable annuities, but if you’re looking for a new route around today’s high interest rate environment, remember not all annuities are created equal.


The three types of annuities highlighted in this article include:

📌 Deferred fixed annuities: As the “vanilla” flavor of annuities, they are purchased by making a deposit with an insurer, which then turns into a tax-deferred credit (or yield) to your account each year. Yields typically mirror the return of mortgage bonds, however, withdrawals are limited to 10 percent of the principal year.

📌 Deferred indexed annuities: While similar in nature to fixed annuities, the return for indexed annuities is calculated in reference to an external index, such as the stock market. As such, you do not earn the full return of the index, but a credited amount based on a formula and performance. Money may also be limited to a 10 percent withdrawal.

📌 Immediate annuities: While fixed annuities and indexed annuities are most often utilized for long-term investing, if you need money sooner, immediate annuities are an option. Upon depositing money with an insurer, you receive guaranteed, regular payments for the rest of your life, which include both income and a return of your principal.

Maintain an open mind: You may have turned away from annuities for the last decade, but given shifting interest rates and an evolving product landscape, it could be time for a second look.