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Annuity Awareness

06/14/2023 Written by: Kristine Simmons


The month of June is designated Annuity Awareness Month – a campaign generated to educate consumers on annuities. An annuity is an important component of your long-term financial plan. It is an investment option that can provide a guaranteed income throughout retirement.

Annuities are purchased for a set period with specific payout amounts based on the amount invested. According to the National Council on Aging, “annuities may be good for people that want the option of a lifetime income during retirement. Annuities are good options for anyone concerned about outliving their savings.” 1

 How Do Annuities Work?

  1. Select the annuity best for you

  2. Pay into the plan through an insurance company

  3. The insurance company invests your payment – earning interest for the annuity

  4. During the payout period, payment is made up of the return of the original investment plus interest (minus fees)

  5. Income is received during retirement – money is not accessible until the annuity payout period 

What are the Types of Annuities?

  • Immediate – As you may guess, with an Immediate Annuity, payout starts soon after a single premium payment.

  • Deferred – Deferred Annuities are paid on a future set date.

  •  Fixed – Payout for Fixed Annuities are based on guaranteed interest rates on contributions. 2 With this type of annuity, payments are fixed and typically, the insurance company bears the investment risk.


  • Indexed – This is a type of contract between you and the insurance company. An indexed annuity provides returns linked to market index performance. 3

  • Variable – Contrasted to the Fixed Annuity, Variable Annuities pay interest that can fluctuate based on the performance of the investment portfolio.

Contact one of our trusted advisors to help you determine which annuity works best with your long-term financial and retirement goals.


 1 https://www.ncoa.org/article/what-is-an-annuity-and-how-does-it-work

2 https://www.investopedia.com/terms/f/fixedannuity.asp

3 https://www.investor.gov/introduction-investing/investing-basics/glossary/indexed-annuities#:~:text=An%20indexed%20annuity%20is%20a,the%20annuity%20(payout)%20phase.





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