Annuities

For decades, annuities have helped retirees create steady, reliable income. As retirement marks the transition from building wealth to drawing from it, many individuals begin prioritizing stability and predictability over growth alone. While market-based investments remain important for long-term appreciation, retirees often seek strategies that can help reduce volatility and support consistent cash flow. Annuities can play an important role in that shift.

An annuity is a contract issued by an insurance company designed to provide income, typically during retirement. It can function as a protective layer around a portion of your assets. Depending on the specific type, an annuity may offer features such as principal protection, tax-deferred growth, and the option to convert savings into guaranteed lifetime income, backed by the financial strength and claims-paying ability of the issuing insurer.

Market volatility is one of the biggest risks retirees face—especially when taking withdrawals. Experiencing losses early in retirement can place added pressure on a portfolio. Certain annuities, including fixed and fixed indexed annuities, are structured to reduce or eliminate direct market exposure. Allocating a portion of retirement assets to insured products may help smooth overall portfolio fluctuations and provide a more stable income foundation.

Predictable income is another key advantage. Many annuities offer payout options that deliver income for a set period or for life. This can help cover essential living expenses such as housing, utilities, and healthcare, while allowing other investments to remain positioned for growth and flexibility.

Annuities are not meant to replace traditional investments but to complement them. When combined thoughtfully within a diversified retirement strategy, insured and market-based assets can work together to balance income security with growth potential.

Learning how annuities function is an important step in deciding whether they align with your retirement objectives and comfort with risk.