Annuities
Contract-based retirement income tools — read the terms first.
Fixed indexed and multi-year guaranteed annuities are insurance contracts, not market accounts. The terms of the contract do the heavy lifting.
Two structures
FIA and MYGA at a glance
Fixed Indexed Annuity (FIA)
- Interest credited from index movement, limited by caps and participation rates the carrier can adjust.
- A floor protects credited value from index declines.
- Surrender charges typically apply for years; withdrawals beyond the free amount reduce value.
Multi-Year Guaranteed Annuity (MYGA)
- A fixed crediting rate set by contract for a defined term.
- Simpler than an FIA, but the rate applies only for the stated period and renewal rates can differ.
- Early withdrawal typically triggers surrender charges.
Fit
When an annuity deserves a look — and when it doesn't
Annuities can make sense for a defined income floor in retirement. They rarely make sense for money you may need soon, or as a substitute for a diversified plan.