Fixed Annuities: Safe, Guaranteed Growth 🔒
Like a CD with better rates and guaranteed lifetime income. Your money grows at a fixed rate with zero market risk.
🌰 In a Nutshell
A fixed annuity guarantees your money will grow at a set interest rate (like 4% every year). No matter what happens in the stock market, you cannot lose money.
Think of it like: A supersized savings account or CD that also converts into guaranteed lifetime income when you retire.
What Is a Fixed Annuity?
A fixed annuity is the safest type of annuity. Here's how it works:
You Give Money to the Insurance Company
You deposit a lump sum (like $100,000) or make regular payments.
Your Money Grows at a Guaranteed Rate
The insurance company locks in a fixed interest rate (like 4% per year). This rate doesn't change no matter what happens in the stock market.
You Receive Guaranteed Income
When you're ready to retire, the annuity converts to guaranteed monthly income—for life or for a set number of years.
Simple analogy:
It's like putting money in a safe that pays you interest—and later, that safe opens and pays you a guaranteed paycheck for the rest of your life.
Key Features of Fixed Annuities
100% Safe
Your principal is guaranteed. You cannot lose money in market crashes. Insurance companies are highly regulated for safety.
Guaranteed Interest Rate
Rates typically range from 3% to 5% per year. This is locked in for the contract term and cannot decrease.
Tax-Deferred Growth
Your money grows tax-free until you withdraw it. You don't pay taxes on the growth each year like you would with CDs or savings.
Predictable Income
Convert your annuity into guaranteed monthly income. You'll know exactly how much you'll receive every month for life.
Real Example: How a Fixed Annuity Grows
Meet John, Age 60
John deposits $200,000 into a fixed annuity earning 4% guaranteed interest per year.
Then at Age 70:
John converts his $296,049 into guaranteed lifetime income:
Pros & Cons of Fixed Annuities
✅ Benefits
- ✓ Zero risk—cannot lose principal
- ✓ Guaranteed interest rate
- ✓ Tax-deferred growth
- ✓ Guaranteed lifetime income option
- ✓ Simple and easy to understand
- ✓ Perfect for conservative investors
⚠️ Drawbacks
- • Lower growth than stocks or indexed annuities
- • Surrender penalties if withdrawn early (typically 5-10 years)
- • May not keep up with inflation
- • Less liquidity than savings accounts
- • Income taxed as ordinary income (not capital gains)
Who Should Choose a Fixed Annuity?
✓ You're close to retirement (within 5-10 years) and want safety over growth
✓ You can't tolerate any market risk or volatility
✓ You want predictable, guaranteed growth better than savings accounts or CDs
✓ You need guaranteed lifetime income to supplement Social Security or pensions
✓ You value simplicity and don't want to manage investments
Fixed Annuity vs Other Options
Find Your Best Fixed Annuity Rate
Compare guaranteed rates from top-rated insurance companies. See exactly how much income you can receive.
🔒 Free quotes. No obligation. Protect your retirement with guaranteed safety.