Fixed Annuity

What Is a Fixed Annuity? A Safe Way to Grow and Protect Your Retirement Income

If you’re looking for a guaranteed way to grow your money without the ups and downs of the stock market, a Fixed Annuity might be exactly what you need.

In today’s uncertain financial world, many people are searching for stable, low-risk options to help them prepare for retirement. Fixed annuities offer guaranteed returns, predictable income, and peace of mind—making them a popular choice for conservative investors and retirees alike.

In this blog post, we’ll break down what a fixed annuity is, how it works, and why it might be a smart part of your financial plan.

What Is a Fixed Annuity?

A Fixed Annuity is a contract between you and an insurance company. In exchange for a lump-sum payment or a series of payments, the insurer promises to:

Grow your money at a guaranteed fixed interest rate, and/or
Pay you a steady income, either for a set number of years or for the rest of your life

Key Features:

How Does a Fixed Annuity Work?

1. Accumulation Phase

This is the period when your money earns interest. Your funds grow tax-deferred, meaning you don’t pay taxes on your gains until you withdraw them.

1. Income (Payout) Phase

When you’re ready to start receiving income, you can turn your annuity into regular payments—either for a certain number of years, for life, or as needed (depending on the product).

Benefits of Fixed Annuities

Safety & Security

Your principal is protected from market volatility. You’ll know exactly what you’re earning and what to expect.

Guaranteed Growth

Earn a fixed interest rate, typically higher than what you'd get from traditional bank CDs or savings accounts.

Tax-Deferred Earnings

Unlike taxable accounts, your interest grows tax-deferred until withdrawal—potentially increasing your overall return.

Predictable Retirement Income

Many retirees use fixed annuities to create a guaranteed income stream they can’t outlive.

Flexible Options

Choose how you receive payments: monthly, annually, or as a lump sum. Some annuities allow income for life, which helps cover essential expenses in retirement.

Fixed Annuity vs. Other Financial Products

Feature	Fixed Annuity	Bank CD	Stock Market
Risk Level	Low	Low	High (Market-dependent)
Returns	Moderate, guaranteed	Low, guaranteed	Variable, not guaranteed
Tax-Deferred Growth	Yes	No	Depends on account type
Lifetime Income Option	Yes	No	No

Who Should Consider a Fixed Annuity?

A Fixed Annuity might be a great fit if you:

Are close to or in retirement
Want to protect your principal
Need a guaranteed income stream
Prefer stable growth over risky investing
Want to diversify away from stock market exposure

Things to Consider

Like any financial product, Fixed Annuities aren’t for everyone. Keep in mind:

Early withdrawal penalties may apply if you access funds before age 59½ or before the contract’s surrender period ends
Interest rates vary by insurer and product
Annuities are not FDIC-insured, but are backed by the financial strength of the issuing insurance company

That’s why it’s important to work with a licensed professional who understands your goals and can help you compare options.