Annuities are an important part of most retirement plans. There is a good reason for this. Money put into an annuity is protected from stock market fluctuations, economic fluctuations, and in most cases it's even protected from lawsuits and creditors. An annuity can help you create a retirement income that is secure, that you cannot outlive, and that connot be lost due to economic or political changes.

Types of Annuities

There are three major types of annuities. In each type of annuity the money you invest is called your premium.

The first type is called an indexed annuity. This is the most popular annuity. In an indexed annuity you can grow back the money you may have lost in your 401k or IRA. As the economy improves your annuity can increase in value. If the economy takes a downturn your annuity will not take a downturn. Your annuity principle and earnings will maintain value. An indexed annuity is safe, liquid, and your earnings are tax-deferred.An annuity could enable you to make the most of your retirement.

The second type is a (MYGA) Multi Year Guaranteed Annuity.  Some folks have referred to this as a CD Annuity, however a MYGA has far more benefits than a CD. Fixed rate annuities are safe and popular because they provide tax-deferred accumulation plus tax-favored income. With a fixed rate annuity you have a guaranteed interest rate for the entire term. Your money grows faster than in a CD or money market account because taxes are deferred.

A MYGA has a fixed rate of interest that is guaranteed over a fixed period of years.  MYGA's are safe and popular because they provide tax deferred accumulation plus tax favored income.  Because of tax deferral on earnings MYGA's grow much faster than CD's.

The third type is an immediate annuity. With an immediate annuity you invest a single lump sum of money. You then immediately begin receiving an income. You can choose how much monthly income you want to receive and the number of years you want to receive that income. The most common choice is an income for life. With the income for life your guaranteed income is paid to you even after your lump sum of money is used up. This type of annuity can be structured so your spouse also receives a lifetime income and your heirs receive any unused portion of the lump sum you invested. 

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