Fixed Annuities

Fixed annuities are the most popular type of annuities with retirees because they are similar to CD-like investments, and like CDs, pay guaranteed rates of interest. In most cases, however, annuities pay higher rates of return than CDs. With these annuities, a pre-retiree invests a certain dollar amount into the annuity and the issuing company provides them with a guaranteed, tax-deferred interest rate.

Tax deferral is a huge advantage annuities provide versus CDs, because the tax deferral allows investors to gain interest off all of the money in their account, rather than the lesser amount they would have after paying yearly taxes. Fixed annuities also provide retirees with payment flexibility, giving them the option to choose when they receive payments off the annuity and for how long. Payout options range from a predetermined number of years to the rest of your life. If you don’t like risk but want a better return on money than CDs, fixed annuities may be the option for you.