Is An Annuity Right For Me?

“Is an annuity right for me?” and “Is an annuity a good investment?” are two popular questions asked at  Like any other financial product, determining if an annuity is right for you can be answered by understanding what your goal is with the money you are considering investing in the annuity.

Annuities are the right investment option for some financial goals, and the wrong investment option for other financial goals.  Below we list a few financial goals that Fixed and Fixed Index Annuities are right for, and a few goals that these types of annuities are wrong for.

Investment Goal Annuity Right?
I need guaranteed income Yes
I need immediate liquidity to more than 10% of my balance per year No
I want tax deferred growth Yes
I only want to make a short term investment No
I have time to let my interest compound and grow Yes
I need immediate monthly income from my investment Yes
I want to use this money before I’m 59.5 years old No
I need an interest rate better than a bank saving account Yes
I’m looking for a high risk for high return product No
I want to guarantee my principal and interest-earned against any loss Yes
Leaving money to my heirs is important Yes
I want to share in the gains of the stock market Yes
I want to avoid the risk of the stock market Yes

Fixed and Fixed Index Annuities are the perfect solution for many of your retirement goals. When these annuity products are part of a complete retirement strategy, they can provide you with guaranteed income and impressive interest potential, all while offering you protection against loss of value due to stock market fluctuations.

If you’d like to learn how an annuity can allow you to participate in some of the upside gains of a growing stock market, while protecting you against losses in a stock market down-turn, please click here to learn more about Fixed Index Annuities.

If you’d like to learn about how an annuity can provide you monthly income payments for the rest of your retirement, please click here to learn more about Fixed Annuities.

If you’d like to see a few real world examples of how annuities have helped people plan for their retirement, please click here.

Liquidity Considerations

When evaluating the liquidity of financial products, it’s important to determine how much liquidity your situation requires. Most financial products allow access to 100% of your current balance, but liquidity is determined by the cost of withdrawing that money from your account.  Liquidity costs are usually realized as commissions, fees, penalties, and/or taxes.

Some financial products like bank savings accounts offer 100% liquidity without any cost, and other products like Fixed or Fixed Index Annuities offer fee-free liquidity up to a specific percentage of your account balance (often 10% per year).

Determining how much liquidity you require begins with defining why you need liquidity at all. Some investors truly have a need for 100% liquidity of their funds.

Example:  Bob has $100,000 to invest today, but plans to use all $100,000 of that money to help his daughter by a new house in 1-2 years.  Bob will need 100% liquidity after one year.

However, some investor’s liquidity requirements are not “full balance liquidity”. They require liquid access to their funds mainly for everyday emergencies like a new water heater, car repairs, or unexpected medical expenses.  In these situations, it is unlikely that they will need liquid access to all 100% of their investment.

Example:  Mary has a fixed annuity with a 10% free-withdrawal allowance and a $200,000 balance.  She is unexpectedly hit with an $8,000 roof repair expense. Mary will be able to withdraw up to $20,000 from her annuity without incurring any penalty fees.  In this case, the annuity provided enough liquidity for Mary’s home repair expense and still has liquidity left for Mary to use for future emergency expenses.  Mary will continue to have access to 10% of her annuity funds per year during her “surrender period” (usually 7-10 years), then she will have access to 100% of her annuity balance, fee-free, after her surrender period ends.

*Some financial products including many Fixed and Fixed Index Annuities allow for 100% fee-free access to your funds in cases of catastrophic illness or death of the annuitant. In these emergency situations you have full fee-free access to your funds.

Finally, the money invested in a Fixed or Fixed Index Annuity is never at any time locked away from you.  You will always have access to your funds.  If you do come across a situation where you need to withdraw an amount above your free-withdrawal limit, you can do so, but you may be subject to surrender fee charges.  Click here to learn more about surrender fees.

Do You Need More Advice On Annuities? works with a network of licensed annuity advisors that can provide you expert information on all your annuity questions.  Your advisor can also help you compare the top annuity products offered by the Nation’s best insurance companies.  Our network of advisors will provide you a no obligation quote on all the annuity products that are best suited for your retirement goals.  To get connected to a licensed annuity advisor in your area, please fill out the information form below.

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Need more information about annuities?

What Is An Annuity | Fixed Annuity Guide | How Annuities Compare to Other Investments | Pros and Cons of Annuities