Retirement Benefits
ANNUITIES
Learn how annuities can work and see how they may help provide principal protection and support retirement income as part of a personalized retirement strategy.
Helping You Understand Your Options
Retirement planning isn't about choosing products—it's about creating a strategy that aligns with your goals, your timeline, and your comfort with risk.
Annuities can be valuable tools for individuals seeking greater income certainty, protection from market volatility, or a way to support long-term retirement income. The key is understanding how they work, the different types available, and whether they may be appropriate for your unique situation.
At Summerlin Benefits Consulting, we believe every financial decision should begin with education. Our role is to help you understand your options so you can make informed decisions with confidence.
What is an Annuity?
An Annuity is an insurance policy designed to help individuals accumulate assets, generate retirement income, or both. Depending on the type of annuity selected, it may offer features such as principal protection, lifetime income payments, or growth opportunities linked to a market index.
Because every annuity is different, understanding the features, limitations, and available options is an important part of determining whether an annuity aligns with your retirement goals.
Types of Annuities
Different annuities can accomplish different goals. Understanding the basic differences may help you determine which options could be worth exploring. Here are a few examples of some of the different types of annuities available:
Fixed Annuities
Designed For:
Pre-determined fixed interest rate over a specified period of time. Can offer principal protection. Often used for conservative savings strategies.
Market Exposure:
No direct market exposure
Principal Protection:
Yes
Fixed Index Annuities
Designed For:
Opportunity for interest based on the performance of a market index while protecting principal from market losses. Can also offer future income benefits, subject to the terms of the contract.
Market Exposure:
Interest may be linked to a market index, but principal is not directly invested in the market.
Principal Protection:
Yes
Immediate Income Annuities
Designed For:
Converting a lump sum into a predictable stream of income that can begin almost immediately. Can have less focus on growth and more focus on lifetime income.
Market Exposure:
May or May not experience market-based growth
Principal Protection:
Depends on contract specifications
Why Some People Consider Annuities
Annuities may be appropriate for individuals who want to:
- Help protect a portion of their retirement savings from market volatility
- Create a more predictable source of retirement income
- Reduce concerns about outliving their income
- Add stability to an overall retirement strategy
- Prepare for future living expenses in later phases of life (ex. long term care needs)
- Leave assets to beneficiaries, depending on the product selected
Every retirement plan is unique. That's why understanding your goals, timeline, income needs, and overall financial picture is an important part of determining whether an annuity may be appropriate.
Not All Annuities Are the Same
One of the most important things to understand is that annuities vary significantly from one policy to another.
Different annuities may offer different:
- Interest-crediting methods
- Income options
- Surrender periods
- Optional riders and benefits
- Liquidity features
- Beneficiary provisions
Choosing an annuity shouldn't be about finding the one with the highest advertised rate—it should be about finding a solution that aligns with your retirement goals and overall financial strategy.
Understanding the "Green Line"
One of the educational tools Stacy uses during her retirement workshops is the Green Line illustration.
It helps explain a simple concept:
What if you had an insurance product that gave you the opportunity to earn interest when a market index performs well, while helping reduce exposure to market losses?
The Green Line illustrates how certain fixed index annuities are designed to balance growth opportunity and principal protection. While you may not receive all of the upside of a rising market, your principal is not reduced because of market declines, subject to the terms of the annuity contract.
Like all retirement strategies, there are tradeoffs. Every fixed index annuity is different, and understanding how a specific product works is an important part of determining whether it aligns with your retirement goals.
Our 4-Step Planning Process
Choosing whether an annuity belongs in your financial strategy begins with understanding your complete retirement picture—
not selecting a product first.
Our planning process is designed to help you evaluate your options in an educational, thoughtful, and personalized way.
Frequently Asked Questions About Annuities
What is an annuity?
An annuity is an insurance product that can help individuals accumulate assets, create a source of retirement income, or both. Depending on the type of annuity selected, it may provide features such as principal protection, lifetime income options, or growth opportunities linked to a market index. Every annuity is different, so understanding the available options is an important part of determining whether an annuity may fit your retirement strategy.
What is the difference between a fixed annuity and a fixed index annuity?
A fixed annuity provides a guaranteed interest rate for a specified period of time, offering predictable growth and principal protection.
A fixed index annuity also provides principal protection but offers the opportunity to earn interest based on the performance of a market index, subject to the terms of the contract. Your money is not directly invested in the stock market, so market declines do not reduce your principal because of market performance.
The right option depends on your retirement goals, timeline, and income needs.
Can I lose money in a fixed index annuity?
A fixed index annuity is designed to protect your principal from market losses. While market declines do not reduce your principal because of market performance, withdrawals before the end of the surrender period or optional riders may affect the value of your annuity. Every contract is different, so it's important to understand the terms before making a decision.
Are annuities only for retirees?
No. Many people begin exploring annuities several years before retirement as part of their long-term retirement income strategy. The timing depends on your financial goals, retirement timeline, and overall plan.
How do annuities generate income?
Some annuities allow you to convert a portion of your retirement savings into a predictable stream of income. Depending on the product you choose, income may begin immediately or at a future date. Available income options vary by product and individual circumstances.
How do I know if an annuity is appropriate for me?
There is no one-size-fits-all answer. The right strategy depends on factors such as your retirement goals, current savings, desired income, comfort with market risk, and overall financial picture. At Summerlin Benefits Consulting, we begin by helping you understand your options so you can determine whether an annuity may be appropriate for your situation.
What happens to my annuity if I pass away?
Many annuities include beneficiary provisions that allow remaining benefits to pass to your designated beneficiaries. The available options vary depending on the product and contract provisions, making it important to review these features before selecting an annuity.
Are annuities taxable?
The tax treatment of annuities depends on factors such as how the annuity was funded and when distributions begin. Because every situation is different, we encourage clients to discuss their specific circumstances as part of their overall retirement planning strategy.
Why do some annuities perform differently than others?
Not all annuities are designed the same. Different products may have different interest-crediting methods, income options, surrender periods, optional riders, and contract features. That's why education and product comparisons are an important part of selecting an annuity that aligns with your retirement goals.
What can I expect during my first appointment?
Your first meeting is designed to help you better understand your retirement options—not to pressure you into making a decision. We'll discuss your retirement goals, answer your questions, review your current financial picture, and explain strategies that may be appropriate for your situation. If retirement annuities are one of those options, we'll help you understand how they work and where they may fit within your overall retirement plan.
To schedule an appointment, please visit our Contact Page.
Explore Your Retirement Income Options
Every retirement journey is different. Whether you're just beginning to plan for your retirement income needs or would like a second opinion on your current strategy, we're here to help you understand your options and determine what may be appropriate for your goals.
No pressure. No obligation. Just an opportunity to ask questions, understand your options, and make informed decisions with confidence.
