How safe are annuities?

Annuities are considered relatively safe retirement income products when purchased from an insurance company with strong financial ratings. Annuities are backed by the financial strength and claims-paying ability of the issuing insurer. Unlike stocks and bonds, whose values fluctuate, annuities provide guaranteed benefits.

Fixed annuities guarantee your principal and a minimum interest rate, providing safety against market fluctuations. Variable annuities invest in markets, so the principal can fluctuate but provide guaranteed income options. While annuities have fees and early withdrawal penalties, the income and principal guarantees are backed by the claims-paying ability of the insurer.

So, annuities can provide secure lifelong income in retirement that you cannot outlive. Just be sure to understand the features and limitations before investing in an annuity. For a steady source of income during your retirement, annuities should be considered as part of an overall retirement income strategy. Use the annuity calculator to know the yearly annuity based on the investment amount, expected rate of return and the life expectancy.