*The 17.75% first-year value enhancement is not a cash bonus or guaranteed investment return and may be subject to product terms, vesting schedules, eligibility requirements and surrender charges. Lifetime income guarantees depend on contract terms and the issuing insurer’s claims-paying ability.
A 21st-Century Retirement Guide
A retirement mix built for growth, access and income.
Retirement planning is no longer just about choosing investments. It is about balancing three different jobs for your money: maintaining a dedicated cash reserve, participating in long-term markets, and creating dependable retirement-income options.
Accumulation years
Ages 45–55
Keep long-term growth central while beginning to create a protected retirement-income foundation.
- Liquid reserve: Emergency savings and planned near-term expenses, calculated from the household budget.
- Market: A diversified stock-and-bond allocation for long-term growth.
- Annuity: A measured allocation for future income or principal-protection goals, when suitable.
Transition years
Ages 55–60
Reduce dependence on uninterrupted market growth and begin organizing assets around retirement timing and future income.
- Liquid reserve: Dedicated cash for emergencies and known near-term expenses; the correct amount should be calculated in dollars first.
- Market: Continued growth potential with increasing attention to volatility and diversification.
- Annuity: A larger income-planning sleeve, subject to liquidity needs and contract suitability.
Retirement runway
Ages 60–65
Prepare for the shift from earning and saving to drawing income, without abandoning the growth needed for a long retirement.
- Liquid reserve: Cash for emergencies, planned purchases and near-term withdrawals, determined from actual spending needs.
- Market: Diversified market exposure for growth and inflation risk, balanced against the shorter time before withdrawals.
- Annuity: A potential income or protection allocation only when the contract, surrender period and available liquidity fit the plan.
Early retirement
Ages 65–70
Coordinate current spending, market exposure and dependable income while preserving enough growth for a potentially long retirement.
- Liquid reserve: Dedicated cash for near-term spending and emergencies, sized from the household budget rather than age alone.
- Market: Diversified investments intended to support inflation-aware, long-term growth.
- Annuity: Insurance-based assets that may support income or protection objectives when properly matched.
Income and legacy years
Ages 70+
Emphasize dependable access and income while retaining diversified market assets for longevity, inflation and legacy goals.
- Liquid reserve: Accessible cash for spending, health care and family needs; the percentage may be lower or higher depending on guaranteed income and total wealth.
- Market: Continued participation for long retirements, inflation and legacy objectives.
- Annuity: A larger potential income-focused allocation, only after reviewing liquidity and insurer risk.
Know the three jobs
What each category is designed to do
Liquid reserve
Dedicated cash and cash-equivalent holdings for bills, emergencies and near-term spending. This is a planning bucket—not a claim that every other asset is impossible to sell.
Market assets
Diversified stocks, bonds, mutual funds and ETFs intended to provide growth, income or both. Many can be sold readily, but their prices can fluctuate, so this guide does not count them as the cash reserve.
Annuity assets
Insurance contracts used for long-term accumulation, income or protection objectives. Access may be limited by surrender periods, contract adjustments, annuitization elections, taxes or other terms.
Category note: “Liquid reserve,” “market assets” and “annuity assets” describe planning roles, not formal asset classes. Some securities are highly tradable, and some annuity contracts permit limited withdrawals. For clarity, this guide treats variable annuities and registered index-linked annuities according to their actual market exposure and contract terms—not automatically as protected assets.
Before changing your mix
Five questions matter more than age alone.
- 01How many years of spending should remain readily accessible?
- 02How much dependable income already comes from Social Security or pensions?
- 03How much market decline could the plan withstand without disrupting retirement?
- 04What surrender period, withdrawal rules and insurer guarantees apply?
- 05How will taxes, required distributions, health costs and legacy goals affect the plan?
Your retirement is not a template.
Build a mix around your income, timeline and comfort with risk.
A complimentary review can help organize the conversation around access, growth, income and the tradeoffs of each option.
EXPLORE YOUR OPTIONS
Understand the different types of annuities.
Annuities are not one-size-fits-all. Open each option to compare its general purpose, guarantees, growth method and important tradeoffs.
01Traditional Fixed AnnuityDeclared interest with protection from direct market losses.
A traditional fixed annuity credits interest according to rates declared by the issuing insurer. It is not directly invested in the stock market.
- Designed for predictable, tax-deferred accumulation.
- Rates may change after the initial guarantee period.
- Withdrawals may be subject to surrender charges and taxes.
02Fixed Indexed AnnuityInterest potential linked to an index without directly owning it.
A fixed indexed annuity may earn interest based partly on an external index. The premium is not invested directly in that index.
- Crediting may be limited by caps, spreads or participation rates.
- A 0% index floor generally protects against negative index interest.
- Rider fees, withdrawals, surrender charges or adjustments may still reduce value.
- Optional guaranteed-income riders may be available for a fee.
03MYGAA fixed rate guaranteed for a selected multi-year period.
A Multi-Year Guaranteed Annuity generally provides a stated interest rate for a specific period, commonly three to ten years. It is an insurance contract, not a bank CD.
- Interest generally accumulates tax-deferred.
- Early withdrawals may trigger surrender charges and taxes.
- The renewal rate after the guarantee term may differ.
- MYGAs are not FDIC insured.
04Income AnnuityScheduled income beginning now or at a future date.
Immediate and deferred income annuities can create scheduled payments for one life or two lives. Certain elections can provide income for life, but access to the original premium may become limited after annuitization.
05Variable AnnuityMarket-based investment options with possible gains or losses.
A variable annuity uses investment subaccounts whose values can rise or fall. Variable annuities are securities and may involve investment risk, contract expenses and optional-rider charges.
06Registered Index-Linked AnnuityIndex-linked growth with limited—not complete—downside protection.
A RILA may provide a buffer or floor against a stated portion of index losses. Losses beyond the contract's protection level can reduce contract value.
Important disclosure: Annuities are long-term insurance products and are not bank deposits, are not FDIC insured and are not guaranteed by the federal government. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurer. Contract terms, crediting methods, fees, withdrawal provisions, surrender charges, rider availability and tax treatment vary. This material is educational and is not individualized investment, legal or tax advice.
Retirement Education
The Top 10 Annuity Misconceptions
Annuities are often discussed as though every contract works the same way. It does not. Open each misconception to separate broad assumptions from the contract details that actually matter.
“Annuity” is a broad category. Fixed, fixed-indexed, variable, registered index-linked, immediate, and deferred annuities can differ substantially in risk, growth potential, fees, liquidity, guarantees, and regulation.
Many contracts permit withdrawals, and some include a limited annual penalty-free withdrawal provision. Withdrawals above the contract allowance may trigger surrender charges, reduce benefits, create taxable income, or affect future guarantees.
Costs vary by product. Some fixed annuities may not assess an explicit annual contract fee, while variable annuities and optional riders can include mortality, administrative, investment, or rider expenses. The full contract—not the product label—reveals the cost.
A fixed-indexed annuity generally credits interest using a formula linked to an external index. The contract owner does not directly own the stocks in that index. Caps, participation rates, spreads, index terms, and other limits can affect credited interest.
A 0% floor typically applies to a particular fixed-indexed crediting method and protects against a negative index credit for that term. Withdrawals, surrender charges, rider costs, taxes, or other contract provisions may still reduce available value. Variable annuities and some registered index-linked annuities can also expose owners to market losses.
Suitability depends less on status and more on the person’s goals, age, liquidity needs, time horizon, income sources, risk tolerance, and available emergency reserves. An annuity may fit some retirement plans and be inappropriate for others.
Death-benefit and payout provisions vary. Depending on the contract and elections made, a beneficiary may receive a remaining contract value, a stated death benefit, continued payments, or no remaining benefit after certain lifetime-only payout choices.
No annuity should be evaluated from a headline rate alone. Guarantees, crediting formulas, renewal terms, rider rules, market exposure, and the issuing insurer’s claims-paying ability all matter. Indexed gains may be limited, and variable returns are not guaranteed.
Tax deferral postpones taxation; it does not automatically eliminate it. Taxable annuity earnings are generally taxed when distributed, and taxable withdrawals before age 59½ may face an additional 10% federal tax unless an exception applies. Individual circumstances should be reviewed with a tax professional.
An annuity is one financial tool—not a complete plan. A balanced retirement strategy may also account for liquidity, emergency reserves, Social Security, pensions, market-based assets, debt, health-care costs, taxes, estate goals, and changing income needs.
Retirement Education
The Top 10 Annuity Misconceptions
Annuities are often discussed as though every contract works the same way. It does not. Open each misconception to separate broad assumptions from the contract details that actually matter.
“Annuity” is a broad category. Fixed, fixed-indexed, variable, registered index-linked, immediate, and deferred annuities can differ substantially in risk, growth potential, fees, liquidity, guarantees, and regulation.
Many contracts permit withdrawals, and some include a limited annual penalty-free withdrawal provision. Withdrawals above the contract allowance may trigger surrender charges, reduce benefits, create taxable income, or affect future guarantees.
Costs vary by product. Some fixed annuities may not assess an explicit annual contract fee, while variable annuities and optional riders can include mortality, administrative, investment, or rider expenses. The full contract—not the product label—reveals the cost.
A fixed-indexed annuity generally credits interest using a formula linked to an external index. The contract owner does not directly own the stocks in that index. Caps, participation rates, spreads, index terms, and other limits can affect credited interest.
A 0% floor typically applies to a particular fixed-indexed crediting method and protects against a negative index credit for that term. Withdrawals, surrender charges, rider costs, taxes, or other contract provisions may still reduce available value. Variable annuities and some registered index-linked annuities can also expose owners to market losses.
Suitability depends less on status and more on the person’s goals, age, liquidity needs, time horizon, income sources, risk tolerance, and available emergency reserves. An annuity may fit some retirement plans and be inappropriate for others.
Death-benefit and payout provisions vary. Depending on the contract and elections made, a beneficiary may receive a remaining contract value, a stated death benefit, continued payments, or no remaining benefit after certain lifetime-only payout choices.
No annuity should be evaluated from a headline rate alone. Guarantees, crediting formulas, renewal terms, rider rules, market exposure, and the issuing insurer’s claims-paying ability all matter. Indexed gains may be limited, and variable returns are not guaranteed.
Tax deferral postpones taxation; it does not automatically eliminate it. Taxable annuity earnings are generally taxed when distributed, and taxable withdrawals before age 59½ may face an additional 10% federal tax unless an exception applies. Individual circumstances should be reviewed with a tax professional.
An annuity is one financial tool—not a complete plan. A balanced retirement strategy may also account for liquidity, emergency reserves, Social Security, pensions, market-based assets, debt, health-care costs, taxes, estate goals, and changing income needs.