Annuities
An annuity is a contract with an insurance company that converts a lump sum or series of payments into a stream of future income — most often in retirement. The right annuity depends on your time horizon, risk tolerance, and tax situation.
Frequently asked questions
What are the main types of annuities?+
The three main types are fixed (guaranteed rate), variable (tied to investment performance), and indexed (tied to a market index with a cap and floor). Each has very different risk and return profiles.
Are annuities a good investment?+
It depends. Annuities can be a useful tool for guaranteed retirement income, but they often carry high fees and long surrender periods. They make most sense for retirees who want a guaranteed income floor.
Are annuities taxed?+
Growth inside an annuity is tax-deferred. Withdrawals are taxed as ordinary income, and withdrawals before age 59½ may incur a 10% IRS penalty.
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