More Americans than ever are including annuities in their retirement planning. According to the Limra Secure Retirement Institute, there were more than $132 billion in fixed annuity purchases in 2018. That’s a 25 percent increase over the previous year and an all-time record.1

Fixed annuities are retirement income vehicles that allow you to earn tax-deferred accumulation, often with some kind of downside protection. For example, you might earn a fixed interest rate over a set period of time. Or you could have the potential to earn interest based on the performance of an external market index, like the S&P 500.

Why have these vehicles surged in popularity? It often depends on a person’s specific retirement income goals and needs. However, there are a few common factors that could make a fixed annuity appealing for someone who is approaching retirement.


So far in 2019, the S&P 500, which is a broad-based index representing American stocks, is up more than 20%. However, that hasn’t come without some sizable ups-and-downs, including a market downturn over the summer.2

If you’re nearing retirement, you may not be as comfortable with those “ups-and-downs” as you were in the past. It’s natural for people to grow less comfortable with risk as they get older. After all, if you’re retiring soon, you don’t have as much time to recover from a loss as you did when you were younger.

Most fixed annuities offer some level of downside protection, such as a principal guarantee*. While you may not earn as much as you would in the market, you also aren’t exposed to downside loss. You simply earn interest based on the terms of your contract. If the market goes down, your premium doesn’t. A fixed annuity can often be a stable portion in an overall allocation.

Guaranteed* Income

Many fixed annuities also offer guaranteed* lifetime income features that can give you certainty and predictability in retirement. For instance, in many of these benefits you’re allowed to withdraw up to a certain percentage of your value each year. As long as your withdrawal stays within the limit, your income is guaranteed* for life, no matter how long you live or how the annuity performs in the future.

Many retirees can only rely on Social Security or possibly a defined benefit pension for guaranteed*, predictable income. An annuity with a lifetime income benefit can provide an additional source of guaranteed* income in retirement.


Growth in fixed annuities is tax deferred. You potentially earn interest each year, but you don’t pay taxes on that growth as long as the money stays in the annuity. That deferral could help your assets compound at a faster rate than they would in a comparable taxable vehicle. You eventually pay taxes on the growth when you take withdrawals or when you pass away.

Ready to evaluate your retirement strategy? Let’s talk about it. Contact us today at Jim Lee Financial. We can help you develop and implement a plan. Let’s connect soon and start the conversation.



Licensed Insurance Professional. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional.  The statements and opinions expressed are those of the author and are subject to change at any time.  This material has been prepared for informational and educational purposes only.  It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy.

19436 – 2019/10/28