What are Annuities and are They Right for You?

With several types of annuities available, the right fit depends on your goals, timeline, and comfort with risk.

On this page, I help you understand how annuities work, the benefits, and whether one makes sense as part of your overall retirement strategy.

If you think an annuity may be a good fit for your retirement strategy, I encourage you to book a video appointment with me using the link below:

Schedule a Video Appointment

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Headshot of Matthew Kenneth Schad
Matthew Kenneth Schad
Registered Representative & Insurance Agent
(262) 371-3585

135 S 84th St Ste 400

Milwaukee, WI 53214

What is an Annuity?

An annuity is a contract designed to help you prepare for and live in retirement. You contribute money to the annuity, and in return, it can provide features such as tax-deferred growth, protection from market losses, or a guaranteed stream of income.

Different annuities work in different ways. Some provide a fixed interest rate, some offer market-based growth potential, and others are designed primarily to create predictable retirement income.

The right structure depends on what you want your money to accomplish.

Can I invest into an annuity with a retirement account?

Yes, this is a common way that annuities are funded.

What Makes an Annuity a Good Fit for Somebody?

There are several types of annuities, each designed to serve a different purpose. The right option, if any, depends on your individual goals, retirement needs, and financial situation.

Some annuities focus on creating reliable retirement income, while others offer opportunities for growth, tax deferral, or protection from market risk.

Here are some of the features different types of annuities may offer:

Retirement Income Unaffected by the Market

Income annuities can provide a predictable stream of retirement income regardless of daily market performance, helping create consistency for essential expenses and lifestyle needs

Fixed Interest & Tax Deferral

Fixed annuities can provide a guaranteed interest rate for a specified period while allowing your earnings to grow tax-deferred until they are withdrawn

Protection From Market Losses

Certain annuities can provide downside protection or a floor on your investment value while still offering the opportunity to participate in market growth, depending on the contract

Legacy & Death Benefit Protection


Certain annuities offer death benefit features that can help protect gains for your beneficiaries. Some benefits may reset based on contract performance, helping establish a protected value for your legacy

Avoid Selling Investments During a Down Market


Having a dependable source of retirement income can reduce the need to sell other investments when markets are down, giving those assets more time to potentially recover

Income You Can’t Outlive


Certain annuities can provide guaranteed lifetime income, helping address the risk of living longer than expected and running out of retirement income

I have RMD's coming up, can the money from an income annuity help satisfy that?

Yes. An income annuity can turn a portion of your retirement savings into guaranteed income while helping satisfy your RMD requirements.

RMDs are generally based on your retirement account value. By using a portion of your retirement assets to create guaranteed lifetime income, you may reduce the balance that future RMD calculations are based on for your remaining account assets.

This can help create predictable income while potentially reducing future RMDs from your remaining retirement accounts.

Can I invest in the market using annuities?

Certain types of annuities can provide exposure to the market while also offering features designed to help manage risk and add protection.

Annuities can also play different roles within a retirement strategy. Some may be used for growth potential, while others focus on predictable income or fixed interest. Using more conservative assets for a portion of retirement needs may also allow other investments to remain invested with a longer time horizon.

There is no one-size-fits-all approach. The right strategy depends on your goals, risk tolerance, time horizon, and overall financial picture.

What kinds of fees can annuities have?

Fees and charges can vary depending on the type of annuity and the features you choose.

Depending on the product, costs may include contract charges, expenses associated with investment options, charges for optional benefits or riders, and surrender charges for certain withdrawals.

Some annuities may structure certain charges based on the amount contributed rather than the account value. That means those particular charges may not automatically increase simply because the account value grows.

Because annuities can differ significantly, it is important to understand how a particular product’s fees, features, risks, and limitations work before deciding whether it fits your financial goals.

What if we meet and an annuity is not a good fit for me?

My goal is to use all of the financial tools available to find what makes the most sense for you. An annuity may not be a good fit, but investments such as investing directly into mutual funds may be more suitable. Maybe neither. I’ll walk you through your options, explain the advantages and trade-offs of each, and help you make an informed decision based on your goals.

Want to learn more?

Book a video appointment using my calendar link below and I can walk you through what makes the most sense for you:

Book Video Appointment