Annuities come in a variety of forms. Each type can have unique features that may help you achieve your financial goals whether you're saving for retirement, approaching retirement, or living in retirement.
How tax-deferred annuities may help you save for retirement
If you are already saving as much as you can in your 401(k) or IRA,1 you can use this type of annuity to boost your retirement savings. Like any tax-deferred investment, earnings compound over time, providing growth opportunities that taxable accounts lack. Deferred annuities have no IRS contribution limits,2 so you can invest as much as you want for retirement. You can also use your savings to create a guaranteed stream of income. Depending on how annuities are funded, they may not have required minimum distributions (RMDs).
Withdrawals of taxable amounts from an annuity are subject to ordinary income tax. If you make withdrawals before age 59½, you may be subject to a 10% IRS penalty. Annuities also come with annual charges not found in mutual funds, which will affect your returns.
How deferred annuities may help as you approach retirement
Some deferred annuities may be appropriate for investors who are 5 to 10 years away from retirement because they may offer guaranteed income for life or for a set period of time. Because they provide reliable, guaranteed income, these annuities may enable investors who hold them to take a more aggressive approach with other assets in their portfolios.
Keep in mind access to the assets varies depending on the type of annuity you select.
How income annuities provide income while living in retirement
Income annuities may be appropriate for investors within one year of retirement because they offer guaranteed income for life or a set period of time. Because they provide reliable, guaranteed income, these annuities may enable investors who hold them to take a more aggressive approach with other assets in their portfolios.
Keep in mind that you may have limited or no access to the assets invested in immediate income annuities.
Immediate fixed income annuities
Immediate fixed income annuities offer a guaranteed, predictable payment for life, or for a certain period of time. Your guaranteed income payment cannot be affected by market volatility, helping shield your retirement income from market risk.
A cost-of-living increase is available to help keep pace with inflation.
Get in touch
Before investing, consider the investment objectives, risks, charges, and expenses of the annuity and its investment options. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Investing in a variable annuity involves risk of loss - investment returns and contract value are not guaranteed and will fluctuate.
Guarantees apply to certain insurance and annuity products and are subject to product terms, exclusions and limitations and the insurer's claims paying ability and financial strength.
The lifetime withdrawal benefit amount is available after the youngest annuitant turns age 59½.
Deferred Income Annuity contracts are irrevocable, have no cash surrender value and no withdrawals are permitted prior to the income start date.
Fidelity insurance products are issued by Fidelity Investments Life Insurance Company (FILI), 900 Salem Street, Smithfield, RI 02917, and, in New York, by Empire Fidelity Investments Life Insurance Company®, New York, N.Y. FILI is licensed in all states except New York. Other insurance products available at Fidelity are issued by third-party insurance companies, which are not affiliated with any Fidelity Investments company. A contract's financial guarantees are subject to the claims-paying ability of the issuing insurance company.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917