Are you looking at different annuity rates for your retirement goals? Generally speaking, an annuity rate is the percentage at which money inside an annuity grows annually. While a majority of annuity rates have to do with growth potential, not all rates do.

Many advertisers push different annuity rates online, but these rates can have different meanings. Those rate distinctions differ largely along the various types of annuities and what each type offers to you.

Some annuities, like immediate annuities, will give you rates that are tied to income payouts. Since immediate annuities are designed to pay you income right away, that makes it pretty straightforward. Other annuities are more 'income for later' and come with rates like “payout percentages” depending on the type of payout option you choose.

Annuity rates usually vary from one life insurance company to another. What’s more, rates are tied to current interest rates. So when current interest rates change, annuity rates tend to move with them.

Do you have a variable annuity and are you looking for alternatives to it? Not sure about what options might make sense for your situation?

Many people buy annuities for different retirement goals, but variable annuities tend to be bought more than other types of annuities. However, this is likely to change in the near future. What is driving this shift is that people are on the lookout for alternatives to variable annuities.

Why? Variable annuities offer the most growth potential of all annuities. But they also have the most exposure to market risk.

What’s more, while this isn't universally true for all of them, many variable annuities are also fee-heavy and expense-heavy.

According to the SEC, just one annual charge for life insurers managing longevity risk – called a mortality and expense charge – can add up to 1.25% per year in variable annuity contracts. Other research by groups like Morningstar has also found that cumulative fees and expenses in a variable annuity can be in excess of 3 percent.

Depending on their needs, people may be interested in alternatives ranging from annuity contracts with less market risk to financial vehicles that aren’t even annuities at all.

Where do you find independent annuity advice that you can trust? Just mention the topic of annuities, and you certainly won’t have any shortage of opinions coming out of the woodshed.

Many financial advisors and pundits are in the pro-annuity camp due to the strong contractual guarantees that only annuities give. On the other hand, annuity naysayers point to a few things, such as sometimes overly aggressive sales pitches, to make their case of annuity pessimism.

So, how can you find independent annuity advice that is somewhere in the middle: objective, honest, and focused on helping you become educated and make a well-informed decision? A good source will give you, among other things:

• Clear and publicly available information on annuities without any obligation on your part to access it
• The fundamentals of annuities and their role as the foundation of an overall retirement plan
• Straightforward questions to ask about annuities you may be exploring
• Upfront points on what annuities can do and what they can’t
• Clear outlines of the different annuity pros and cons
• Opinions on who is a good candidate for an annuity (millions of people, but not everyone)
• Clearly spelled-out details of the strong point of annuities – protections stemming from their guarantees – and what they can do for you

In other words, a credible source of annuity information will be upfront and clear about what annuity contracts can achieve – and also not accomplish – for you.

Are you looking for safe money and income strategies that you heard of on the radio or someplace else? After a long career, most people would like a financially secure retirement that they can spend in peace and comfort.

This probably applies to you as much as anyone else. As you prepare for your post-career years, you may have heard or read about those "safe money and income strategies.” If you have, you may be wondering exactly what they are and whether they are right for you in your current financial situation.

What Are Safe Money and Income Strategies?

This sort of strategy follows a retirement school of thought that emphasizes income, safety, and protection. At its core, a safe money and income strategy can:

• Pay regular predictable income to you for as long as you live.
• Protect your hard-earned retirement assets.
• Grow your money with a guaranteed interest rate.
• Possibly earn more interest above a certain minimum rate.

Many fixed-income assets can serve as its lynchpin, from fixed-type annuities to bonds or Treasury securities. However, only annuities can truly pay you a guaranteed lifetime income.

What’s more, historically low interest rates have made it that much harder to live off of the interest from corporate and municipal bonds, CDs, Treasury securities, and savings bonds.

This isn’t to say that these instruments can give you some yield for dependable retirement income. It’s just harder in this lower interest rate environment.

Annuities are a growing option for retirees looking for relatively 'worry-free' places where they can place their money without too much stress. There are many different types of annuities. But all annuities can fundamentally be divided into two main categories: immediate and deferred annuities.

By definition, an annuity is when someone puts a single lump-sum payment or a series of payments into a contract offered by a life insurance carrier. At a later point, this person starts receiving a stream of income from the annuity contract. The income stream can be for either a set period or the rest of their life.

So, what are the key differences between a deferred and immediate annuity? Here's a quick look at the overarching distinctions.

Chances are you have heard of annuities at some point. When they have a clear role in your plan, they can be an excellent part of a retirement strategy. If you are in your 50s, you might have thought at some point or another: Does an annuity make sense in your 50s, even when retirement might seem still quite a few years away?

Well, the answer rests on three primary factors: when you plan to retire, what your timeline is from now until then, and what you would use the annuity for.

When the World War II generation finally retired, many former workers were able to count on a secure corporate pension to supplement their Social Security income. This pension income lasted for as long as they lived. Then it often continued to pay the surviving spouse after the initial recipient had passed away.

But pensions have largely disappeared from the corporate landscape. In turn, this has left an unexpected hole in the retirement plans of many retirees.

However, many people have found an alternative in annuities as a way to generate guaranteed income that they can count on every month. Annuities can provide a type of privately-funded pension income in a manner unlike any other type of financial instrument in the marketplace today.

Annuities are designed to pay a stream of guaranteed income for as long as someone lives. This holds even if someone receives more money from the insurance company than what was in their annuity contract.

Annuities can certainly strengthen your retirement plan even while interest rates are low. Among other things, they can add more predictability and stability to what you already have.

But what can you do when interest rates are at rock-bottom? In response to the economic fallout from the coronavirus pandemic, the Federal Reserve has dropped the target rate for its benchmark federal funds rate (its overnight lending rate to banks).

Now the target range for this rate is zero to one-quarter percent. The last time the Fed did this was during the financial crisis. In 2008, it dropped the rate to the same target range, and this didn't change course until December 2015.

The pandemic had an unprecedented impact on the economy. It put tens of millions of people out of work in just weeks and left many sectors basically on standstill.

Estate planning isn’t likely to rank high on your list of fun things to do. Thinking about a post-death legacy and what you wish for loved ones probably isn’t high up there, either.

But having a proper estate plan is beneficial in many ways. It can ensure that your assets are distributed in the manner that you desire after you are gone.

Depending on the size of your estate as well as your state of residence, you may be facing estate taxes on your assets. There are ways that you can reduce that tax liability if you might choose so.

But one legal process can also derail your legacy wishes, tie up your assets for a long time, and lead to family drama that otherwise wouldn’t happen: probate.

The good news? One way that you can avoid probate on some of your assets for certain is if you have money in annuities.

With how they are treated under law, annuities exempt the money within them from this often time-consuming and drawn-out proceeding.

Annuities are contracts between you and an insurance company. As the policyholder, you are entitled to certain guarantees provided to you by your life insurance company.

You can enjoy guaranteed income for life, guaranteed growth, guaranteed protection against market risk, or a guaranteed death benefit, among many other benefits.

Annuities also give the benefit of tax-deferred growth until you start withdrawing money from them. Not only that, annuities can also provide you with certain protections against creditors.

However, this helpful protection characteristic of annuities can vary by state. Here's a quick look at how annuities can offer various creditor protections if you are concerned about the exposure of your assets or money.

Arguably the greatest benefit that an annuity can bring to a portfolio is protection. But depending on the contract you get, the annuity may provide enhanced protection for you in different qualifying circumstances.

These enhanced benefits can protect you against a number of financial risks. Those risks can range from confined care in a nursing home facility to home-based care and death benefit protection.

Some contracts have these as built-in features. In other cases, most enhanced benefits come as insurance contract add-ons, or annuity riders. Many of these enhanced benefit riders come at an additional charge.

You should be sure of what that enhanced annuity benefit specifically gives you, what it doesn't give you, how much it costs, and whether it truly makes sense for your situation before confirming any add-ons to your contract.

Even so, enhanced benefits can be a great supplement for the right financial situations. Here's how different enhanced benefits for annuities might help your retirement security in various situations.

If you have heard of annuities, you might wonder if they are right for you. Some advisors use annuities as part of the financial strategies that they create for their clients. Other advisors aren’t as much a fan of them.

Sometimes annuities get a fair amount of negative press. However, when they are used as a solution and are structured properly, annuities can actually be a great solution as part of your portfolio.

So, how can you tell if an annuity makes sense for you? Here are some reasons why one of these guaranteed insurance contracts could be a good addition to your portfolio.

Let's take a look at how fixed annuities and fixed index annuities might be of benefit.

Millions of Americans depend on annuities for retirement and for tax-advantaged accumulation. But if you are considering one, you might be unsure about which questions to ask about an annuity. Beyond that, you also want to be able to judge whether a specific annuity product is right for you.

Essentially, an annuity is a contract between you and a life insurance company. The contract provides tax-deferred growth for your money and different choices for your payout options: a lump-sum payment, income for life, or income for a set period.

Most annuities are started with money from retirement accounts -- 401(k) plans, IRAs, or Roth accounts. But you can also purchase an annuity with personal savings or proceeds from a transaction like a home sale. The money you use to begin your annuity contract will have its own tax implications, so keep that in mind as you consider your options.

Determining what annuity is right for you is up there with other important retirement decisions. After all, these are your life savings.

You want to be sure that you bought the right annuity contract -- if indeed it does make sense for you -- and that its unique features and benefits solve for the existing gaps in your portfolio.

Here are some questions to ask about annuity options that can help you narrow down your choices to the right fit.

If you are looking for a decent rate for your money, your local bank might not offer much to write home about. We already are in a low-interest rate environment, and the Fed doesn't appear to be ready to raise rates anytime soon.

This is, of course, one of the effects of recent public health and economic conditions, which also might not be winding down anytime soon.

When it comes to earning interest, one option that banks offer is a certificate of deposit.

How much income will your annuity contract pay you? The answer depends on what age you start collecting income from your annuity.

If you start income at age 70-75, you will receive higher payouts. If you begin your annuity income in your mid-50s, it will be less than what you would receive in your 60s or later.

Annuities therefore resemble Social Security in that their payouts will increase the longer you wait to take them. But annuities with qualified money, or pre-tax dollars, in them have required minimum distributions that must be taken by age 72.

Why is this? Since the insurance company is on the hook for paying you guaranteed income for a certain period or life, it manages its risk based on the age of when you start that guaranteed income stream.

The insurance company also builds estimates of statistically how long it believes you will live into every single one of its income payments. These estimates are based on life expectancy and mortality data.

Annuities can help strengthen your overall retirement strategy with their unique guarantees.

From lifetime income to growth or protection, their contractual guarantees can help in many areas. But just like with any other instrument, annuities also have risks of their own.

What are these risks of annuities? What should you keep in mind as you consider an annuity contract for your retirement?

Here's a quick rundown of different risks of annuities and some other information that can help with your decision-making.

Annuities are becoming an increasingly popular retirement savings vehicle for people in the U.S. Many folks are seeking alternative instruments that can guarantee them a stream of income for life.

With corporate pensions gradually disappearing from the financial marketplace, annuities have emerged as a viable substitute for these bygone streams of income.

Most annuity contracts today come with a variety of benefits and features that were unheard of a generation ago. Living and death benefit riders, guaranteed income riders, and disability and long-term care riders are now commonly available in many annuity products.

However, in order to take advantage of many of these benefits, the annuitant will have to give the insurance company permission to annuitize their contract.

Annuitization is a one-time, irreversible event that ends the accumulation phase of the annuity, where money was being put into the contract or a lump sum of money was left to grow on its own. Annuitization marks the start of the payout phase of the annuity.

From variable to fixed annuities, millions of people buy annuity contracts for many reasons. These purposes range from lifetime income to asset protection and tax-advantaged growth. As a contract, each annuity has a different time period that it takes to mature.

Depending on what you buy, your annuity may have a maturity period that goes only for a few years. If your annuity has more benefits or the benefits are guaranteed for a longer time, its maturity period can be as long as 15 years.

But what about when you are on the backend? What should you do with your annuity at maturity? Annuity owners have a variety of options when they reach that point.

Depending on your age, financial situation, and the goals that you have for your annuity money, you can do the following when the contract ends:

• Keep your money in the contract and withdraw it at strategic times (or a certain withdrawal schedule),
• Cash it out in a lump-sum balance,
• Renew your contract,
• Annuitize your contract into an irreversible income stream, or
• Transfer the money into a new annuity contract.
  
  

Let's go into more details about what you can do when your annuity contract matures.

There are many different types of annuities available in the financial marketplace today. Two of the more popular types of annuities are fixed annuities and indexed annuities. Indexed annuities are also known as fixed index annuities nowadays.

Both kinds of annuities can have their place in a retirement financial plan. But there are key differences between a fixed and an indexed annuity that people should understand in order to make an informed decision when choosing which type to use.

Before we delve into the differences between fixed and indexed annuities, it’s good to know the ways in which they are similar.

For retirement savers wanting more growth potential than what CDs and other fixed-interest assets might offer, fixed index annuities can be an attractive option. Indexed annuities can earn more interest over time than what these other options might.

Even so, some people would rather know that they are earning a guaranteed rate of interest. They are more comfortable with a minimum interest rate for their money’s growth.

Multi-year guaranteed annuities, or MYGA annuities, can fill this role for those who want a guaranteed interest rate with full protection of principal.

Multi-guarantee annuities are backed by the same dollar-for-dollar reserve requirements that apply to fixed and indexed annuities.

That means that for every dollar of MYGA premium that is issued, the insurance company must keep at least one dollar in its cash reserves to cover the outstanding amount.

The modern financial landscape for today's retirees is quite different from that of prior generations. Corporate pensions are disappearing, and the Social Security program faces new pressures from record-breaking numbers of people retiring.

Annuities have steadily emerged as a solution to these retirement income challenges. But up until some years ago, many retirees eschewed the use of annuities. Why? Because in order to get a guaranteed lifetime stream of income, they had to annuitize their contracts.

In order to do this, they had to effectively forfeit control of their money for the rest of their lives. Thankfully, life insurance companies have innovated and come up with a new benefit that gives more flexibility: an annuity income rider benefit.

So, you have decided that an annuity makes sense for your retirement. But what type of annuity might be right for you? This will depend on the answers to a variety of questions.

What is your risk tolerance? What timeline do you have for your money? What annuity guarantees are important to you? What you hope to accomplish with the annuity contract? All of these considerations and more are relevant to what annuity might be a good fit for you.

Here are some questions to consider as you think about what annuity might be right for your situation.

Annuities can bring more stability and certainty to a retirement portfolio. But how do you know you are getting a good deal for your money?

The biggest advantage that annuities can give for your retirement is their guarantees. Or in other words, the contractual assurances that the contract-issuing insurance company promises to provide you.

For your retirement, you might already have a number of financial guarantees that will contribute to your retirement security.

You paid into the coffers of Social Security during your career. In exchange, Uncle Sam guarantees you will receive a monthly paycheck from the SSA once you begin your benefits.

If you buy Treasury securities, you are guaranteed a return of your initial principal once the bonds mature. The bonds also pay you guaranteed semiannual interest payments during the maturity period. You also have these same guarantees when you hold a CD from the bank.

Many Things in Retirement Aren't Guaranteed

Of course, other parts of retirement don't come with guarantees.

You aren't guaranteed for your money to grow when investing, although most likely your money will grow over the long run. Historical market data shows and suggests this.

However, you can lose money, and even your principal, during periods of market losses. This can be a bigger hit especially if you are the cusp of retirement and ready to start taking income from your portfolio.

When financial uncertainty arises, experts acknowledge that fortifying your portfolio with the guarantees and actuarial precision of annuities can benefit you in more ways than one.

If you asked a hundred financial advisors about what they use to construct retirement strategies, you would surely get as many opinions as there are flavors of ice cream.

Many portfolio strategies today call for strategic mixes of equities and bonds. Lots of research is on the so-called 60/40 portfolio, made up of 60% equity assets and 40% bond assets.

The problem is that bonds are particularly vulnerable to interest rate risk, which is the danger of an asset losing value when interest rates rise. And with interest rates sitting at basically zero percent for the foreseeable future, the only direction they can go is up.

This isn't to say that bonds don't have a place in a retirement income strategy. But there is also the flip-side to consider.

Do you really have all options on the table if your advisor leaves annuities out of the conversation? Unlike bonds of any sort, annuities are unique in that life insurers include estimates of people's expected mortality into their payouts.

Unlike other types of vehicles, annuities are the only financial instrument capable of paying a guaranteed lifetime income. They are the only one on the planet. No individual investor can duplicate what insurance companies can offer you with paying you a guaranteed income stream.

Nor can any other asset class do what annuities do. They have contractual guarantees backing them.

Dollar-for-dollar capital reserve requirements, as well as mortality estimates built into every single payout by the insurance company, makes these income promises quite dependable. In this sense, annuities have a monopoly on lifetime income.

You can choose to receive guaranteed income for a certain timespan. Say you need guaranteed income for just 10 years. Then your guaranteed income can be structured to last for that long. Or you can receive guaranteed income for the rest of your life, regardless of how the markets perform.