What Does an Annuity Protect You Against?

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Annuities protect against outliving your savings, market crashes, inflation, and sequence-of-returns risk. Learn how each type shields your retirement income. Related Articles What Is An Annuity | Annuity Guide Annuity Options Explained | Annuity Guide Independent Annuity Advice | Annuity Guide Annuity Aggregation Rule | Annuity Guide Key Takeaways Annuities provide guaranteed income, protecting against the risk of outliving your savings. Market crashes can be mitigated through fixed annuities, ensuring stable returns. Inflation protection is crucial; some annuities adjust payouts to maintain purchasing power. Sequence-of-returns risk is lessened with annuities, offering consistent income during market volatility. Utilize retirement calculators to assess how annuities fit into your retirement strategy. Quick Answer Annuities protect against the risk of outliving your savings by providing a guaranteed income stream. They also shield your principal from market volatility and help mitigate sequence-of-returns risk. SafeMoney Editorial Team  |  Reviewed by Licensed Financial Professionals  |  Updated Regularly Understanding Annuity Protections Annuities are financial products designed to provide protection against several retirement risks. Since 2011, SafeMoney.com has been guiding individuals on how annuities can secure their financial future. By offering a guaranteed income, annuities ensure that retirees do not outlive their savings. This protection is crucial in maintaining a stable post-retirement lifestyle. Protection Against Market Volatility Market fluctuations can pose significant risks to retirement savings. Fixed annuities offer a safeguard by preserving the principal, even during market downturns. They provide interest based on a guaranteed rate or a financial benchmark, ensuring steady growth without exposure to market losses. Guarding Against Sequence-of-Returns Risk Sequence-of-returns risk is the danger of experiencing poor investment returns at the onset of retirement. This can severely impact the longevity of your savings. Annuities counter this risk by delivering consistent income, regardless of market conditions, thereby stabilizing your financial plan. Inflation Protection with Annuities While inflation can erode purchasing power,