Annuities for Growth
Not every annuity is built for income right away. Two of the most common types are designed to help your money grow steadily while protecting it from market downturns.
Fixed Annuities (MYGAs)
A multi-year guaranteed annuity (MYGA) locks in a guaranteed interest rate for a set number of years — similar in concept to a CD, but issued by an insurance company. Many people compare MYGA rates directly against bank CDs when shopping for safe, predictable growth.
Fixed Indexed Annuities
A fixed indexed annuity protects your principal from market losses while crediting interest based on the performance of a market index, subject to caps and terms in the contract. It's designed for people who want some upside potential without direct market risk.
Both product types are commonly used for the portion of a portfolio someone doesn't want exposed to a market downturn — savings earmarked for retirement income a few years down the road, or simply money they can't afford to lose.
Annuities for Guaranteed Income
Other annuities — or optional riders added to a growth annuity — are built specifically to convert a portion of your savings into income you cannot outlive, regardless of how long you live or how markets perform.
- Lifetime income riders can turn an accumulation-focused annuity into a stream of guaranteed payments once you're ready to turn on income.
- Immediate income annuities begin paying out shortly after you fund the contract, often used by people already at or near retirement.
- Deferred income annuities let you lock in a future payout rate today, in exchange for starting income at a later date.
For many retirees, guaranteed income functions like a personal pension — a paycheck that continues no matter what the market does. Social Security, a pension (if you have one), and annuities are the only three sources of truly lifetime income in a typical retirement plan.
Pension vs. Annuity: What's the Difference?
Fewer employers offer traditional pensions today, which is why many retirees look to annuities to recreate that same dependable, monthly paycheck feeling — funded with their own savings instead of an employer.
| Pension | Annuity |
|---|
| Who provides it | Employer | You purchase it individually |
| Funding | Employer-funded | Funded with your own assets |
| Income structure | Set by employer formula | Based on the contract you choose |
| Flexibility | Limited | Multiple contract and payout options |
| Availability | Increasingly rare in the private sector | Widely available through insurance companies |
Pensions and annuities aren't the same thing, but they share the same goal: dependable income you can count on. For a deeper comparison, Roots & Wealth has a full breakdown of pension vs. annuity income.
Is an Annuity Right for You?
Annuities aren't a one-size-fits-all answer, and they're not right for every dollar of savings. They tend to make the most sense for people who value principal protection, tax-deferred growth, or the option of guaranteed lifetime income as part of a broader plan that also includes Social Security, investments, and other assets.
The best way to know if one fits your situation is a personalized conversation — not a generic sales pitch.
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