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Securing Your Retirement With Fixed-Rate Annuities

In these uncertain economic times, even relatively safe investments sometimes fail to provide returns. If you want to ensure financial security in your retirement, it’s wise to invest in asset classes that offer guaranteed returns. Long-term fixed-rate annuities are a great investment opportunity for those seeking guaranteed returns. But how can you get the best rates on your investments? And who has the best fixed annuity rates?

Read on to learn everything you need to know about fixed-rate annuities.

What is an annuity?

An annuity is an investment plan which provides guaranteed payouts to its investor. Unlike most retirement tools, you purchase annuities from insurance companies, rather than banks or investment firms.

To invest in this asset class, simply buy an annuity from your chosen insurance company. You can either pay in a lump sum or a series of payments. Then, when you need additional income further down the line, the insurance company will pay you back (plus interest) in a series of regular monthly installments. Depending on the annuity you choose, you will either receive these payments for the rest of your life or even into the life of a chosen beneficiary.

The money you invest in a fixed annuity won’t earn as much interest as you could with other retirement plans, like mutual funds. But the guaranteed payout is what sells it. Once you’ve retired and lack any additional income stream, guaranteed monthly payments are a great source of financial security.

Types of annuities

Before you start shopping around, you should understand the types of annuities that are out there. There are two main classifications for annuities:

Fixed rate vs. variable rate

A fixed-rate annuity pays out the same amount each month, regardless of market fluctuation. A variable-rate annuity’s payouts depend on market performance.

Immediate vs. Deferred

Annuities can begin their payouts immediately after your purchase, or they can delay for some time. If you’re on the brink of retirement, an immediate annuity may be a better fit for you. If you’re in your early 30s and planning for the future, consider a deferred payout.

Why choose a fixed annuity rate?

A fixed annuity rate is a much safer option than a variable annuity rate. While a variable annuity’s returns fluctuate based on market performance, a fixed annuity’s returns are set in stone. That means that you know exactly how much you’ll get every month for the rest of your life.

Not everyone can afford the risk of a variable-rate annuity. Say you rely on the monthly payment of an annuity as your primary source of income. In this case, a fixed-rate annuity is a far safer bet than one with a variable rate, even if it may limit your returns in the long run.

Alternatively, if you have 20 years left on a 30-year mortgage, a fixed annuity that pays you precisely what you owe every month would be a prudent investment. That way, you can guarantee that you’ll never be late on a payment.

Are there any downsides to fixed-rate annuities?

Although a fixed annuity will protect you from poor market performance, it will also shield you from positive market performance. This means that even if the market is doing well, your monthly payments will not increase.

Plus, once you’ve invested savings into an annuity, it’s hard to get it back out. This is a mixed blessing. It reduces the temptation to pull out a large chunk of money for a frivolous purchase. But it also means that you won’t be able to access that money in the event of an emergency, like an expensive medical crisis.

It’s often wise to diversify your retirement investments. Make sure to put some money into higher-yield plans, and into plans where your savings are more liquid, in addition to taking advantage of the reliability and consistency of annuities.

Now that you understand the advantages and disadvantages of fixed-rate annuities, you’re ready to start shopping around. Which brings us to a crucial question: who has the best fixed annuity rates?

Who has the best fixed annuity rates?

Not sure where to start? We’ve put together a list of insurance companies offering annuities with highly competitive fixed rates. Browse your options and compare their offerings below:


Not sure where to start? Shopping around is an excellent first step. Click here to compare top-rated insurance companies side by side.

And remember, it’s always a good idea to diversify your retirement investments! Click here to compare top brokerages, or browse investment advisors here.