A fixed annuity gives you the stability of a fixed interest rate that’s guaranteed for a set number of years.

How do fixed annuities work?

A fixed annuity has two phases – an accumulation phase and an income phase. During the accumulation phase, the money you contribute to your annuity will earn interest at a fixed interest rate. During the income phase, the money you’ve accumulated in your annuity can be turned into a stream of income payments.

Fixed annuity advantages

Here are some things to know as you consider a fixed annuity:

  • Protection from loss: With a fixed annuity, your annuity won't lose value, regardless of market conditions, unless you withdraw money or surrender your annuity during the early withdrawal period.
  • Steady, predictable growth: Fixed annuities are guaranteed to grow in value at a fixed interest rate.
  • Tax deferral: You don’t pay taxes on the interest your annuity earns until you start receiving payments or take a withdrawal, so your annuity may grow at a faster rate.
  • Guaranteed retirement income: When you’re ready to turn your annuity into retirement income, you can select from a variety of payout options, including an income stream that will last for the rest of your life.

A fixed annuity may be the right choice to protect your principal while safely growing your money at a fixed interest rate. If you’re interested in growth based on market performance, you may want to consider a fixed-indexed or variable-indexed annuity.