8 Surprising Ways to Prosper From Annuities

You can use a fixed annuity to do more than just generate retirement income. These insurance contracts can also help you give to charity, leave money to your heirs and delay taking Social Security.

A couple meets with a financial planner to discuss annuities.
(Image credit: Getty Images)

As financial tools go, fixed annuities are not particularly flashy. In exchange for a premium or a lump sum of cash, these insurance contracts earn a moderate fixed return, currently 1.5% to 3% a year, to deliver a steady, guaranteed income for the rest of your life and even that of a spouse or partner. "It's like having your own personal pension plan," says Sara Wiener, assistant vice president of annuities at Principal Financial Group in Des Moines, Iowa.

You can set up an immediate annuity with a lump sum deposit to collect income right away or pay a series of premiums, either monthly or annually, for a deferred annuity, which starts paying you at a future date. Once you begin drawing the income, you stop paying premiums.

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David Rodeck
Contributing Writer, Kiplinger's Retirement Report