Posted on January 29th, 2026.

 

Planning for retirement can feel less like a straight road and more like a path with a lot of turns. You know what you want: steady income, fewer “what ifs,” and confidence that your money will last as long as you do.

The challenge is choosing the right tools to support that future. Annuities are one of those tools, and while they are often misunderstood, they can play a powerful role in creating reliable retirement income.

When people hear the word “annuities,” terms like "fixed," "indexed," and "variable" may come to mind, sometimes with more confusion than clarity. Yet behind those labels is a simple idea: turning a portion of your savings into a stream of income you can count on. Instead of wondering whether your money will run out, annuities are designed to provide structure and predictability around your income.

With the right guidance, annuities can move from “complicated product” to “practical solution.” They are not just about investment returns; they are about protecting the lifestyle you’ve worked hard to build.

 

Understanding Annuity Types

A fixed annuity is often the easiest place to start. It offers a guaranteed rate of interest over a set period and can provide a stable, predictable income stream in retirement. The insurer promises to pay you a specific amount according to your contract, similar to a pension-like payment. Your principal is shielded from market swings, which means your account balance does not rise and fall with stock performance.

Because of this stability, fixed annuities are especially appealing if you value clarity about what your future income will look like. They can be a useful way to cover essential expenses, such as housing, utilities, and groceries, since you know how much will be coming in. When you choose to “annuitize,” you can often convert that value into a lifetime income, which addresses one of the biggest retirement fears: outliving your savings.

Indexed annuities add another layer of potential growth. They tie interest credits to the performance of a market index, such as the S&P 500, without putting your money directly at risk in the market. You can benefit from a portion of index gains while still having protection from losses when the index drops. There are usually caps, participation rates, or spreads that limit how much of the upside you receive, so it’s important to understand how those features work.

At the same time, indexed annuities remain focused on long-term stability, not aggressive speculation. Many offer lifetime income options similar to fixed annuities, aiming to balance growth opportunity with protection and guarantees. For someone who wants more potential than a traditional fixed annuity but less risk than being fully invested in the market, indexed products can be an attractive middle ground.

To clarify the roles of these options, it can help to see them side by side:

• Fixed annuities emphasize guaranteed interest and predictable lifetime income
• Indexed annuities balance principal protection with index-linked growth potential
• Both types can be structured to help reduce the risk of outliving your money

Both fixed and indexed annuities are built with longevity risk in mind. They aim to make sure your income continues for as long as you live, not just as long as your account balance lasts. Choosing between them comes down to your comfort with market-linked features, your need for certainty, and how you want your overall retirement plan to behave in different conditions.

 

How Annuities Guard Against Running Out of Money

Variable annuities introduce more growth potential by allowing you to allocate funds among different investment subaccounts, such as stock, bond, or money market options. The value of the annuity, and therefore your potential income, will move up and down with market performance. This approach is geared toward investors who are comfortable with market risk and want the opportunity for higher long-term returns inside an insurance wrapper.

Many variable annuities include riders or features such as a guaranteed minimum income benefit (GMIB) or similar protections. These guarantees can provide a baseline level of income even if the underlying investments perform poorly. You gain the potential for market-driven growth while still maintaining a safety net for essential income. The trade-off is that fees for variable annuities are typically higher, reflecting the investment options and guarantees they include.

Another meaningful feature to consider is the joint life option. This design allows income payments to continue over the lifetimes of both you and your spouse. If the primary annuitant passes away first, the surviving spouse continues to receive payments, which can be a major source of comfort in planning for a shared financial future. While joint life options usually mean slightly lower initial payments than single life options, they offer lasting support for couples who are planning together.

Inflation protection is also worth reviewing. Some annuities offer riders that increase income over time to help offset rising costs. These features can be valuable for retirees who are concerned about their purchasing power 10, 15, or 20 years down the road. They often come with higher initial costs or lower starting payments, so a careful comparison is important before choosing them.

Key income and protection features many people look at include:

• Lifetime income riders that provide guaranteed payments for life
• Joint life options that continue income for a surviving spouse
• Minimum income guarantees that support you in weak market periods
• Optional inflation adjustments that help keep pace with rising costs

Taken together, these features show how annuities are designed to address the worry of running out of money. They allow you to convert a portion of your savings into structured income tailored to your goals. When paired with other income sources like Social Security and pensions, annuities can fill gaps and help maintain stability through different stages of retirement.

 

Strategic Retirement Planning with Annuities

Annuities work best when they are part of a broader, coordinated retirement income strategy. Instead of relying on a single product, many people benefit from a mix of annuity types and different start dates. For example, using a fixed annuity to cover essential expenses, an indexed annuity for moderate growth with protection, and a variable annuity for long-term growth can create a balanced structure that responds to different needs over time.

Laddering strategies can also be useful. This might mean purchasing annuities at different times or using deferred annuities that begin paying later in life. Deferred income annuities, sometimes called longevity annuities, can start benefits at ages like 80 or 85. By setting up income that begins later, you can protect yourself against the risk of a very long life while using other resources earlier in retirement.

Cost-of-living adjustments and other riders can further personalize your plan. While these features may involve higher initial premiums or lower starting payments, they help match your future income with your expected expenses. Women and couples, who often need to plan for longer time horizons, may find particular value in layering these types of protections to extend confidence deeper into retirement.

When you integrate annuities with other income sources, you gain a clearer view of how your retirement finances fit together. Social Security, employer pensions, personal savings, and annuities can each play a distinct role. Annuities are often used to create a “floor” of reliable income, while investments and savings provide flexibility for discretionary spending, travel, gifts, or unexpected costs.

In practice, a thoughtful annuity strategy can help you:

• Match guaranteed income streams to ongoing essential expenses
• Use growth-oriented investments for long-term or discretionary goals
• Reduce pressure on investment accounts during market downturns
• Increase confidence that income will last as long as you need it

The key is that no two retirement plans should look exactly the same. Your health, family situation, goals, and comfort with risk all shape which annuity options make sense. An independent agent who understands annuities and the wider retirement picture can help you compare your choices and build a plan that fits your real life, not just a generic model.

Related: Which Retirement Income Option is Best: Annuities or Others?

 

Building a Retirement Income Plan You Can Trust

At Larry Fulmer Insurance Agency, we know that financial security in retirement is about more than numbers. It is about knowing that your income is structured to last, that you have a plan for both everyday life and the unexpected, and that you are not facing these decisions alone. We take the time to explain how fixed, indexed, and variable annuities work, how their guarantees differ, and how they might support your long-term goals.

We work with you to evaluate your full retirement picture, including Social Security, pensions, savings, and insurance. From there, we help you decide how annuities can fit in, whether that means building a base of guaranteed income, adding growth potential with protection, or creating a backup income stream later in life. Our goal is to help you feel clear, prepared, and in control of your decisions, rather than rushed or uncertain.

Contact us to discuss the different avenues we can place the money in, ensuring you are informed when it comes to distributing your funds across varied strategies. 

Call us directly at (972) 377-0924 or email [email protected] for more information.