Understanding Annuities: Are They the Right Fit for [ Your Retirement Income Plan?

When it comes to retirement income, longevity is both a blessing and a planning challenge—especially for women. On average, women live longer than men, meaning your retirement income needs to last longer, too. That’s where annuities can come into play.

While annuities often spark confusion (and even skepticism), they can serve a valuable purpose in a well-rounded retirement plan—particularly for those seeking guaranteed, consistent income. But like any financial tool, they’re not one-size-fits-all.

Let’s break down what annuities are, how they work, and when they might make sense for your retirement income strategy.

What Is an Annuity?

An annuity is a contract between you and an insurance company. In exchange for an upfront payment or a series of payments, the insurance company guarantees regular income—either starting right away (immediate annuity) or at a future date (deferred annuity).

There are several types of annuities, including:

Fixed Annuities: Provide predictable, guaranteed payments.
Variable Annuities: Payments vary based on investment performance.
Indexed Annuities: Payments are linked to the performance of a market index, like the S&P 500, with some downside protection.

Why Women Should Consider Annuities

Women typically live longer and are more likely to outlive a spouse, making lifetime income especially appealing. Annuities can be particularly beneficial for:

Longevity protection: A stream of income that can’t be outlived.
Supplementing Social Security or pension gaps: Reliable income for essential expenses.
Reducing sequence-of-return risk: Protecting income in down markets.

Pros of Annuities in Retirement Planning

Guaranteed Lifetime Income: Helps cover non-negotiable expenses like housing, food, and healthcare.
Tax-Deferred Growth: Your money can grow without immediate taxation until withdrawal.
Customizable Options: Riders can provide inflation protection, spousal benefits, or long-term care coverage.
Peace of Mind: For conservative investors or those with limited pensions, annuities reduce the stress of market fluctuations.

Potential Drawbacks and Considerations

Fees and Expenses: Some annuities—especially variable or indexed—carry high costs.
Complexity: Terms and riders can be confusing. Transparency is essential.
Liquidity Restrictions: Many annuities impose surrender charges if you withdraw funds early.
Inflation Risk (with Fixed Annuities): Payments may not keep up with rising costs unless inflation protection is built in.

When Does an Annuity Make Sense?

Annuities are not for everyone—but in the right circumstances, they can be a powerful complement to other retirement assets. You may want to consider an annuity if:

You want a portion of your income guaranteed for life.
You’re concerned about longevity risk.
You have already maxed out other tax-deferred accounts.
You want to diversify income sources beyond market-dependent assets.

Apriem’s Approach to Annuities

At Apriem Advisors, we take a values-driven, client-first approach to retirement planning. If an annuity is a good fit, we help evaluate:

How it supports your overall retirement income plan
Whether fees are appropriate and transparent
The quality and strength of the issuing insurance company
How to coordinate annuity income with other income streams like Social Security, RMDs, and investments

We prioritize simplicity, education, and transparency—ensuring that our clients understand exactly how an annuity fits into their long-term vision for retirement.

Final Thought

Annuities aren’t good or bad—they’re tools. The key is understanding how (and if) they serve your specific retirement income needs. For many women, especially those seeking peace of mind and predictable income, annuities can provide an important foundation for financial confidence in retirement.

Interested in learning whether an annuity is right for your financial plan?
Contact us at bri@apriem.com for personalized, transparent guidance.