Annuities, Explained From the Ground Up
Annuities have evolved for centuries, but the core promise—trading today's dollars for tomorrow's dependable income—remains the same.
A quick history lesson
Annuities began as communal income pools and now serve as contractual retirement tools. The constant thread: dependable income and protection when you need it most.
Ancient Rome
Citizens contributed to the annua for lifetime income.
Middle Ages
European governments used annuities to fund wars and public projects.
Modern day
Insurers design annuities for retirement income, legacy planning, and care support.
How Annuities Work
Every annuity follows the same foundation—even though the details vary by product. Trace the journey from your initial contribution to the moment you receive dependable income.
Pay a lump sum or make scheduled contributions. The insurer issues the contract and locks in your guarantees.
Your balance accumulates according to the annuity type—fixed interest, market-linked credits, or investment subaccounts.
Choose when to start payments. Income can begin immediately or in the future, and last for a set period or lifetime.
Benefits of annuities
They complement 401(k)s, IRAs, and brokerage accounts by adding stability, income, and protection where your plan needs it most.
Income you cannot outlive
Lifetime payouts turn a portion of savings into a predictable paycheck that is hard to outlive.
Stability in any market
Principal protection or minimum guarantees help you stay invested through volatility.
Tax deferral
Growth compounds without current taxes, so more of your money keeps working until you take income.
Care and legacy support
Riders can boost income during a care event and direct remaining value to loved ones.
How people put annuities to work
These are practical ways people blend annuities into their strategy. The right fit depends on your goals—Makonnen works with you to align features with what matters most.
Principal protection
Many contracts guarantee your original premium, shielding your nest egg from market volatility.
Long-term care options
Optional riders can double income for a period if you experience a qualifying care event.
Lifetime income
Turn savings into a reliable paycheck you cannot outlive—an annuity can function like a personal pension.
Legacy confidence
Name beneficiaries so remaining value or continued income supports the people and causes you love.
Tax-deferred growth
Earnings compound without current taxation, helping balances grow faster before you start distributions.
Myths about annuities
Clear the confusion with the facts so you can evaluate annuities confidently.
Annuities are only for the ultra-wealthy
Reality: Fact: Contracts can start with modest premiums, and flexible payout options make them useful for a range of retirement budgets.
All annuities lock up your money for too long
Reality: Fact: Most allow annual penalty-free withdrawals and offer varied surrender schedules so you can match access to your timeline.
You lose control once you start income
Reality: Fact: Many riders preserve account value for beneficiaries or let you delay income until the timing is right.
Fees always outweigh the benefits
Reality: Fact: Plain fixed and income annuities often have no ongoing fees, and riders with fees can provide guarantees you may value more than the cost.