Annuities

Retirement income with continued access to your account value.

Most people's only reference point for an annuity is a pension — money goes in, and it never comes back except as a monthly check. Today's annuities can work very differently. Here's the real comparison, in plain language.

	Traditional Pension-Style Annuity	Indexed Annuity with Income Rider
Typically funded by	Employer contributions	401(k), 403(b), 457, IRA, TSP rollovers, or personal savings
Income	Income for life, once annuitized	Income for life, activated through an income rider
Access to your money	Generally none — the account is annuitized, meaning you exchange the lump sum for a payment stream	Typically retained — you keep access to the underlying account value, not just the income payments
What's left for beneficiaries	Depends on the payout option chosen; often nothing beyond a spousal continuation, if elected	Remaining account value generally passes to your named beneficiaries

The Traditional Model

Pension-Style Annuitization

This is the model most people picture when they hear "annuity" — and for a long time, it was the only real option. Here's the typical path:

Employer→ Contributions→ Life Insurance Co.→ Annuity→ Income for Life

The trade-off: annuitization. Once the account is annuitized, it's converted into a stream of payments — you generally give up direct access to the underlying lump sum in exchange for guaranteed income. Depending on the payout option selected, a surviving spouse may continue receiving a reduced benefit, but any remaining value typically does not pass on to children or other heirs.

A Modern Alternative

Indexed Annuity + Income Rider

Indexed annuities can be funded from a wider range of sources, and structured very differently:

401(k) / 403(b) / 457 / IRA / TSP→ Life Insurance Co.→ Indexed Annuity→ Income for Life

Income rider, not annuitization. An income rider can turn on a lifetime income stream without requiring you to give up ownership of the underlying account.
Growth potential linked to a market index. Indexed annuities generally do not receive negative index credits due solely to market declines, subject to contract terms — though growth is typically limited by a cap or participation rate, and specifics vary by carrier and product.
You retain access. Unlike a fully annuitized pension, you typically keep access to the remaining account value, not just the income payments.
A legacy for your family. Because the underlying account isn't given up to activate income, any remaining value generally passes to your named beneficiaries when you pass away.

The Real Difference

It comes down to one question: do you want to keep control of your money?

Both paths can provide reliable income for life. The real difference is what happens to your money along the way — and what's left for the people you'd want to leave something to.

Pension-Style

You trade the lump sum for income

No annuitization required
Account access generally given up
Contractually guaranteed lifetime income, backed by the claims-paying ability of the issuing insurer
Little to nothing typically passes to heirs beyond spousal continuation

Indexed Annuity

You keep the account, and add income

No annuitization required
Account access typically retained
Growth potential; generally no negative index credit solely from market declines, subject to contract terms
Remaining value generally passes to beneficiaries

Let's see what this looks like with your numbers.

Every carrier and contract is different — the details matter. Let's walk through yours together.

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