A Practical Guide to Choosing the Best Annuities for Your Retirement

 If you’ve ever thought about creating a reliable income stream in retirement, you’ve probably come across annuities. And if you’ve ever googled “best annuities”, you probably ended up more confused than when you started.

As financial professionals—not insurance agents—our goal is to help you understand annuities in plain language, highlight their benefits and pitfalls, and help you figure out which type (if any) might be a smart fit for your long-term strategy.

What Is an Annuity, Really?

At its core, an annuity is a contract between you and an insurance company. You give them money either in a lump sum or over time, and in return, they promise to give you income—usually starting at a later date. Think of it as buying a personal pension.

Sounds simple, right? Not quite.

There are different types of annuities, each with their own rules, risks, and potential rewards. The best annuity for someone depends on their goals: income, growth, protection, legacy, or tax deferral.

The Main Types of Annuities

Before we dive into what makes the best annuities, let’s break down the main types you’ll encounter:

1. Immediate Annuities

You pay a lump sum, and the insurer starts paying you income right away—usually for life. This is a good option if you’re nearing or already in retirement and want guaranteed income you can’t outlive.

2. Deferred Annuities

These start payments in the future and can grow over time. There are three main flavors:

• Fixed – Offers a guaranteed interest rate for a set period.
• Indexed – Tied to a market index like the S&P 500. Gains are capped but never go below zero.
• Variable – Invested in sub-accounts (similar to mutual funds). Offers high growth potential but also high risk.

3. Fixed Indexed Annuities (FIAs)

A hybrid option gaining popularity. You get market-linked returns with downside protection. It’s not a get-rich-quick tool, but for conservative investors, it can be a strong fit.

4. Income Riders

Some deferred annuities come with optional riders that guarantee future income, even if your account value drops. These are especially helpful for people planning 10-20 years down the road.

 

What Makes the Best Annuities?

There’s no single “best” annuity. The best one is the one that fits your unique needs, risk tolerance, and timeline. That said, here are key features to look for:

1. Strong Carrier Ratings

Always go with an insurer that’s financially stable. Check A.M. Best, Fitch, and Moody’s ratings. Remember: this is about long-term promises, so stability matters.

2. Low Fees (or Transparent Fees)

Variable annuities can be notorious for hidden fees. Fixed and indexed annuities usually have lower costs, but check for administrative, mortality, and surrender charges. If it’s not clear, ask—then ask again.

3. Flexible Payout Options

Look for plans that offer choices: lifetime income, joint payouts, or period-certain options. Flexibility becomes important if your situation changes.

4. Competitive Rates

Whether it’s the fixed rate on a MYGA (multi-year guaranteed annuity) or the participation rate on an FIA, you want your money to grow. Compare several offers before choosing.

5. Strong Income Riders (If Needed)

If you’re buying an annuity specifically for future income, look at the guaranteed income growth rate (some offer 6–8% compounded annually) and how income is calculated later. Don’t confuse this with the actual investment return—these are often separate figures.

 

Top Annuity Options We’re Seeing in 2025

Based on recent data, here are a few annuity products and companies getting attention for strong performance, fair terms, and good consumer satisfaction (keep in mind, availability may vary by state):

• Athene Agility 10 – A strong fixed indexed annuity with a generous income rider and no annual fees.
• Nationwide Peak 10 – Offers downside protection and growth potential with flexibility in payout options.
• MassMutual RetireEase – A solid immediate annuity with strong payout rates and multiple options.
• Fidelity Personal Retirement Annuity – Low-cost variable annuity ideal for tax-deferred growth in retirement planning.

Remember, these are just examples. What’s best for your neighbor might not be best for you.

 

Pros and Cons of Annuities

Pros:

• Guaranteed lifetime income
• Tax-deferred growth
• No market risk (for fixed and indexed annuities)
• Protection against outliving your money
• Can be tailored to your financial goals

Cons:

• Can be complex
• Limited liquidity (often with penalties for early withdrawal)
• Potentially high fees (especially variable annuities)
• Limited upside in strong markets
• Not all are inflation-protected

 

Who Should (and Shouldn’t) Consider Annuities?

Annuities can be a great fit if:

• You’re close to or in retirement and want guaranteed income
• You’re risk-averse and want protection against market losses
• You’ve maxed out other retirement accounts and want tax-deferred growth

But they’re not ideal if:

• You need flexibility and full access to your money
• You’re chasing aggressive growth (look to stocks instead)
• You don’t understand the product—never buy something you don’t fully get

 

Final Thoughts

Annuities are not inherently good or bad—they’re just tools. Used right, they can be a core part of your retirement income strategy. Used wrong, they can become an expensive mistake.

The best annuities are the ones that fit your goals, timeline, and tolerance for risk. Work with a financial professional who isn’t pushing a specific product but is genuinely looking at your big picture. Take your time, ask questions, and never be rushed into a decision.

You only retire once—make sure your money lasts as long as you do.

types of annuities