Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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How safe is a fixed annuity?

Choosing a fixed annuity is one of the safest retirement decisions you can make. The fixed annuity ranks among the savings account, the certificate of deposit, and the money market account as the kind of investment you can count on with the most certainty during your golden years. Is the fixed annuity flashy? No. Is the fixed annuity safe? Absolutely!

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Thanks to the Internet, it is easier than ever before to research the fixed annuity and other elements of a safe retirement plan. The easy to navigate tool on this page allows you to compare safe fixed annuity rates from different insurance companies across the United States. Just type your zip code into the box above in order to initiate the rate comparison process. It is safe and pain free—much like the fixed annuity.

What exactly is a fixed annuity?

A fixed annuity is a safe and effective means of saving, accumulating, and withdrawing retirement money. By entering into a contract with one’s insurance company, the investor agrees to put a certain amount of money into an account that will be managed by the insurance company. The money will grow TAX FREE for an agreed upon period of time (anywhere from 3 to 15 years is common), at which point it may be withdrawn. To take the money out earlier is to subject oneself to significant surrender charges.

Many investors choose to withdraw their fixed annuity retirement money in periodic increments that imitate the checks they received while working. One of the factors that makes the fixed annuity such a safe investment is the fact that all the money invested is guaranteed to be there when the investor retires. Fixed annuities also accrue interest at rates that are competitive and relatively reliable.

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What are the elements of a safe fixed annuity?

There are several factors that go into the fixed annuity’s designation as a safe retirement planning option.

  • The original investment—the principal—is guaranteed
  • The investment grows as competitive interest rates are applied
  • Taxes are deferred until the money is withdrawn
  • Since the investor controls the timing and amount of withdrawals, he can influence the timing and amount of taxes

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Will a fixed annuity protect me throughout my retirement?

The fixed annuity is guaranteed for the entirety of the investor’s retirement. The fixed annuity contract specifies periodic payments that are calculated based on the interest rate and the average life expectancy. Investors who live longer than the average American will find themselves benefitting at a higher rate thanks to the fixed annuity as a guaranteed retirement investment.

Riders are available to allow investors the option to pass along any unused funds to their heirs after they die. The withdrawals the investor makes while alive will be a bit lower once he chooses this lump sum refund option. An investor who wants to get the most out of his investment during his lifetime would choose the “life only” option instead.

Taxes and the fixed annuity

As discussed above, a fixed annuity is a tax deferred investment. No taxes are paid until the invested funds are withdrawn. With any given withdrawal, the investor is actually only paying taxes on a small portion. The financial term used to describe this mathematical reality is the exclusion ratio. It is an equation that lends itself to making the fixed annuity such a safe and beneficial option.

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Protect Yourself

The details—often in fine print—that surround the fixed annuity can be difficult to comprehend. It is imperative to take your time in researching and selecting your fixed annuity so that you are able to come to a full understanding of this financial strategy before you implement it. It is crucial to take a close look at the taxes, fees and sales commissions associated with the fixed annuity. They vary widely from one insurance company to the next. Be sure to look at many different options to find the insurance company with the fixed annuity that’s most ideally suited for your situation.

Find a safe fixed annuity that’s best for you

If safety is a key component of your retirement plan, then a fixed annuity may be right for you. It is solely a matter of finding the right one. Do not delay in trying out the annuity rate comparison tool on this page in order to gain access to the offerings from insurance companies across the country. The rate comparison tool—like the fixed annuity—is safe and effective. Start planning for a secure retirement today. Enter your zip code to compare annuity quotes now!