Fixed vs. Variable Annuity
A fixed annuity delivers a fixed rate of return—or a guaranteed income for a specified period of time. During that time, their investment is guaranteed to grow at the agreed-upon rate.
A variable annuity invests annuity funds for a possibly higher—or lower—rate of return, based on market fluctuations.
A third option—an indexed annuity—offers something of a middle path: performance that’s benchmarked to a market index, such as the S&P 500. Generally, indexed annuities cannot lose value, even in a down market.
Deferred vs. immediate annuity
A deferred annuity accumulates annuity value on a tax-advantaged basis over time, say during your working years, and then convert the value to a guaranteed income stream at a specific time in the future.
A single premium immediate annuity (SPIA) is an annuity that is purchased with a single lump-sum payment and can begin generating income immediately. It skips the accumulation phase altogether.