A Fixed Annuity for Retirement Income

By Stock Research Pro • January 30th, 2010

A fixed annuity, also known as an “equal” or “flat” annuity, is a long-term contract between an insurance company and the annuity owner under which the insurance company provides payments in fixed dollar amounts to the annuitant for the pre-defined length of the contract or (typically) until the annuitant dies. A fixed annuity is often used to create a guaranteed stream of retirement income as these annuities are backed by the “full faith and credit” of the insurance company providing the annuity.

While a fixed annuity offers growth with a predictable return and payments to the annuitant that are always the same, these payments will be negatively impacted by inflation and the purchasing power of the annuitant will decrease over time. In contrast, variable annuities (which add an element of uncertainty to the payment stream) offer more flexibility and the opportunity to take advantage of improving market conditions.


The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.

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