Fixed annuities are insurance products designed to provide a guaranteed stream of income for a specified period or for life, depending on the terms of the annuity contract. They are a type of annuity where the insurance company guarantees a fixed rate of return on the principal amount invested by the annuitant. Fixed annuities are often used as retirement planning tools to provide a stable income stream during retirement.

Here's how fixed annuities work and some key features:

1. Guaranteed Interest Rate: One of the primary features of fixed annuities is the guaranteed interest rate. The insurance company promises to pay a fixed rate of return on the principal amount invested in the annuity. This fixed rate is predetermined and remains constant for a specified period, such as one year, three years, five years, or longer, depending on the annuity contract.

2. Principal Protection: Fixed annuities offer principal protection, meaning that the initial investment (premium) is safeguarded from market fluctuations and losses. Regardless of how the financial markets perform, the annuity contract ensures that the principal amount will not decrease due to market volatility.

3. Tax-Deferred Growth: Like other annuities, fixed annuities provide tax-deferred growth. This means that earnings within the annuity accumulate tax-free until withdrawals are made. This tax-deferral feature can be advantageous for retirement planning, allowing funds to grow faster compared to taxable investments.

4. Income Options: Fixed annuities offer various income options to the annuitant. These options include a fixed period annuity (income for a specified number of years), lifetime annuity (income for life), joint and survivor annuity (income for two individuals with survivor benefits), and other customized payout options. The annuitant can choose the option that best suits their retirement income needs.

5. Withdrawal Options: While annuities are designed for long-term income, most fixed annuities allow for penalty-free withdrawals of a certain percentage of the account value each year, typically up to 10%. However, withdrawals may be subject to surrender charges if made before a specified surrender period ends.

6. Death Benefit: Fixed annuities may include a death benefit feature that ensures beneficiaries receive the remaining value of the annuity contract if the annuitant passes away before receiving the full income payments. The death benefit amount can vary based on the annuity contract terms and options chosen.

Typical candidates for fixed annuities include:

• Individuals nearing retirement or in retirement who seek a stable and predictable income stream.

• Investors looking for conservative investment options with principal protection and guaranteed returns.

• Those who want to supplement other retirement income sources, such as Social Security and pensions, with steady annuity payments.

• Individuals who prioritize safety of principal and want to avoid market risks associated with stocks, bonds, and other investments.

It's important for individuals considering fixed annuities to carefully review the terms, features, costs, surrender charges, withdrawal options, and income guarantees before purchasing. Working with a knowledgeable financial advisor or insurance professional can help individuals understand whether fixed annuities align with their financial goals, risk tolerance, and retirement planning needs. Comparing multiple annuity quotes and exploring different annuity providers can also help individuals find the best annuity product for their specific circumstances.