What is an annuity?

Basics of annuities

An annuity is a retirement product that may provide protected, reliable income when you need it. An annuity can help bridge the gap between the savings you’ve accumulated over time and traditional sources of retirement income, like Social Security. Plus, if you don’t need the income immediately, you can let it potentially grow tax deferred.* That’s why an annuity can be a powerful addition to your financial plan. 

Annuities can be versatile with a variety of options tailored to your retirement plan. When considering an annuity, the process can look like this: 

  1. Decide when you need retirement income: You can invest a lump sum and choose to start receiving payouts immediately, or down the road.
  2. Choose a product that’s right for you: We offer a variety of annuities that may fit your specific retirement needs.
  3. Customize your plan with unique options: Discover how add-on benefits can guarantee income for life or help you leave a legacy.

How do annuities work?

Annuities can provide several retirement benefits. Our annuities offer flexible choices so you can choose the options that help meet your wants and needs.

The way an annuity works is that you pay your premiums to an insurance company - either as a single, lump sum payment, or in smaller payments over the course of time. The amount you pay into an annuity contract can potentially grow tax-deferred.

You can choose when you want to start receiving annuity payments from your contract in return. The size of your payment is based on the accumulated value in your annuity, your type of annuity, and the terms you chose at the beginning of your contract. You can receive these payments for the rest of your life, or whatever other options you may have chosen at the beginning of your contract.

An annuity is a long-term retirement product, there can be withdrawal charges if you leave the contract early, and a 10% tax penalty if you withdraw before age 59 ½ .

Here at Jackson, we also offer modern annuities where you can retain ownership over your funds and still receive potential lifetime income or legacy benefits for an additional cost. This way, you can have more flexibility in case your life circumstances change.

Keep reading to learn more about specific types of annuities.