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    Understanding annuity income

    SEPTEMBER 11, 2026

    annuity income

    If you've been hearing more about annuities lately, there is a reason. When market uncertainty and rising inflation meet the continued decline of traditional pensions, more pre-retirees and retirees are turning their attention to guaranteed* income options.

    The 2025 Protected Retirement Income and Planning (PRIP) Study conducted by the Alliance for Lifetime Income by LIMRA found that 54% of Baby Boomers and Gen X investors say they're worried about outliving their assets in retirement—that number is up six points from just a year ago.1 Despite this rising concern, only 1 in 5 pre-retirees currently own an annuity.2

    Annuities are insurance contracts designed to help meet a variety of financial needs. Depending on the product, they may provide a source of retirement income, growth opportunities, death benefit features or other benefits that can help support long-term financial goals.
     

    What is annuity income?

    Annuity income refers to payments you receive from an annuity, either for a set period or, depending the contract, for the rest of your life. Annuities are insurance contracts issues by life insurance companies that can serve a variety of financial goals. While some are designed to help provide retirement income, others may focus on tax-deferred† growth potential, investment opportunities, death benefit features or a combination of these benefits. They can complement other retirement incomes sources, such as Social Security, personal savings and pensions.

    When you choose to begin receiving income, an annuity can provide a stream of payments through annuitization or, if available, an optional living benefit rider. Income may begin immediately or at a future date you choose, depending on the contract. The amount you receive depends on factors such as the type of annuity, the value of the contract, any elected income features, your age when income begins, investment performance (for products with investment options) and other contract terms.

    There are several types of annuities, each designed to meet different income needs and retirement timelines. Jackson offers a range of annuity products designed to provide reliable and flexible income options for retirement, and your financial professional can help determine which type may be right for your specific needs.
     

    Types of annuities

    There are a variety of annuity options available, each designed to meet different income needs, levels of risk tolerance and retirement timelines.

    • Immediate annuities are purchased with a lump sum and begin paying income shortly after purchase—typically within 30 days to a year. They may be an option for someone who needs income now and wants to convert a portion of their savings into a predictable payment stream right away.
    • Fixed annuities offer a fixed interest rate for a specified period and are designed for those seeking predictable growth without direct market exposure.
    • Fixed index annuities provide growth potential tied to the performance of a market index while helping protect your principal from market losses. Some contracts also offer optional features, such as guaranteed lifetime income‡ or enhanced death benefits, for an additional cost.§
    • Variable annuities offer a range of investment options,** with your account value fluctuating based on their performance. Because the value of a variable annuity can rise or fall with market performance, it carries investment risk, including the possible loss of principal. It may be a good fit for those seeking long-term growth potential and who are comfortable with market risk.
    • Registered index-linked annuities (RILAs) allow for growth tied to the market, but come with built-in protection features. Gains are tied to an index and subject to a cap rate, and investors can choose their level of protection through a buffer. It’s important to keep in mind that losses beyond the protection level can still reduce principal.

    Jackson offers all of these annuity types, and a financial professional can help evaluate which may be the best fit for your retirement income goals.


    The benefits of annuity income

    For many people approaching retirement, the question isn't whether they want a reliable income stream—it's how to create one. According to the research from the Alliance for Lifetime Income by LIMRA, nearly half of pre-retirees say they won't have enough guaranteed income to cover basic living expenses in retirement.3 Annuities directly address that need.

    One of the most significant benefits of an annuity is a stable income stream. Contract owners receive regular payments over a specified period or for life, offering a reliable income source in retirement.

    Annuities also offer potential tax benefits. Earnings generally grow tax deferred until withdrawn, allowing you to postpone paying taxes on investment gains until you begin taking distributions.

    Some annuities also offer protection against market volatility—a feature that may be increasingly important as you move closer to and through retirement. This is especially beneficial during economic uncertainty when market swings can put your retirement savings at risk.

    Jackson offers a range of annuity products designed to address all three of these needs: reliable income streams, tax advantages and protection against market fluctuations.
     

    What to consider when choosing an annuity

    Annuities come in a variety of types, each with unique features and tradeoffs—and the right choice depends on your individual circumstances and retirement goals. A few key considerations can help you decide what would work best for you.

    • Timing: If you need income now, an immediate annuity may be worth exploring. If retirement is still a few years away, a deferred annuity can give your money time to grow before payments begin.
    • Risk tolerance: If you're looking to reduce market risk and increase protection on what you've saved, a fixed or fixed index annuity may be a better fit. If you're comfortable with some market exposure in exchange for greater growth potential, a variable annuity or RILA might be worth consideration. Where you fall on that spectrum will help point you toward the right type.
    • Income options: If your annuity includes income features or you choose to annuitize your contract, you may have options for receiving income, such as lifetime payments or payments over a specified period. Available options vary by contract, so consider how each aligns with your income needs and overall retirement plan.
    • Surrender charges and fees: If you think you may need access to your funds before a contract's surrender period ends, it's important to understand what that could cost. Annuities can carry charges for early withdrawals, and knowing those terms upfront helps you make a decision that fits your broader financial picture.

    Working with a financial professional

    Annuities can be a valuable part of a retirement income plan and should be evaluated based on your specific financial situation. With the variety of options, payout structures, timing and contract terms, a financial professional can provide personalized guidance to help you make the decisions that best fit your needs.

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    *Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

    †Tax deferral offers no additional value if an IRA or qualified plan, such as a 401(k), is used to fund an annuity and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a legal entity such as a corporation or certain types of trusts.

    ‡For the optional living benefit, the for life guarantee becomes effective on the activation date. For the embedded living benefit, the for life guarantee becomes effective on the issue date.

    §Benefits that provide income for the length of a designated life and/or lives may be available for an additional charge. The amount of income that these benefits may provide can vary depending on the age when income is taken, and how many lives are covered when the benefit is elected. The cost of these benefits may negatively impact the contract's cash value. There is no guarantee that an annuity with a living benefit will provide sufficient supplemental retirement income.

    **Select up to 99 investments and adjust options or allocations up to 25 times each contract year without transfer fees. To prevent abusive trading practices, Jackson restricts the frequency of transfers among variable investment options including trading out of and back into the same subaccount with a 15-day period.

    1. Alliance for Lifetime Income by LIMRA, "2025 Protected Retirement Income and Planning (PRIP) Study," LIMRA Consumer, 2025. 

    2. LIMRA, "U.S. Annuity Sales Set New Record in First Half of 2025," LIMRA.com, 2025.

    3. Ibid.

    Annuities are long-term, tax-deferred vehicles designed for retirement and are insurance contracts. Variable annuities and registered index-linked annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met. Add-on living benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity and may be subject to conditions and limitations. There is no guarantee that an annuity with an add-on living benefit will provide sufficient supplemental retirement income.

    Before investing, investors should carefully consider the investment objectives, risks, charges, and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses provide this and other important information. Please contact your financial professional or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

    Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. Clients should rely on their own independent advisors as to any tax, accounting, or legal statements made herein.

    Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York. For variable annuities, guarantees do not apply to the principal amount or investment performance of a variable annuity’s separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

    The latest maturity date or income date allowed under an annuity contract is age 95, which is the required age to annuitize or take a lump sum. Please see the prospectus for important information regarding the annuitization of a variable annuity contract.

    Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York).  Annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These contracts have limitations and restrictions. Jackson issues other annuities with similar features, benefits, limitations, and charges. Contact Jackson for more information.

    Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company®, and Jackson National Life Insurance Company of New York®.