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    Should a deferred annuity be part of your financial plan?

    november 7, 2025

    deferred annuity

    Have you ever wondered if it's possible to secure a stable income for your retirement? A deferred annuity might be the answer you're looking for.

    This retirement product can help you grow your investments while enjoying tax-deferred* benefits. Let’s dive into what deferred annuities are all about and the ways they can help bring confidence to your retirement planning.

     

    What exactly is a deferred annuity?

    An annuity is a long-term, tax-deferred vehicle designed for retirement. With a deferred annuity, you can save for retirement by letting your money build up over time.

    Unlike immediate annuities that start paying you right away, deferred annuities let your investment grow first. This means you can enjoy some tax-deferred growth on your contributions before you start pulling out money.

     

    Deferred annuities have two main phases: accumulation and income.

    During the accumulation phase, your contract value can grow based on either a fixed interest rate or investment returns, depending on how the chosen product. When you’re ready to retire or start receiving income, you enter the income phase. During the income phase, your money can continue growing tax-deferred while you're taking withdrawals.

    What makes deferred annuities appealing is their focus on long-term savings. This could be beneficial for anyone looking to create a steady income stream when they retire or someone who likes the idea of tax-deferred growth potential. Deferred annuities can offer multiple benefits, including an income stream that you cannot outlive.

     

    Different types of deferred annuities

    Ready to explore the different types of deferred annuities? These options let you save for the long haul while pushing taxes to the back burner until you’re ready to withdraw. Here are the three main types:

    • Deferred fixed annuities are all about predictability. They promise a guaranteed† minimum interest rate for a set period, which is great if you prefer a steady growth path. Your principal is protected, and you can benefit from competitive interest rates.
    • Deferred variable annuities add a bit of diversification‡ to your savings. They offer growth potential through a range of investment options—though they involve investment risk and may lose value. This makes them a good fit if you're comfortable with risk in pursuit of potentially higher returns.
    • Deferred indexed annuities offer a balance of growth and a level of protection. Your potential returns are tied to a market index, giving you opportunity for growth with some level of protection from market dips. While they still involve investment risk, and may lose value, they may be able to help you stay on track toward your financial goals.

     

    How do deferred annuities work?

    Deferred annuities are designed to help you save for retirement and eventually provide a reliable stream of income. They operate in two phases: accumulation and income.

    Accumulation phase: During this phase, your annuity is focused on growth. The money you contribute has the opportunity to earn interest or returns over time, depending on the type of annuity you choose. This period is all about building your savings and preparing for future income.

    Income phase: Once you're ready to start using those savings, you annuity shifts into the income phase. This is when you being receiving income—either through steady lifetime payments, payouts for a set number of years or flexible withdrawals—to help support your retirement goals.

    One perk of deferred annuities is their tax benefits. The earnings in a tax-deferred annuity can grow without you having to pay taxes immediately. This lets your money compound more effectively, potentially leading to a larger payout when you retire.

    Plus, you can choose how you want to receive your money, whether as a lump sum or through scheduled payments.

    Interest is credited to your deferred annuity based on the specific terms of your contract, which could be a fixed or variable rate. Deferred fixed annuities can offer competitive rates and various options tailored to meet your financial needs, so your retirement savings can work hard for you.

     

    Why consider a deferred annuity?

    One of the biggest draws of a deferred annuity is the sense of security it offers, thanks to the guaranteed† income it can provide during retirement. This can offer a sense of predictability, regardless of market ups and downs. It’s comforting to know that you can have a reliable income stream when you need it most.

    Another major plus is the potential for tax-deferred‡ growth. A tax-deferred annuity allows your investment to grow without immediate tax implications. This can lead to greater accumulation over time, harnessing the power of compound returns to help boost your retirement savings.

    Plus, deferred annuities offer you flexibility in investment choices. Whether you prefer fixed, variable or indexed options, you can select a plan that fits your risk tolerance and financial goals. This way, you can create a personalized investment strategy that can help maximize your future financial stability.

    Deferred annuities can also help support your wealth transfer goals. Many offer return of premium or enhanced death benefits, available for an additional charge, that can help you leave a financial legacy for your loved ones, working alongside your estate plan so your assets are plassed on the way you intend.

     

    Common concerns about deferred annuities

    Understanding deferred annuities is essential, especially when it comes to important situations like the fees or penalties that may be involved.

     

    Liquidity

    Liquidity is a common concern. Generally, deferred annuities aren’t liquid assets and can have penalties for early withdrawals before the surrender period ends. This is something to keep in mind if you're considering how quickly you might need access to your funds.

     

    Fees and surrender charges

    It’s also worth noting that there can be fees and surrender charges. Plus, the complexity of these products can sometimes lead to confusion about their terms and conditions. By prioritizing transparency and education, you can better understand deferred annuities and related products, helping you make informed choices that align with your financial goals.

     

    You don't have to make financial decisions alone

    Knowing the ins and outs of annuities—deferred or otherwise—can feel overwhelming. A financial professional can meet with you one on one, look at your financial situation, and help you decide what's best for your future. Don't hesitate to get your financial planning in order and talk to your financial professional about annuities today. 

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    *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.

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

    ‡Diversification does not assure a profit or protect against loss in a declining market.

    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. You should rely on your 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 and 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.

    Investing in taxable or tax-deferred vehicles involves risk, and you may incur a profit or loss in either type of account. Changes in tax rates and tax treatment of investment earnings may also impact comparative results. Investors should consider their personal investment horizon and income tax bracket, both current and anticipated, when making an investment decision, as these may further impact the comparison. 

    Withdrawals of tax-deferred accumulations are subject to ordinary income taxes. If withdrawn prior to age 59½, there may be an additional 10% federal tax penalty imposed. Lower maximum tax rates on capital gains and dividends could make the investment return for the taxable investment more favorable, thereby reducing the difference in performance between the hypothetical investments shown.

    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®.