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The 3 Essential Steps to Finding the Best Annuity for Your Specific Needs

Annuities are designed to protect your retirement assets from negative financial surprises during your retirement years allowing you to maintain financial independence throughout your retirement.  Annuities allow you to transfer specific financial risks to your retirement such as market downturns and the large unknown of how long your (and your spouse’s) retirement will last. They allow you to shift specific risk areas of your financial plan onto the large shoulders of Life Insurance companies. If utilized properly, you’ll be able to fill your financial gaps with specified contractual guarantees backed by an insurance company that provide you with protection from what could otherwise be detrimental to your financial independence… most common risks that annuities address are market downturns and the uncertainty of life longevity.

How Are Annuities Best Used?

Annuities are best used to address specific risks that you have in your current retirement plan. For instance, one very unique aspect of most annuity types is that they offer you a means of obtaining a known amount of income for the rest of your life… no matter how long that may be. This lifetime income stream can prove to be a much needed supplement to social security income for those without pensions given that social security alone is not meant to fully support your retirement.

Annuities are unique in the fact that they can provide a blend of insurance and investment benefits depending on the product type. There are many different types which cover the full spectrum of insurance to investments, so the good news is that you can create a customized solution to your specific needs with the right help. Unlike pure investments, annuities can provide you with guaranteed outcomes that are backed by large insurance companies. These guarantees can range from specifying the exact amount of money you’ll receive for the rest of your life to allowing you to participate in a portion of investment market gains while you’re guaranteed to not lose any principal in market downturns.

Given the risk focus and the large amount of annuity choices at your disposal, the first step in finding the right product should be to evaluate your risks.


STEP 1 – Evaluate Your Risks

Hopefully you have already established a retirement plan which includes listing your current assets and plotting the projected annual changes to all of your assets classes going forward. Without a plan, you have no way of knowing if you will have adequate assets throughout your retirement years and you’ll certainly have a tough time in determining the risks you face without having a baseline plan.

If you have not yet established a forward looking plan that which shows the process, we recommend working with a retirement planning professional in determining your plans because they have the knowledge and tools necessary to do this in an efficient and effective manner.

STEP 2 – Learn About the Different Annuity Types

Now that you know the risk areas of your retirement plan, it’s now time to learn about the array of different types of annuities that are available to you. For instance, don’t make a decision for or against the annuity industry until you know why the following types of annuities are or are not a fit for you:

  • Fixed Annuity
  • Fixed Index Annuity
  • Longevity Annuity
  • Multi-Year Guarantee Annuity (MYGA) – aka Fixed Rate Annuity
  • Single Premium Immediate Annuity
  • Variable Annuity

To help learn about these various types of annuities, you should reference Annuity Wiki-University, which is a tremendous educational resource that has many articles about all types from top annuity professionals across the country.

STEP 3 – Shop Across Insurance Carriers for Your Annuity Solution

After decideing on a specific annuity type to address your specific risk area(s), it is smart to look at more than just one or two insurance carriers for the top option. This process can be complicated and the slightest feature difference in one vs. another can result in a sizeable difference over the long term, so we highly recommend working with an independent annuity professional to help navigate through the product choices.  Although we do offer a product analysis tool in Annuity123 which covers over 1,200 products, we still recommend that you do not use it as the sole basis for your decision.

In order to find an independent annuity professional, we recommend seeking counsel from any of the contributors in Annuity Wiki-University since they are all established pros who are education-focused. If you have any trouble finding one who is licensed in your state, just send an email (containing your name, phone number, and zip code) to and we’ll be happy to point you in the right direction.

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Annuity123 does not offer insurance, investment, or tax advice.  You should always seek the guidance of qualified and licensed professionals concerning your personal insurance, investment, or tax matters.  Annuity Wiki-University is a platform allowing retirement planning professionals to help educate the community on various retirement planning topics.  Annuity123 does not directly support or take responsibility for ensuring the accuracy of the content displayed in the articles themselves or any feedback that may get added in the Comments section from the community.

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