Variable Annuities (VAs) are insurance contracts that combine tax-deferred investing with insurance guarantees. They’re one of the most powerful — and most misunderstood — retirement products available.
When you purchase a VA, you invest a premium (typically $25,000 to $500,000) into sub-accounts that work like mutual funds. Your money grows tax-deferred, meaning you don’t pay taxes on gains until you withdraw.
What makes a VA different from a regular investment account is the guarantee rider — an insurance feature you pay for that protects against specific risks.
Protects your heirs. If you die while the contract is active, your beneficiaries receive at least your original investment, regardless of market performance.
Protects your principal. After a specified period (usually 10 years), you’re guaranteed to receive at least your original investment back, even if the market crashed.
Guarantees a minimum annual withdrawal amount, regardless of market performance. You can withdraw a set percentage of your benefit base each year.
Like GMWB but with two powerful additions: a rollup that grows your benefit base at a guaranteed rate, and a ratchet that locks in market highs. This is the most popular guarantee type.
Guarantees a minimum lifetime income stream when you convert your account to an annuity. Combines growth potential with pension-like income.
VA fees typically include:
Variable Annuities make the most sense for:
The best way to understand a Variable Annuity is to see it in action. Our free interactive calculator lets you simulate different guarantee types, fee structures, and market scenarios so you can see exactly how a VA would perform with your money.