- Annuities offer guaranteed income for retirees, but fees vary widely.
- Annuities can be fixed, variable, or indexed, each with different risk levels.
- Choosing the right annuity depends on risk tolerance, payment timing, and tax situation.
Are you anxious about outliving your savings in retirement? Annuities offer a simple solution in the form of guaranteed income through periodic payments, possibly even for the rest of your life. An annuity can be a reliable retirement planning tool when combined with the best retirement plans.
The best annuities provide peace of mind for current or future retirees who want to avoid prematurely running out of savings before they die. However, not all annuities are built the same, with some charging exorbitantly high fees for little payoff.
Best Annuities Summary
These are our top picks for the best annuity companies. Our personal finance team at Business Insider has reviewed the market-leading annuity companies to determine our top picks:
- New York Life Insurance: Best Life Annuity
- Nationwide Annuities: Best Variable Annuity
- Gainbridge: Best Fixed Annuity
- MassMutual Annuities: Best Immediate Annuity
- Allianz Life Annuities: Best Deferred Annuity
- Equitrust Annuities: Best Fixed Index Annuity (EIA)
- Athene Annuities: Best Multi-Year Guaranteed Annuity (MYGA)
Compare the Best Annuity Companies
The best annuity providers offer a strong combination of financial stability, diverse annuity options, and dependable customer support. Our list includes a mix of insurers and financial institutions, since the right provider for you will depend on your specific retirement goals and risk tolerance.
For each top pick, we've highlighted the standout features, benefits, or annuity products that make them worth considering. Read on to learn more about the best annuity companies.
New York Life Annuity
New York Life is a top annuity company offering some of the most competitive interest rates for retirees seeking guaranteed income for the rest of their lives. The Guaranteed Lifetime Income Annuity II from NYL offers the best annuity for guaranteed lifetime income with interest rates as high as 11.42%.
New York Life offers both individual and joint annuity products. Fixed-deferred and variable annuity products are also available.
The Guaranteed Lifetime Income Annuity II is a single-premium, immediate annuity contract with a $10,000 minimum premium. You can receive your income monthly, quarterly, semi-annually, or yearly.
Another annuity to consider is the Guaranteed Future Income Annuity II, which provides deferred income payments for life beginning on your chosen date. This contract has a $5,000 minimum premium.
Depending on your age and circumstances, certain payment options and withdrawal features are available to customize your annuity to suit your financial needs. For example, NYL allows you to withdraw up to 100% of the discounted value of the remaining guaranteed payments when you reach 59 ½, but only during a guaranteed payment period.
You can add optional features, such as increasing income payments by 1% to 3% each year to combat inflation over time.
New York Life is beginner-friendly, offering various educational resources like blog posts, webinars, and even a podcast about annuities as retirement strategies.
Pros of New York Life Annuities:
- Guaranteed Lifetime Income Annuity II provides rates up to 11.42%
- Flexible penalty-free withdrawal opportunities once you reach age 59 ½
- Add-ons available to personalize your annuity
- Financial Strength rating of A++ from AM Best
Cons of New York Life Annuities:
- No index-linked annuity options
Nationwide Annuity
Nationwide Annuities is the best annuity provider for variable annuities due to its large selection of products, including commission-based, investment-focused, advisory, and fee-based variable annuities. Its variable annuities also have competitively low fees and premiums.
Nationwide variable annuities grow tax-deferred and have over 100 variable investment options.
Variable annuities typically incur high fees because of underlying fund expenses, mortality and expense fees (M&E), and administrative costs, which average 2%-3% annually. However, Nationwide variable annuities have fees that range from 0.30% to 1.50%, depending on the contract (not including riders). In comparison, MassMutual's variable annuities charge a separate account fee ranging from 1.18% to 1.50% on top of an M&E fee ranging from 1% to 1.5%.
Premiums for Nationwide's variable annuity contracts are also low. For example, the Soloist annuity has an initial $300 premium, and the Best of America IV has no minimum investment requirement for buyers with a qualified 401(k) or similar plan ($1,500 minimum for non-qualified buyers). Other variable annuity premiums from Nationwide range from $3,000 to $25,000, with most initially requiring at least $10,000.
In addition, most Nationwide variable annuities (excluding the Destination Future annuity) include a premium-enhanced death benefit rider for no extra charge (usually 0.50 to 0.95% annually). This ensures that after you die, your beneficiaries will receive at least the amount you invested, regardless of market performance. Other fees still apply.
Pros of Nationwide Annuities:
- Those with a qualified 401(k) or similar plan can open a Best of America IV with no minimum investment requirement
- Low-cost variable annuity contract with low premiums
- Free premium-enhanced death benefit rider with most variable annuity contracts
- Financial strength rating of A from AM Best
Cons of Nationwide Annuities:
- Variable annuities carry a higher risk of losing value
- Lack of liquidity
Gainbridge Annuity
Gainbridge is a digital life insurance and annuity provider that offers low-cost and accessible fixed annuity contracts to help people grow and extend their retirement savings. Its annuity products offer principal protection on initial deposits with a fixed interest rate ranging from 5.45% to 5.80% APY, making it the best provider of fixed annuities.
You can purchase a Gainbridge annuity for as little as $1,000 as a lump sum. However, you earn the highest interest rates on initial investments of $100,000 or more. Since interest rates are fixed, you never earn less than your contract's minimum guaranteed interest rate.
Gainbridge doesn't charge annual fees or commissions on its annuity products, making it a top provider for fee-conscious investors. However, surrender charges (starting at around 3%) and early withdrawal penalty fees may apply. If you withdraw more than the free amount or full surrender from a SteadyPace annuity, you may be charged a market value adjustment.
Gainbridge offers tax-deferred and non-tax-deferred contract options with terms ranging from 3 to 10 years. At the end of your contract term, you can withdraw your full annuity amount (including the principal) or convert your funds into an income stream for a set period or even the rest of your life. You also have the option of renewing your contract for another term.
Earnings in your SteadyPace annuity are tax-deferred. There's flexible liquidity: You can withdraw a portion of the growth penalty-free each year, but not your principal payment.
Pros of Gainbridge Annuities:
- Minimum guaranteed interest rate up to 5.80%
- Low $1,000 minimum investment requirements
- No annual fees or commission
- Financial Strength rating of A- from AM Best
Cons of Gainbridge Annuities:
- Limited product selection
- No immediate, variable, or indexed annuities
MassMutual Annuity
MassMutual Annuities' RetireEase single premium, fixed annuity is the best for immediate income. With a one-time initial deposit of $10,000, it locks in guaranteed payouts within 13 months of purchasing. After, buyers can start receiving payouts monthly, quarterly, semi-annually, or annually.
Income annuities provide guaranteed, tax-efficient income without market risk. MassMutual's RetireEase annuity can provide income for a set period or the rest of your life. You can purchase up to the maximum age of 85.
In addition to its RetireEase income annuity, MassMutual offers deferred fixed annuities, variable annuities, fixed index annuities, and deferred income annuities. All of MassMutual's annuities include lifetime income options. However, certain MassMutual income and deferred income annuity contracts don't include death benefits.
To purchase an annuity with MassMutual, you must call and consult with one of the company's financial professionals. They consider your entire financial picture and recommend products to fit your situation.
Pros of MassMutual Annuities:
- RetireEase annuity provides immediate income within 13 months of buying for a $10,000 single premium
- Guaranteed lifetime income options are available with no fees
- Financial Strength rating of A++ from AM Best
Cons of MassMutual Annuities:
- Can't purchase an annuity online
Allianz Life Annuity
Allianz Life Annuities offers a wide selection of fixed index and registered index-linked annuities that prioritize creating tax-deferred income streams with limited market risk. Allianz's deferred annuities are geared toward pre-retirees in their 40s and 50s who want to lock in a guaranteed income stream and growth rate for their retirement, but aren't ready to start earning the payments.
A deferred annuity doesn't provide income immediately. Instead, payments are deferred until a later time, often several years or decades later. Allianz Life offers the best deferred annuities due to its multiple contract options, premium bonuses, optional income riders, and flexible withdrawal opportunities.
The growth earned in a deferred annuity combats inflation and the increased cost of living. Deferred annuities are often fixed, so you have a guaranteed rate of return. In addition to deferred fixed annuities, Allianz offers variable and index deferred annuities.
For example, the Allianz 360 annuity can be purchased starting at age 40 and generates tax-deferred growth over time based on the index option and crediting method you choose. The longer the money is left to grow, the bigger your payments will be.
Just like a traditional IRA or 401(k) plan, the money invested in your Allianz Life annuity is tax-deferred, so you won't pay tax until you withdraw.
Allianz also offers a Benefit Control annuity with greater liquidity access, which most insurance companies lack. This makes Allianz Life a strong choice for potential buyers concerned about locking their money up for several years. The Benefit Control annuity is designed to accumulate growth from your chosen allocations for a steady income stream in retirement. But it can be turned into an immediate annuity for those age 50 or older.
With Allianz Life, premiums range from $10,000 to $20,000. Fixed annuities have no contract fees, but registered index-linked annuities charge a $50 annual maintenance fee.
Pros of Allianz Annuities:
- Benefit Control annuity provides greater liquidity
- Large selection of deferred fixed index annuities
- Access to death benefits before the annuity matures (Allianz 222 annuity)
- A+ rating from AM Best
Cons of Allianz Annuities:
- Lack of immediate and fixed income annuities
Equitrust Annuity
Equitrust Annuities offers a diverse selection of fixed-index annuity contracts that grow based on the performance of a popular underlying index, such as the S&P 500 or Barclays Focus50 Index. Equitrust provides downside protection, withdrawal flexibility, and premium bonuses, making it the best provider of fixed-index annuities.
The initial premium minimum ranges from $5,000 to $10,000. Certain contracts, like the MarketPower Bonus Index Annuity, provide a 10% premium bonus added immediately to your annuity's accumulation value. Similarly, the MarketTend Bonus Annuity offers a 6% premium bond on premiums paid in the first five years.
Annuity contracts include downside protection, which shields your accumulated value from market downturns so you only benefit from market growth. In addition, Equitrust fixed index annuities have a guaranteed return rate that never dips below the preset minimum.
Equitrust offers flexible access to your money, allowing you to withdraw up to 10% of the accumulated value each year without penalty. Equitrust annuities include Death Benefits, a Nursing Home waiver, and a Terminal Illness Rider for no additional charge. These riders give you greater flexibility over your funds for major life events.
With an Equitrust index annuity, your rates are reset yearly or every two years. Accumulated growth is tax-deferred with a 10-year surrender charge schedule.
Pros of Equitrust Annuities:
- Flexible, penalty-free withdrawal period with built-in riders in case of illness, death, or the owner being moved into a nursing home
- Low $5,000 to $10,000 initial premium minimums
- Downside protection to shield from market losses
Cons of Equitrust Annuities:
- Lower financial strength rating of B++ from AM Best
- Hard to navigate website
Athene Annuities
Athene Annuities, one of the largest annuity providers in the US, offers a range of affordable fixed and index-linked annuities with multi-year strategies that lock in a set growth rate during your term period (three, five, or seven years). Earnings meet or exceed the contracted minimum but never exceed the guaranteed rate.
Multi-year guaranteed annuities (MYGA) lock in a specific guaranteed interest rate for a set term. MYGAs are usually deferred annuities.
Rates and terms for annuity contracts with Athene's MYGA strategy are as follows:
| Length of term | Under $100,000 | $100,000 or more |
| 3-year term | 4.5% | 4.75% |
| 5-year term | 4.95% | 5.2% |
| 7-year term | 4.95% | 5.2% |
Athene's initial premiums range from $5,000 to $1 million. You can contribute additional money afterward, but it must be at least $1,000 and not exceed $100,000 over a rolling 12-month period.
Another standout perk of an Athene annuity is that it doesn't have annual contract fees. Rider fees still apply.
Athene MYGAs include a flexible Withdrawal Charge period, which allows you to easily withdraw up to 10% of your annuity's accumulated value penalty-free each contract year. If you are diagnosed with a terminal illness, you can withdraw up to 100% of your annuity's accumulated value for no penalty.
Many of Athene's annuities include a Death Benefit. This guarantees that designated beneficiaries get your full accumulated or guaranteed contract value, whichever is greater, if you die before you annuitize your contract.
Pros of Athene Annuities:
- Low $5,000 initial premium
- No annual contract fees
- Penalty-free withdrawals are available during the Withdrawal Charge period
- Included Death Benefit for leaving a legacy
- Financial Strength rating of A+ from AM Best
Cons of Athene Annuities:
- Unavailable to New York residents
What Is an Annuity?
An annuity is a contract between you and an insurance company that helps retirees extend their retirement savings with a reliable income stream monthly, quarterly, semi-annually, or annually. Your premium investment grows through a pre-determined interest rate (fixed annuity) or market-linked investments (variable and index-linked annuities).
Depending on the type of annuity you buy, you can start receiving payments immediately or defer your payments for several years, even decades. Annuities generally require buyers to be at least 59 ½ before permitting penalty-free withdrawals. Otherwise, you incur a 10% early withdrawal fee from the IRS.
How Annuities Work
Annuities work by asking you to pay a minimum initial deposit, called a premium, that grows (often tax-deferred) through interest payments or investments. Premiums are most commonly paid as one lump sum up front, but could be deposited in smaller chunks over time in what is referred to as the accumulation phase.
You start receiving payments during the annuitization phase, which can last several years for a set period or the rest of your life.
Types of Annuities
Fixed Annuity
Fixed annuities provide guaranteed growth through a fixed interest. This locks in consistent periodic income without exposure to the market, making it the best annuity type for risk-averse individuals. However, by limiting risk, fixed annuities have more limited growth potential.
Variable Annuity
A variable annuity accumulates growth through investments like stocks, mutual funds, and index funds. This type of annuity offers the most growth potential and the highest level of risk. However, variable annuities tend to charge higher fees.
You can invest your premium in multiple subaccounts to invest in different market sectors. Like an investment portfolio, diversification across and within market sectors combats risk and volatility.
Fixed Index Annuities
A fixed or fixed-index annuity offers the best of both worlds, providing guaranteed growth through a fixed interest rate in combination with investments in popular market indexes like the S&P 500. Although less risky than a variable annuity, index annuities still pose a level of risk.
Deferred Annuity vs. Immediate Annuity
A deferred annuity doesn't start giving you payments until later in life. Depending on the age you buy it and your estimated life expectancy, you can defer your annuity payments for several years or decades. Keep in mind that you must start withdrawing funds by the annuity commencement date. For example, some New York Life annuities require buyers to withdraw by age 85.
Deferred annuities are best for buyers with a long time horizon who are comfortable locking in a growth rate on a portion of their retirement savings.
With an immediate annuity, or single premium immediate annuity (SPIA), you start receiving payouts relatively shortly after purchasing. The insurance company usually calculates your earnings based on your age, expected number of payouts, and current interest rates.
You can start receiving payments within the first 12 months of buying an immediate annuity. Some annuities encourage a flexible waiting period so your principal payment can accumulate some additional value.
An immediate annuity is best for retirees or soon-to-be retirees who need cash flow soon.
How to Choose the Right Annuity
Here's how to choose the right annuity to secure retirement savings over the long term.
Factors to Consider
Selecting the right annuity hinges on your comfort level with risk. Variable annuities offer potentially greater returns by investing in the market, which can be beneficial for combating inflation and the increasing cost of living. However, this potential comes with the possibility of investment losses. For those who are risk-averse, a fixed annuity, with its guaranteed growth, offers a more secure path.
Another factor to consider is when you want to start receiving payments. A deferred annuity is best if you don't need an income stream from your annuity until later in life. But if you want to start receiving payments in the near future, an immediate annuity is better.
Ensure you also consider your entire tax situation. If your other retirement savings are also tax-deferred, such as from a traditional 401(k) or IRA, you may end up paying considerable taxes on withdrawals during your retirement.
Annuity with Survivor Benefit Plan Options
A survivor benefit plan option allows any remaining annuity payments to go to your designated beneficiary after death. Most annuities include this benefit automatically, while others may require you to purchase a Death Benefit rider. Read the terms of your annuity contract carefully to see if a spousal continuation is included in your contract. If it is, you also want to ensure your spouse is listed as the beneficiary.
If you have a joint and survivor annuity with a spouse, the remaining annuitant can continue earning payments at a reduced rate after the other dies.
Summary of the Best Annuities
| Company Name | Best For | Account Minimum* | Annual Percentage Yield (APY)** |
| New York Life Insurance | Best Life Annuity | $5,000 | up to 4.60% |
| Nationwide Annuities | Best Variable Annuity | $1,500 | up to 5.25% |
| Gainbridge | Best Fixed Annuity | $1,000 | up to 5.80% |
| MassMutual Annuities | Best Immediate Annuity | $1,500 | up to 4.65% |
| Allianz Life Annuities | Best Deferred Annuity | $5,000 | Unpublished |
| Equitrust Annuities | Best Fixed-Indexed Annuity | $10,000 | up to 5.50% |
| Athene Annuities | Best Multi-Year Guaranteed Annuity | $5,000 | up to 5.30% |
*Annuity account minimums may vary by the product you select. Rates are accurate as of the publication date and subject to change.
**Annuity interest rates will vary based on the product type, premium amount, and duration you select.
FAQs
Are annuities a good idea for retirement income?
Annuities are a good idea for retirement income for retirees with a low risk tolerance who are concerned about outliving their savings. They are also a good retirement planning tool for those seeking guaranteed income during retirement. However, annuities are highly illiquid and don't provide the highest growth rate.
Can I leave my annuity to a beneficiary or spouse?
Yes, you can leave your annuity to a beneficiary or spouse to ensure that any remaining payouts are given to your loved ones after you die. Some annuities include this benefit for free. Otherwise, you have to purchase a death benefit rider.
What are the best annuities with lifetime income guarantees?
The best annuities with guaranteed lifetime income are New York Life, Gainbridge, or MassMutual, which offer some of the highest interest rates and most competitive fees. New York Life is our top pick for the best life annuity for robust product options, flexibility, and low fees.
