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Did You Know?

That, as of the first quarter 2011, the combined net assets of U.S. variable annuities were valued at nearly $1.6 trillion, an 11% increase from first quarter 2010 and the highest level ever recorded?
In 2010 fixed annuity assets were valued at $659 billion a 6% increase from 2009?
That in 2010, the total average expense difference between variable annuities and mutual funds was 1.01%?
In 2011, the contribution limits range from $5,000-$6,000 for an IRA, $16,500-$22,000 for a 401(k) and $200,000 plus for a non-qualified annuity?
That the average number of funds per variable annuity contract was 50 in 2010, of which 47% of assets were invested in equities, 11% in bonds, and 20% in fixed-rate accounts?
That the guaranteed lifetime withdrawal benefit was offered on 79% of variable annuities in 2011 and was elected by 65% of contract holders?
Boomers who own annuities have a higher confidence in retirement expectations, with 92% believing they are doing a good job in preparing for retirement?

Advisors

High-Level Professional Resources

How Do Variable and Fixed Annuities Differ?

01.01.2009

The main difference between variable and fixed annuities is who assumes the investment risk. A fixed annuity earns interest at a rate guaranteed by the insurance company when you're saving for retirement and then guarantees payment of a specific dollar amount - for example $3000 per month - when you retire. With a variable annuity the return is tied to the performance of your underlying investments, so the investment risk is on the policyholder. But since you can invest in stock funds, a variable annuity can generate higher returns than a fixed annuity. And, these higher returns translate into a larger retirement nest egg and higher annuity payments when you retire.

Variable annuities also allow you to have the annuity payments based on the investment performance of the underlying portfolios which provides the possibility of growth and rising income over time.

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