A Brief Look at Fixed Annuities — Individual Retirement Accounts

A longtime resident of California, Darrach Bourke serves as a financial advisor with Emerson Equity, a broker-dealer and registered investment advisor in San Mateo, California. Darrach Bourke offers families, individuals, and nonprofits comprehensive financial planning services, including investment planning and retirement income planning.

People who do not have access to employer-sponsored retirement plans and individuals who want to save beyond the maximum limit of their employer-sponsored 401(k) may consider individual retirement accounts, such as fixed annuities. Fixed annuities are common personal savings plans for retirement. A type of insurance contract, fixed annuities offer guaranteed returns. Investors deposit a sum of money with an insurance company. In exchange for the principal amount deposited, investors receive a fixed rate of return for an agreed-upon period. Fixed annuities are not subject to IRS contribution limits.

According to annuity.org, fixed annuities are considered low risk and can provide guaranteed income for life. Additionally, fixed annuities have predictable benefits. If the investor dies, the beneficiaries receive death benefits. However, fixed annuities do not offer inflation protection.