Fixed vs. Fixed Indexed Annuities: Which Suits Your Retirement?
Both protect your savings from market losses. Both grow tax-deferred. The difference is how they grow — and that difference can matter a great deal over a ten-year retirement plan.
By Aman Anand & Shubhra Srivastava · October 2026
First, what is an annuity?
An annuity is a contract with an insurance company. You give it a sum of money — all at once or over time — and in return it grows that money tax-deferred and can turn it into income later, including income guaranteed for the rest of your life.
Think of it as a way to create your own personal pension. In a world where fewer employers offer one, that’s a powerful idea.
Fixed annuities: a guaranteed rate, like a CD with benefits
A fixed annuity — often called a multi-year guaranteed annuity, or MYGA — pays a set interest rate for a set number of years, commonly three to ten. You know exactly what you’ll earn. Unlike a bank CD, the growth is tax-deferred until you withdraw it.
Fixed indexed annuities: market-linked growth, no index losses
A fixed indexed annuity (FIA) credits interest based on the performance of a market index such as the S&P 500. Your money isn’t invested in the market directly. When the index rises, you receive a share of the gain, subject to a cap or participation rate. When it falls, your principal and previously credited interest are protected from the index loss.
Many FIAs also offer optional income riders that can guarantee a lifetime income stream, regardless of how long you live — usually for an added annual fee.
| Fixed annuity (MYGA) | Fixed indexed annuity | |
|---|---|---|
| How it grows | Guaranteed rate for a set term | Linked to a market index, with a cap or participation rate |
| Market losses | None | Protected from index losses |
| Growth potential | Known in advance | Varies — can be higher in strong index years, can be 0% in weak ones |
| Lifetime income | Can be annuitized | Optional income riders, often with a fee |
| Taxes | Growth is tax-deferred until withdrawn | |
| Access to money | Surrender charges apply to early withdrawals beyond free amounts; IRS penalties may apply before age 59½ | |
The risk annuities are designed to solve
The biggest threats to a retirement aren’t always obvious. A market crash in the years just before or after you retire can permanently reduce the income your savings can produce. And with people regularly living into their 90s, the risk of outliving your money is real.
Annuities address both: protection from market losses, and — with the right options — income you can’t outlive. That’s why we see them as a cornerstone of defensive retirement planning.
Annuities are long-term contracts. Money you may need in the next few years generally belongs somewhere more accessible. The right amount to place in an annuity depends on your other savings and income.
Which might fit you?
A fixed annuity may fit if…
- You want a known, guaranteed rate
- You’re comparing it to CDs or savings
- You have a specific time horizon
A fixed indexed annuity may fit if…
- You want more growth potential without index losses
- You’re within 10–15 years of retirement
- You want the option of guaranteed lifetime income
How much guaranteed income could your savings create? We’ll compare options from multiple carriers and show you the numbers.
Book a free check-inGeneral education only. Annuities are not bank deposits, are not FDIC-insured and are not investments in the stock market. Caps, participation rates, rider fees and surrender schedules vary by contract. Guarantees are based on the claims-paying ability of the issuing company. The taxable portion of withdrawals is taxed as ordinary income and may be subject to a 10% IRS penalty before age 59½.