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It’s time for a fresh look at annuities

Our “Fresh Look at Annuities” series uses plain language to explain how annuities work, covering core topics such as annuitization and guaranteed lifetime withdrawals, annuities for savings and income, and understanding costs and fees.

Annuities have evolved

People are living longer and spending more years in retirement than ever before — which means it’s time for a fresh look at the valuable benefits annuities can offer in helping people create financially secure retirements.

To learn more about annuities, read the articles below — and be sure to take a look at our Annuity Education Guide, which explains the types of annuities available.

A fresh look: Not your grandmother's annuity

Today’s annuities are designed with greater flexibility, so you don’t have to give up access to your money to generate lifetime income.

Read more

A fresh look: Annuities for savings. Annuities for income.

Annuities are designed to help meet America’s expanding retirement needs. But did you know that annuities can serve two different financial purposes?

Read more

A fresh look: Understanding annuity costs

Today’s annuities come in a variety of types — offering valuable benefits to help address different goals and objectives. When selecting an annuity, it’s important to understand the costs.

Read more

Annuities explained

Annuities are long-term insurance products designed for retirement. They typically have a growth stage and an income stage. In the growth stage, they can help people build assets on a tax-deferred basis,1 which means retirement savings can grow and build over time without being taxed until a future date, typically when the funds are withdrawn in retirement. 

In the income stage, they can provide guaranteed lifetime income through a standard feature known as annuitization or through more flexible features known as Guaranteed Living Benefits. These features may be standard or optional — and some Guaranteed Living Benefits can also help annuity owners automatically grow their future retirement income. Additional fees, age restrictions and other limitations may apply to these features.

Depending on the product type, an annuity can help meet one’s needs for asset growth, offer downside protection that helps limit or protect against losses during market downturns, and deliver lifetime income for an individual or for a married couple. 

Understanding how annuities work and the value they bring can help empower Americans to take important steps in securing their financial future.

Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, an additional 10% federal tax may apply. If you fund your IRA with an annuity, you should realize that these types of retirement accounts are already tax-deferred. An annuity provides no additional tax-deferred benefit beyond that provided by the retirement account itself. You should only use an annuity in a retirement account if you want to benefit from features other than tax deferral. Please consult with your financial professional and tax advisor regarding your individual situation.

Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.  

 

This material is general in nature, was developed for educational use only, and is not intended to provide financial, legal, fiduciary, accounting or tax advice, nor is it intended to make any recommendations. Applicable laws and regulations are complex and subject to change. Please consult with your financial professional regarding your situation. For legal, accounting or tax advice consult the appropriate professional.

 

An annuity contract can be annuitized in order to receive lifetime income payments for no additional cost if a lifetime annuity option is chosen. Income protection features such as Guaranteed Living Benefits may be optional or standard. Additional fees, age restrictions, withdrawal parameters, and other limitations apply. With variable annuities, certain investment requirements also apply. Early withdrawals may be subject to withdrawal charges and a Market Value Adjustment (MVA) may also apply to certain fixed annuities and index annuities. Partial withdrawals may reduce benefits available under the contract, as well as the amount available upon a full surrender. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, an additional 10% federal tax may apply. An investment in a variable annuity or registered index-linked annuity involves investment risk, including the possible loss of principal. The contract, when surrendered, may be worth more or less than the total amount invested. Keep in mind, for retirement accounts (such as IRAs), an annuity provides no additional tax-deferred benefit beyond that provided by the retirement account itself. However, annuities offer other features and benefits that may be valuable.

 

Variable annuities are sold by prospectus only. The prospectuses for each underlying fund as well as the variable annuity contract describe the investment objectives, risks, fees, charges, expenses, and other information for each, respectively. The statutory and summary prospectuses for each underlying fund and the variable annuity contract should be considered carefully before investing. Please contact your insurance and securities licensed financial professional or call 1-800-445-7862 to obtain any of those prospectuses, which should be read carefully before investing.

 

Registered index-linked annuities are sold by prospectus only. The prospectus contains the investment objectives, risks, fees, charges, expenses and other information regarding the contract, which should be considered carefully before investing. A prospectus and summary prospectus if available may be obtained by calling 1-877-445-1262. Investors should read the prospectus carefully before investing.

 

All contract and optional benefit guarantees, including any fixed account crediting rates or annuity rates, are backed by the claims-paying ability of the issuing insurance company. They are not obligations of or backed by the distributor, insurance agency or any affiliates of those entities and none makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company. Products and features may vary by state and may not be available in all states. The purchase of an annuity is not required for, and is not a term of, the provision of any banking service or activity.

 

Annuity contracts issued by American General Life Insurance Company (AGL), Houston, TX except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life). Certain annuities are issued by The Variable Annuity Life Insurance Company (VALIC), Houston, TX. Securities are distributed by Corebridge Capital Services, Inc. (CCS), member FINRA, 21650 Oxnard Street, Suite 750, Woodland Hills, CA 91367- 4997, 1-800-445-7862. Issuing companies AGL, US Life and VALIC are responsible for financial obligations of insurance products. AGL does not solicit, issue or deliver policies or contracts in the state of New York. Beginning January 1, 2026, VALIC will not solicit, issue or deliver new policies or contracts in the state of New York. Products and services may not be available in all states and product features may vary by state. Please refer to the contract.