Different types of annuities (and how they work)
There’s no one-size-fits-all annuity. Here are the main types explained the easy way:
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Immediate annuity: You give the insurer money and they start paying you right away — like turning your savings into instant income.
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Deferred annuity: You give them money now, but the payments start later (say, when you retire). The money grows in the meantime.
Then there are the “flavors”:
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Fixed annuity: You get predictable payments, kind of like a certificate of deposit (CD) but for retirement.
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Variable annuity: Your money is invested in the market, so the payments can go up or down. There’s more risk here.
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Indexed annuity: This one’s tied to a stock market index (like the S&P 500). You get some growth when the market does well, but you’re protected from losses when it drops.
So when people say “I have an annuity,” it could mean very different things depending on which type they chose.
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