PROS: These are much less expensive than immediate annuities. By locking in a guaranteed monthly payment for your later years, you may feel more comfortable spending during the early years of retirement.
CONS: If you die before payments start, you — and in most cases, your heirs — receive nothing from your investment.
Multi-year guaranteed annuity. Provides a fixed rate of return over a specific period of time .
PROS: They typically pay a higher yield than certificates of deposit.
CONS: Most multi-year guaranteed annuities come with surrender charges of up to 15% if you withdraw the money before a specified period of time.
Fixed-index annuity. Your returns are linked to an index.
PROS: Depending on how the market performs, you could earn more than you would from a multi-year guaranteed annuity, and your investment is protected from losses.
CONS: There’s a limit on how much you can earn, even when the market is going gangbusters.
Buffered annuity. A buffered annuity has a floor that limits how much you can lose.