Is an Annuity Only for Rich People?

The short answerNo. Many annuities can be started with a modest lump sum or a rollover from a retirement account, and some allow ongoing contributions. They're for people who want a steadier place for part of their savings or a dependable income stream later. The key is that the money is meant to stay put for years, because surrender charges usually apply if you take out too much early.

Who annuities can fit

People nearing retirement who want part of their savings shielded from market drops
People rolling over an old 401(k) or IRA
Anyone who wants an income stream for life, from an income annuity or income rider

What to know first

Minimums vary. Some contracts start at a few thousand dollars; others require more.
Surrender charges. Commonly last several years and decline over time.
Fees and riders. Optional income riders usually cost extra.
Liquidity. Keep an emergency fund outside the annuity.

Start where you are

You don't need a lot of money to start planning for your tomorrow, today. Even a modest amount set aside with a plan can make a difference. See hypothetical numbers in our free annuity projector.

See hypothetical growth numbers

Our free projector shows how savings could grow under example rates. Hypothetical only, not a quote or a promise of future results.

Open the annuity projector

Related free tools

Family needs analysisAdd up debt, income, mortgage and education to get your own coverage number.FAST calculatorSee where money leaks each month and what you could redirect toward protecting your family.Mortgage coverage calculatorStart with your loan balance and monthly payment.

Common follow-up questions

How much do I need to buy an annuity?

It depends on the contract. Some start at a few thousand dollars.

Can I add money later?

Some annuities accept additional contributions; many single-premium ones don't.

Are annuities safe?

Fixed and fixed indexed annuities are backed by the claims-paying ability of the issuing insurer, not FDIC insured. They aren't exposed to market losses, but surrender charges and fees can apply.

Can I use my 401(k) to buy one?

Often, through a rollover. Ask a tax professional about any tax consequences. Compare the fees, features and surrender charges with your current plan before moving money.

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Is an annuity only for rich people?