When it comes to wealth management or general financial planning, there are often so many industry-specific terms and jargon that determining the best course of action can be difficult. For example, when presented with a choice of a fixed annuity or variable annuity, we find that many individuals aren’t exactly sure of the distinction. Fixed Annuities vs. Variable Annuities In general, a fixed annuity determines a fixed interest rate from the beginning of an arrangement that will remain constant forever, despite any changes or fluctuations in the market. It also means that payments and income resulting from these annuities will also be constant. Meanwhile, the interest rates of variable annuities can change over time following the performance of the market— or specific financial factors to which they’re connected. Benefits of Fixed Annuities One of the clear benefits of a fixed annuity is that market fluctuations don’t impact interest rates or payouts. This makes them particularly appealing at moments when interest rates are low and expected to rise—a fixed annuity will insulate you from the effects of an uptick in rates. Benefits of Variable Annuities Variable annuities, on the other hand, provide their own benefits. Variable annuities can offer earnings that are tax-deferred and don’t place limitations on contributions. Meanwhile, they also often provide a guaranteed source of income as well as a death benefit. With no caps on how much mutual fund share prices can rise, variable annuities also offer the opportunity for greater returns and unlimited potential for growth if the market performs well. That said, it’s coupled with the risk of lower returns or losses if the market performs poorly. Choosing between a fixed rate or variable annuity involves the assessment of a wide range of financial factors, as well as your own personal situation. We advise seeking the guidance of an experienced wealth management specialist who can give you the direction you need.


Annuities are long-term products and may be subject to contract limitations, fees and charges including M&E expense, sales and surrender charges, administrative fees, charges for optional benefits, underlying investment expenses, and early withdrawal penalties and taxes.  Variable annuities are sold by prospectus only. Amuni Financial, Inc. is a Broker-Dealer and Registered Investment Advisor. Member FINRA/SIPC. Please see our website for the states in which we’re registered to do business.

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