Everything You Need to Know Before You Buy an Annuity
The complete guide to safe money growth, guaranteed income, and tax mitigation—designed to help you protect your principal, secure your lifestyle, and retire with confidence.
The Rules of Money Have Changed
If you are approaching or already in retirement, the financial playbook that served you well for decades no longer applies. The strategies that built your nest egg are not the same ones that will protect it.
During Your Working Years
The goal was accumulation. You wanted maximum growth and could afford to ride out the "Wall Street Rollercoaster." A market crash was actually a gift—you were buying shares on sale.
In Retirement
The goal shifts to preservation and distribution. When you withdraw money to live on, a market crash is no longer a gift. It is a direct threat to your lifestyle.
The Biggest Threat to Your Retirement
It isn't a market crash. It isn't inflation. For most retirees, the single greatest fear is far more personal—and far more paralyzing.
The fear of running out of money.
A recent Allianz Life study revealed a striking truth about the modern retiree mindset. Americans are no longer just worried about how long they'll live—they're worried about whether their money will last as long as they do.
This anxiety has real consequences. Many retirees become so afraid of depletion that they never give themselves permission to enjoy what they worked their entire lives to build. They have the money, but they don't have the "license to spend" it.
A Fear More Powerful Than Death
Fear of Outliving Savings
Of Americans worry more about running out of money than about death.
Underspending
Portfolio-only retirees often spend just 2% of their savings each year—living far below their means out of fear.
Sequence of Returns Risk
The mathematical reason behind this fear has a name: Sequence of Returns Risk. This is the danger that the stock market drops right as you begin withdrawing money for retirement. The timing of returns—not just the average—can make or break your retirement.
Both retirees started with $1,000,000 and planned to withdraw $40,000 a year. Person A could run out of money 10 years earlier than Person B—simply because of bad timing. You cannot control the sequence of market returns, but you can protect yourself from it.
The Same Withdrawal, Two Very Different Outcomes
Person A — Unlucky Start
Retires the year before a 20% market crash.
- Account drops from $1M to $800,000
- Withdraws $40,000 to live on
- Now sits at $760,000 in year one
- Account drained from both ends
Person B — Fortunate Timing
Retires the year after the crash, during a bull market.
- Withdrawals taken from a rising balance
- Portfolio recovers and grows
- Money lasts dramatically longer
- Better outcome on identical decisions
The "0% Floor" Strategy
In 2024, a record-breaking $434.1 billion was placed into annuities across the United States. Americans are tired of market volatility—and they want certainty.
Record Inflows
Placed into annuities in the U.S. in 2024 alone.
Your Floor
The maximum you can lose to a market crash.
How a Fixed Indexed Annuity Works
A Fixed Indexed Annuity (FIA) offers a unique proposition: market upside with a 0% floor. It lets you participate in growth without exposing your principal to loss.
When the Market Goes Up
Your account is credited with a portion of those gains, determined by a participation rate or cap.
When the Market Goes Down
Your account stays exactly where it is. You lose nothing. Your principal is completely protected.
Zero is your hero. This strategy removes the timing risk from your retirement.
The Tax Timebomb
If your money sits in a tax-deferred account like a Traditional IRA or 401(k), the IRS has a silent partnership in your account. You haven't paid taxes on that money yet—and they fully intend to collect their cut.
Two Hidden Tax Traps
Social Security Taxation
Many retirees are shocked to learn that, depending on their "provisional income," up to 85% of their Social Security benefits can be subject to federal income taxes.
Required Minimum Distributions
The IRS eventually forces you to take money out of tax-deferred accounts through RMDs. Fail to take them, and you face a massive 25% excise tax penalty.
Social Security Taxed
The portion of benefits that can be subject to federal tax.
RMD Penalty
The excise tax for missing a required minimum distribution.
The Solution: RMD-Friendly by Design
Modern annuities are built to work seamlessly with the tax rules you face in retirement.
- Carriers calculate the exact RMD amount and distribute it automatically
- No surrender penalties on your required distributions
- Used in a holistic strategy to create tax-deferred growth—and in some cases, tax-free income streams
Your Questions, Answered
Before you make any decisions, you deserve absolute clarity. Here are the most common questions we answer for our clients—starting with the one everyone asks first.
Fees, Pay & Bonuses
Do annuities have high fees?
Some do, some don't. Older variable annuities can charge 3–4% a year. But many modern FIAs have zero internal fees—the carrier makes money on the spread. An optional income rider usually costs under 1%.
How does my broker get paid?
Independent brokers are paid a commission directly by the insurance carrier. You pay nothing out of pocket, and nothing comes out of your principal. Every dollar goes to work for you on day one.
Are there premium bonuses?
Yes. Many carriers offer bonuses of 5% to 20% on day one. A 10% bonus on $500,000 gives you $550,000 working for you immediately.
Access, Safety & Your Legacy
Aren't annuities locked up?
Most modern annuities allow penalty-free access to 10% of your account value every year, starting in year one—plus waivers for nursing home care or terminal illness. You retain significant liquidity.
Does the company keep my money when I die?
No. That's a myth based on old "life-only" payouts. Modern annuities have a full death benefit—whatever remains goes directly to your named beneficiaries, avoiding probate.
How do I know the carrier will pay me?
Annuities are backed by heavily regulated carriers required by law to hold dollar-for-dollar reserves. We only work with highly rated, A-rated (AM Best) carriers with long histories of stability.
Why Annuities, and Why Now
Why an annuity instead of the stock market?
The market is great for accumulation but terrible for distribution due to Sequence of Returns Risk. An annuity provides a safe floor so you don't have to sell assets at a loss during a crash.
How is this different from my financial advisor?
We complement your advisor. They manage investments for growth; we provide guaranteed lifetime income, principal protection, and specialized tax mitigation most advisors aren't licensed to do.
Is now a good time to move my money?
Timing the market is impossible. The real question is simpler: can you afford a 20% drop right now? If not, it's time to secure your principal.
What's Different About Today's Annuities
If you had a bad experience with an old annuity, you're not alone. Older products were often variable, exposing you to market losses.
Today's FIAs link growth to market indexes while fully protecting your principal when the market drops. The difference is night and day: zero fees, principal protection, full death benefits, and penalty-free access.
Who This Is—and Isn't—For
If You Already Own an Annuity
Many people already have an annuity—and that's perfectly fine. We offer a no-pressure, objective review of your current contract.
- If your current contract is great, keep it
- If a modern product offers better growth caps or income riders, we'll show you the math
- We use annuities to minimize taxation on Social Security and overall provisional income
What Happens in a Strategy Session
It is a working session, not a pitch. As a done-for-you practice, we handle the heavy lifting from start to finish.
We review your current trajectory, identify income and tax gaps, and look at objective math to build a custom strategy. To prepare, simply accept the calendar invite, gather your recent statements, and write down your top concerns about income, market crashes, or taxes.
The "Done-For-You" Approach
Information you don't apply is useless. Reading this guide is the first step—but executing the strategy is what actually protects your retirement.
As an independent brokerage, we are not tied to any single carrier. We shop the entire market to find the exact product that fits your specific needs. Once we agree on a strategy, our team handles all the paperwork, transfers, and implementation.
Your next step: schedule a strategy session.
Let's look at the objective math behind your specific situation—and build a retirement you never have to worry about outliving.
STRONG RETIREMENT GROUP