There are only six annuity structures a retiree actually meets. Here's what each one really is, how it works, what it costs, and the trade-off the sales pitch tends to skip.
| Type | In one line | Liquidity | The catch |
|---|---|---|---|
| Immediate Annuity SPIA | Hand over a lump sum, start collecting a guaranteed paycheck within about a year — for life, or for a set period. | None (irrevocable) | It is irrevocable and illiquid. |
| Deferred Income Annuity DIA | Buy a future paycheck today: pay now, lock the income, and turn it on years later — often at a much higher rate. | Higher per dollar | You get nothing during the deferral, and if you die before (or shortly after) income starts, you may collect little or nothing without a death-benefit rider — which lowers the payout. |
| Fixed Annuity (MYGA) MYGA | A tax-deferred CD-style contract: a guaranteed interest rate for a set number of years. | Usually none | You are locked in. |
| Fixed-Index Annuity FIA | Returns tied to a market index with a floor of zero — and a ceiling that quietly caps most of the upside. | Capped / participation-limited | The word 'guaranteed' applies to your principal, not the returns — and the guaranteed growth you're shown is often on an income base, not your actual account value. |
| Variable Annuity VA | Market investing inside an insurance wrapper — with optional guarantees, and the highest fee stack of any annuity. | ~2–4%/yr typical | Fees stack and compound, quietly eroding returns; converting future gains into ordinary income can cost you versus a taxable account; and the riders are often over-sold to people who don't need them. |
| QLAC Qualified Longevity Annuity Contract | A deferred income annuity inside your IRA/401(k) that also pushes back required minimum distributions on the money used. | Age 85 | It's a longevity bet locked inside your IRA: illiquid, and if you die early the tax and income benefits may never fully materialize without a return-of-premium option (which lowers the payout). |
Hand over a lump sum, start collecting a guaranteed paycheck within about a year — for life, or for a set period.
Read the file →Buy a future paycheck today: pay now, lock the income, and turn it on years later — often at a much higher rate.
Read the file →A tax-deferred CD-style contract: a guaranteed interest rate for a set number of years.
Read the file →Returns tied to a market index with a floor of zero — and a ceiling that quietly caps most of the upside.
Read the file →Market investing inside an insurance wrapper — with optional guarantees, and the highest fee stack of any annuity.
Read the file →A deferred income annuity inside your IRA/401(k) that also pushes back required minimum distributions on the money used.
Read the file →Educational explainers, not individualized financial advice. Grounded in SEC/FINRA investor bulletins, IRS Pub 575/939, NAIC Annuity Disclosure & Suitability model regulations, and the SECURE 2.0 Act. Updated 2026-08-21. We do not sell annuities.