How do annuities work as part of a financial plan?

Whatever you dream of when it comes to retirement, making sure you'll have the money to make it happen is an important part of your financial plan. These days, fewer and fewer companies are offering pensions, and the future of Social Security is uncertain. So now, more than ever, people have to rely on themselves to plan for their finances in retirement. An annuity is one way to make sure your retirement goals stay on track, giving you a steady stream of income that doesn't change based on market volatility and is guaranteed to last the rest of your life.

There are different types of annuities that might be right for you depending on your goals. Income annuities are typically purchased close to retirement and give you predictable income for the rest of your life. Fixed and variable annuities can also help you grow your assets during your working years.

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What to know about income annuities:

Income annuities give you guaranteed income in retirement.

An income annuity can help you make sure you're ready for whatever life throws at you. It means you won't outlive the income stream and won't have to worry about running out of money in retirement. And it means you won't be at the mercy of the markets or the future of Social Security when you're ready to retire.

You won't lose your money if you pass away sooner than expected.

Many of our income annuities come with an optional death benefit feature to make sure your loved ones will get back at least what you've put into your annuity if you pass away before your income payments start.

Annuities are more affordable than many people think.

Like with all financial products, annuities do come with some costs. But depending on the type of annuity you purchase, it could come with some big benefits like tax deferral, a minimum death benefit, and/or guaranteed income for life. Even better, the income from your annuity will never go down—in fact, some annuities earn dividends, meaning your income could go up over time.

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What are the types of income annuities?

Immediate Income Annuities

An immediate income annuity is best for someone who is very close to retiring, as it gives you a guaranteed stream of income that starts within one year of purchase and continues for the rest of your life.

Deferred Income Annuities

A deferred income annuity lets you set aside a portion of your savings today to create income for your retirement. The earlier you buy one, the higher your income payments will be down the road.

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Which type of annuity will help you meet your goals best?

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BenefitsSelect™ Portfolio Immediate Income Annuities (PIIA)Select™ Immediate Income Annuities (SPIA)Select™ Portfolio Deferred Income Annuities (PDIA)Select™ Deferred Income Annuities (DIA)
Lifetime income
Tax deferral
Death benefit
Potential to earn dividends and flexibility in using them
Flexibility to change the amount and frequency of your payments including making regular payments, a single payment, fluctuating payments, and skipping payments
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Make a plan for tomorrow today.

When you work with Northwestern Mutual, we listen to the goals you have and design a financial plan tailored specifically to your life. An income annuity could be an important part of that plan, giving you a guaranteed stream of income that will take you all the way through your retirement. Find out more about how we plan.

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