Buying an annuity can seem overwhelming but it doesn’t have to. This guide show you how to buy an annuity using a 5-step process. If you would like some expert guidance you contact us at 855-583-1104.
Before buying an annuity, assess your overall financial picture. Consider your retirement timeline, risk tolerance, current savings, and expected expenses. Decide if you want to grow your money, need immediate income, or want guaranteed income in the future.
If your goal is income, download our retirement income worksheet to determine how much your monthly annuity payment should be.
If safe accumulation is your objective consider these things:
When you are buying an annuity it is very important to select the type that best meets your goals. Common types of annuities include:
| Annuity Type | Best For | Current Features (Dec 2025) |
| Fixed Annuity | Maximum safety & predictability | Rates as high as 6%+ on MYGAs (Multi-Year Guaranteed Annuities) |
| Fixed Indexed Annuity | Principal protection + growth potential | Tied to S&P 500 with 0% floor, caps around 9–12% |
| Immediate Annuity (SPIA) | Need income now | Payout rates near all-time highs due to elevated interest rates |
| Deferred Income Annuity (DIA/QLAC) | Future income + tax advantages | Great for delaying RMDs with a Qualified Longevity Annuity Contract |
| Variable Annuity | Higher growth potential | Only if you’re comfortable with market risk and lower fees |
Not all providers are equal, so shop around. Check insurance companies by looking at their financial strength ratings from agencies like AM Best or Moody’s. This helps ensure they can meet their long-term obligations.
Use our annuity company financial ratings database.
Look at customer reviews on sites like the Better Business Bureau. Compare fees like surrender charges, administrative fees, and rider costs. These fees can range from 1% to 3% each year.
Never buy the first annuity you’re shown; it’s best to compare rates from at least 3 different companies. You can access product brochures and compare tons of current annuity rates at our online annuity marketplace.
Top-rated annuity providers (A.M. Best A or better):
Visit our annuity company directory.
Once you’ve selected a type and provider, it’s time to complete your annuity application. You will want to know who you are naming as your beneficiary and have their contact information handy.
You will also have to decide how you are going to fund the annuity policy. You can buy an annuity by mailing a check. However, it may be easier to use an ACH, wire transfer, direct rollover, or 1035 exchange.
Your annuity agent can complete the 1035, rollover, or ACH paperwork for you at the time of your application. If you have already selected an annuity you can complete our preliminary annuity application online.
After purchase, you should register on your annuity company’s client portal. This will allow you to monitor your annuities growth, change beneficiaries, and access withdrawal forms.
If you buy a fixed index annuity you can re-allocate your money to the index options annually. You will also want to mark the date your annuity comes out of surrender. Most annuities will automatically renew for another term. This happens if you do not take out your money or move it to a new custodian.
Every state gives you a free-look period (10–30 days) to cancel and get 100% of your money back. Use this time to double-check the contract and payout illustrations.
Complete this interactive checklist to assess your readiness
Buying an annuity is a smart way to secure guaranteed income, but it requires careful planning and consideration. By following this step-by-step guide and using the checklist, you can confidently choose the right annuity for your retirement needs.
Remember, an annuity is a long-term commitment, so take your time to understand the product, shop around, and consult with professionals to ensure your decision is the right one for your financial future.
An annuity is a contract with an insurance company. You pay a premium (either lump sum or over time), and in return the insurer provides tax-deferred growth and the option to receive income in the future. Contract features and guarantees are backed by the issuing company’s claims-paying ability.
Start with your goal:
Then weigh timeline, liquidity needs, risk tolerance, state availability, and insurer strength.
Yes. Annuities can be purchased within IRAs and via 401(k) rollovers, subject to plan and carrier rules. Tax deferral already exists in qualified accounts; the annuity adds insurance features and contract provisions.
Most deferred annuities offer an annual free-withdrawal amount (commonly up to 10% of account value) without surrender charges. Larger withdrawals during the surrender period may incur charges. IRS penalties may apply to taxable distributions before age 59½.
Growth is tax-deferred. Non-qualified annuities: earnings are taxed as ordinary income when withdrawn; principal is generally not taxed. Qualified annuities (IRA/401k): distributions are typically fully taxable as ordinary income. A 10% IRS penalty may apply to taxable amounts withdrawn before age 59½. Consult your tax professional.
Review financial strength ratings (e.g., AM Best, S&P, Moody’s, Fitch), historical rate/crediting competitiveness, product features, service, and state guaranty association limits (coverage varies by state; not a substitute for ratings). Guarantees depend on the insurer’s claims-paying ability.
You’ll get an illustration (for many products), disclosures, application, and the policy contract after issue. Keep these with your records and note your free-look period timeline.
Consider annuitization or activating an income rider when you need predictable, guaranteed income you can’t outlive. Compare the contractual income vs. other options, your health, inflation protection, and survivor needs.
Typically 1–3 weeks from application to issue, depending on transfers/rollovers, suitability review, and carrier processing times.
You can request side-by-side illustrations, current rates, and product comparisons from an independent agency. Provide your goal, time horizon, liquidity needs, and state to verify availability.
Now that you know how to buy an annuity it is time to take the next step. Compare today’s best fixed annuity rates at My Annuity Store’s online annuity marketplace. You can also use our income annuity calculator to get a live income annuity quote instantly.
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