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Optimal Wealth Strategy Group
Optimal Wealth Strategy Group
Wealth Strategies


Annuities Made Simple

Think of an Annuity Like a Personal Pension

An annuity is designed to do one main thing well:

Turn savings into predictable income you cannot outlive.


You give a sum of money to an insurance company. In return, the insurance company agrees to:

  • Protect your money (depending on the type chosen)

  • Grow it over time, or

  • Pay you a steady income—often for the rest of your life

This is why annuities are often compared to pensions, even though they are purchased individually.


Why Many People Use Annuities

As people approach retirement, priorities change. 

The focus is no longer just growth—it becomes income, stability, and certainty.


Annuities are commonly used to:

  • Create reliable monthly income

  • Reduce worry about market ups and downs

  • Ensure money lasts through retirement

  • Supplement Social Security or pensions

  • Provide peace of mind for spouses

What Problems Do Annuities Solve?

1. Market Risk

Some annuities protect your principal from stock market losses. Even when markets go down, your annuity value does not decline due to market performance.

2. Longevity Risk

Many retirees fear outliving their savings. Annuities can provide income for life, no matter how long you live.

3. Income Predictability

Annuities turn unpredictable investments into consistent paychecks, similar to earning a salary in retirement.

4. Emotional Stress

Knowing a portion of your income is guaranteed helps reduce financial anxiety during retirement.

Safe Growth Annuities

These are designed to protect your money while allowing it to grow steadily over time.

  • Your money is not invested directly in the stock market

  • Growth may be fixed or linked to market indexes

  • Ideal for people who want growth without market losses

Simple Types of Annuities

Income Annuities

These are designed to pay you a guaranteed income.

  • Payments can last for life

  • You choose when income starts

  • Can cover essential expenses like housing, food, and utilities

Growth-Oriented Annuities

These allow more growth potential but come with more risk.

  • Value may rise or fall with the market

  • Often include optional income guarantees

  • Best for those comfortable with some volatility

How Annuities Pay You

Income payments can be set up in different ways:

  • Monthly, quarterly, or annually

  • For a certain number of years

  • For your lifetime

  • For both spouses

Some annuities allow income to grow before payments begin, resulting in higher future income.

Are Annuities Liquid?

Annuities are designed for long-term planning, not short-term access.

  • Limited withdrawals are often allowed

  • Early withdrawals may have penalties

  • Most people use annuities for money they won’t need right away

This trade-off allows the insurance company to provide guarantees.

Are Annuities Safe?

Annuities are insurance products, not bank products or market investments.

  • Guarantees are backed by the financial strength of the issuing insurance company

  • Insurance companies are regulated at the state level

  • Many people use annuities as part of a diversified retirement plan

Annuities and Taxes

  • Your money grows tax-deferred

  • You don’t pay taxes until you withdraw funds

  • When income is paid, gains are taxed as ordinary income

This tax deferral can help money grow faster over time.

Who Should Consider an Annuity?

An annuity may be appropriate if you:

  • Are within 5–10 years of retirement

  • Want predictable income

  • Prefer safety over high risk

  • Are concerned about market volatility

  • Want part of your retirement income guaranteed

Who May Not Need an Annuity?

Annuities may not be ideal if you:

  • Need full access to your money at all times

  • Are focused on short-term investing

  • Are comfortable managing income solely from market investments

Annuities as Part of a Bigger Plan

Annuities work best when combined with:

  • Social Security

  • Investment accounts

  • Cash reserves

  • Estate and legacy planning

They are not “all-or-nothing” tools—but rather building blocks for a stable retirement.

Bottom Line 
​An annuity is not about chasing high returns. It is about certainty, income, and peace of mind. When used properly, annuities help turn savings into a reliable retirement paycheck—so you can focus on living, not worrying.

Contact Us!

Sam Vadakekut

Wealth | Strategy & Growth Advisor

MyIlia

LinkedIn


Contact Information:

Phone: (405)213-4817

Email: samv@optimalwealthsg.com