Top 10 Best Annuities 2021 for Guaranteed Income

Key Highlights

In a world where financial security is paramount, finding the right investment vehicle can feel overwhelming. Annuities have emerged as a popular choice for those seeking guaranteed income in retirement, offering peace of mind for the future. In this blog post, we’ll delve into the top 10 best annuities of 2021 that promise stability and reliability. Whether you’re looking for fixed index options or immediate income solutions, we’ll guide you through essential features to consider, different types of annuities available, and the latest trends impacting rates. Join us as we explore how these financial products can secure your financial future and bring you one step closer to achieving your retirement dreams.

Introduction

Are you concerned about outliving your retirement savings? It is a common worry, but there are tools to help secure your financial future. An annuity is a contract with an insurance company designed to provide guaranteed income in retirement. By understanding the options that were available, you can learn what to look for. This guide looks back at the top 10 best annuities from 2021, highlighting the features that made them stand out for creating a reliable retirement income.

Top 10 Best Annuities in 2021 for Guaranteed Income

Finding the right annuity means looking at what the top insurance companies offer. In 2021, several products stood out for their ability to provide guaranteed income, making them some of the best annuities for retirement planning. Companies like Allianz Life, MassMutual, and New York Life were among the top-rated providers, offering a range of options popular with retirees.

These products were known for their strong features, competitive rates, and the financial stability of the companies behind them. Whether you needed immediate annuity payments or wanted to grow your savings for a future income stream, there was a top-tier option. Let’s explore the 10 annuities that were leading choices for securing retirement income in 2021.

1. Allianz Life Fixed Index Annuity

Allianz Life stood out in 2021 with its innovative indexed annuity products. This life insurance company offered options that tied your potential returns to a market index, like the S&P 500. This created an opportunity for a higher rate of return than a traditional fixed annuity, but with features to protect your principal from market downturns.

This blend of growth potential and security made their indexed annuity a compelling choice. For retirement savers looking to build a future lifetime income stream without taking on full market risk, this product was an excellent tool. It allowed your retirement savings to participate in market gains up to a certain cap while shielding you from losses.

Key features included:

• A variety of fixed index and registered index-linked annuities (RILAs) to choose from.
• The ability to purchase annuities up to age 85.
• Minimum deposits starting between $10,000 and $20,000.

2. MassMutual Immediate Income Annuity

For those needing income right away, the MassMutual Immediate Income Annuity was a top contender in 2021. This type of annuity works by taking a single, lump-sum payment and converting it into a guaranteed series of payments that can last for the rest of your life. It is an effective way to turn a portion of your savings into a personal pension.

The process is straightforward: you provide the funds to the insurance company, and they agree to send you regular checks. This provides a predictable cash flow you can rely on, removing the guesswork from your retirement budget. If you were looking for simplicity and immediate guaranteed income, this was an ideal solution. A financial advisor could help structure the payments to meet your specific needs.

Standout benefits of their immediate annuities included:

• Guaranteed cash flow could begin within 13 months of your initial payment.
• The RetireEase single premium immediate fixed annuity had no contract fees.

3. New York Life Secure Term Annuity

New York Life has long been recognized for its exceptional financial strength and reliability. In 2021, their annuity products reflected this stability, particularly with offerings like their Secure Term MVA and Premier Variable Annuity. The company’s history of paying dividends to eligible policyholders since 1854 showcased its commitment to sharing success with its members.

This strong track record gave retirees confidence that the company could honor its long-term promises. An annuity contract with New York Life was seen as a very secure choice for generating a guaranteed rate of return. Many of their products also included a valuable death benefit, ensuring a legacy could be passed on to loved ones.

Notable aspects of New York Life’s offerings:

• The company has an excellent reputation for financial strength and has paid dividends for over a century.
• Some variable annuities included riders that could guarantee a return of your investment.
• They offered a range of deferred and immediate annuities to suit different needs.

4. Pacific Life Pacific Income Advantage

Pacific Life was a popular choice in 2021 for retirees focused on dependable retirement planning. Their fixed annuity products were designed to provide predictable income payments, a cornerstone for anyone looking to secure their financial future. With a strong history as a life insurance provider, they brought a high level of trust and stability to their annuity offerings.

Their fixed annuities, such as the ones offered through their subsidiary Pacific Guardian, allowed you to lock in a specific rate of return for a set number of years. This predictability was especially appealing for those who wanted to avoid market volatility and know exactly what their money would earn. It made budgeting for retirement much simpler and more secure.

Key features of their fixed annuities in 2021:

• Offered guaranteed rates for various term lengths, including 5, 7, and 10 years.
• Provided a competitive rate of return, making them an attractive alternative to CDs.

5. Athene Ascent Pro Annuity

Athene established itself as a leader in the fixed annuity market, and products like the Athene Ascent Pro were a big reason why. In 2021, this indexed annuity offered a balance of safety and growth potential, making it a popular choice. It provided an income stream linked to an index’s performance but with built-in protections against market loss.

One of the features to look for in a top annuity is flexibility, and Athene delivered with a variety of annuity options and riders. For instance, an optional death benefit rider could ensure your beneficiaries received the remaining value of your contract. Consulting with a financial advisor could help you customize an Athene annuity to fit your long-term goals.

Highlights of Athene’s annuities:

• A wide selection of annuity types, including fixed, indexed, and immediate annuities.
• Optional riders, such as a return-of-premium death benefit, were available.

6. Nationwide Guaranteed Level Annuity

Nationwide was a standout choice in 2021 for those who prioritized legacy planning alongside lifetime income. Many of their annuity products featured enhanced death benefit riders, which ensured that your loved ones would receive at least the remainder of your premiums. This feature provided valuable peace of mind for many retirees.

Beyond their fixed-rate products like the Secure Growth annuity, Nationwide also offered a wide array of investment choices within their variable annuities. This gave you more control over your portfolio while still benefiting from the annuity structure. The combination of income security, investment flexibility, and strong death benefits made Nationwide’s offerings distinct. However, it’s important to be aware of the surrender period before committing.

Key benefits of Nationwide annuities included:

• Options for enhanced death benefits to protect your legacy.
• A wide selection of equity, bond, and fixed accounts for variable annuity buyers.

7. TIAA Traditional Annuity for Retirees

TIAA has long been a trusted name for educators, healthcare workers, and nonprofit professionals, and its TIAA Traditional Annuity was especially popular among these retirees in 2021. This fixed annuity product provided a foundation of security with a guaranteed principal and a minimum interest rate, offering essential peace of mind for retirement income planning.

What made TIAA unique was its profit-sharing model. The company often shared its profits with contract holders through higher interest rates, increased payouts, and loyalty bonuses. This meant your retirement income had the potential to grow beyond the initial guarantees. It offered the stability of a fixed annuity with an opportunity for additional growth, unlike many standard mutual funds.

Features of the TIAA Traditional Annuity:

• Guaranteed principal protection and a minimum interest rate.
• Potential for payouts to grow through the company’s profit-sharing program.

8. Lincoln Financial Income Edge

Lincoln Financial Group, with its strong financial strength ratings, was a reliable choice for lifetime income annuities in 2021. Products like their MYGuarantee Plus fixed annuity provided a sense of security that many retirees were looking for. The trend in 2021 leaned toward stable, predictable returns, and Lincoln Financial’s offerings were well-positioned to meet that demand.

These fixed-rate annuities from one of the nation’s trusted insurance companies allowed you to lock in a competitive interest rate for a predetermined period. This helped protect your savings from market fluctuations while generating a steady return. For those planning their retirement income strategy, Lincoln Financial provided a solid foundation for building a secure future.

Key aspects of their fixed annuities:

• Offered Multi-Year Guaranteed Annuities (MYGAs) with terms of 5, 7, and 10 years.
• Provided competitive fixed rates that offered stability and predictable growth.

9. Brighthouse Shield Level Annuity

The Brighthouse Shield Level Annuity was a notable product in 2021 for those who wanted market-linked growth without full market risk. This type of annuity, often called a registered index-linked annuity (RILA), provided a “shield” or buffer against a certain amount of market loss. This feature made it stand out from a standard variable annuity.

This product was designed for individuals with a moderate risk tolerance who were not content with fixed-rate returns but were wary of market conditions. It allowed you to participate in potential stock market gains up to a cap while knowing your downside was limited. Brighthouse also offered traditional fixed-rate annuities for those seeking more predictability.

Standout features of Brighthouse annuities:

• Shield Level annuities offer a buffer to protect against a certain level of market downturns.
• Their products cater to different risk tolerances, from secure fixed rates to growth-oriented RILAs.

10. Fidelity Personal Retirement Annuity

The Fidelity Personal Retirement Annuity, offered through insurance companies like Fidelity & Guaranty (F&G), was a popular option for retirees in 2021 who wanted more control over their investments. These annuities often came in a variable format, allowing you to choose from a diverse menu of investment options that resemble mutual funds.

This flexibility appealed to retirees who were comfortable managing their portfolios and wanted the potential for higher growth. While offering this control, the annuity wrapper still provided key benefits like tax-deferred growth and the ability to create a lifetime income stream. F&G also offered fixed products, like the FG Guarantee-Platinum Annuity, for those seeking more stability.

Highlights of annuities from Fidelity partners:

• A wide range of investment options to customize your retirement portfolio.
• The ability to convert your invested funds into a guaranteed source of lifetime income.

Key Features to Look for in the Best Annuities (2021)

When you were evaluating the best annuities in 2021, certain features were crucial for ensuring your financial security. The primary goal was to find a product that could reliably provide lifetime income, but the details mattered. Top-tier annuity options offered more than just a basic promise of future income payments.

You needed to look for products with strong guaranteed income options, flexible payout choices, and clear, stable interest crediting methods. Consulting with a financial advisor could help you navigate these features to find the right fit. Let’s examine these key characteristics more closely.

Guaranteed Income Options

The most fundamental feature of any annuity is its ability to provide guaranteed income. This is how an annuity generates income for your retirement: you make a payment (or payments) to an insurance company, and they, in turn, contractually promise to provide you with a future income stream. This process transforms your accumulated savings into a reliable paycheck.

This guarantee is backed by the financial strength of the insurance companies themselves, which is why choosing a highly-rated provider is so important. The income can be structured in various ways to meet your personal needs, whether you need it to last for your lifetime or for a specific number of years.

Common guaranteed income options include:

• Lifetime income annuities, which provide payments for the rest of your life.
• Joint and survivor options, ensuring payments continue for a spouse’s lifetime.
• Period certain annuities, which guarantee payments for a specified number of years.

Flexible Payout Choices

A key feature to look for in the best annuities of 2021 was flexible payout choices. The ability to decide how and when you receive your stream of income is crucial for effective retirement planning. Top products didn’t lock you into a single, rigid structure but instead offered a variety of ways to access your money.

You could choose to receive annuity payments for a set period or for the rest of your life. You could also often decide on the frequency of these payments, such as monthly, quarterly, or annually. This flexibility allows the annuity to adapt to your changing needs in retirement, ensuring the income stream works for you.

Examples of flexible payout choices include:

• Immediate payouts that start within a year of purchase.
• Deferred payouts that allow your money to grow tax-deferred for years.
• Systematic withdrawal plans that let you take out a certain amount regularly.

Rate Stability and Interest Crediting Methods

Understanding how your annuity earns interest is vital, and in 2021, rate stability was a significant trend. The interest rate determines the rate of return on your investment and ultimately how much your money grows. Different types of annuities use different methods to credit interest, each with its own level of risk and potential reward.

For example, a fixed annuity offers a guaranteed interest rate, providing maximum stability and predictability. An indexed annuity, on the other hand, links its interest crediting to a market index, offering the potential for higher returns but with less certainty. The low interest rate environment of the time made products that guaranteed a solid rate of return particularly attractive.

Common interest crediting methods are:

• Fixed rate, which offers a set, guaranteed rate for a specified term.
• Indexed rate, based on the performance of an index with caps and floors.
• Variable rate, which depends on the performance of underlying investment subaccounts.

Types of Annuities Available in 2021

In 2021, there were several types of annuities available, each designed to meet different retirement goals. The main categories included fixed, immediate, variable, and index annuities. Understanding their core differences was the first step in choosing the right product for your financial situation.

Due to the market conditions of the time, annuities that offered predictability were especially popular. For example, multi-year guaranteed annuities (MYGAs) offered better rates than many bank CDs with the added benefit of tax deferral. Let’s look at some of these key annuity types more closely.

Fixed Annuities

A fixed annuity is one of the most straightforward types of annuities. It offers a guaranteed rate of return for a specific period, providing a predictable and secure way to grow your retirement savings. This guaranteed growth translates into a reliable source of monthly income once you decide to start taking payments.

The main difference between a fixed and an immediate annuity is that “fixed” refers to how your money grows (at a fixed rate), while “immediate” refers to when your payments start (within a year). A fixed annuity can be either immediate or deferred. This simplicity and security made fixed annuities a cornerstone of many retirement plans in 2021.

Here is how a standard fixed annuity compares to a fixed index annuity: | Feature | Fixed Annuity | Fixed Index Annuity | |—|—|—| | Guaranteed Returns | Yes | No | | Protection from Losses | Yes | Yes | | Growth Potential | Limited | Higher potential | | Predictability | Very high | Moderate | | Simplicity | Simple | More complex |

Immediate Annuities

An immediate annuity is designed for one primary purpose: to create an instant income stream. The process is simple: you make a single lump-sum payment to an insurance company, and in exchange, they begin sending you regular payments right away. This is an ideal tool for retirement planning if you’ve just retired and need to replace your paycheck.

The annuity contract specifies the amount and frequency of your payments, which can be guaranteed to last for the rest of your life. This turns a portion of your nest egg into a secure, pension-like income source. For those who valued simplicity and immediate cash flow in 2021, this was an excellent choice.

Key characteristics of immediate annuities:

• They are funded with a single lump-sum premium.
• The income stream typically begins within one month to one year of purchase.

Multi-Year Guaranteed Annuities (MYGA)

Multi-Year Guaranteed Annuities, or MYGAs, were a very popular type of fixed annuity in 2021. A MYGA offers a fixed, guaranteed interest rate for a set period of time, typically ranging from three to 10 years. This provides excellent rate stability and predictable, guaranteed income growth.

Compared to other annuity types, MYGAs stood out because they often offered higher interest rates than bank CDs or government bonds, with the significant advantage of tax-deferred growth. This meant your interest could compound without being taxed annually, leading to faster accumulation. The annuity contract clearly defines the term and rate, so there are no surprises.

Here’s how a 5-year MYGA in 2021 might have compared to other safe investments: | Product (5-Year Term Example) | Rate | Key Feature | |—|—|—| | MYGA (Annuity) | ~3.0-4.0% | Tax-deferred growth | | High-Yield CD | ~1.0-2.0% | Taxed annually | | U.S. Treasury Bond | ~0.5-1.5% | Backed by U.S. gov’t |

Indexed Annuities

Indexed annuities offered a middle ground between the safety of fixed annuities and the growth potential of the stock market. Instead of a set interest rate, the return on an indexed annuity is linked to the performance of a market index, such as the S&P 500. This created an opportunity for your investment amount to grow more than it would in a fixed product.

Insurance companies add two important features: a “floor” and a “cap.” The floor, which is often 0%, protects your principal from market losses. The cap limits your potential upside, but the trade-off is the protection you receive. This differs from a fixed annuity’s guaranteed rate and an immediate annuity’s payout timing, offering a unique blend of safety and growth.

Core features of indexed annuities:

• Interest is credited based on a market index, offering higher growth potential.
• Principal is protected from market downturns thanks to a 0% floor.

Trends and Developments in Annuity Rates in 2021

The annuity landscape in 2021 was heavily influenced by the broader economic environment, particularly the prevailing low-interest-rate market conditions. This environment prompted insurance companies to get creative. While base annuity rates were tied to bond yields, many providers began to emphasize new features to make their products more attractive.

This led to trends like the rise of RILAs, which offered a degree of market participation with protection, and the addition of valuable riders for income and death benefits. These developments gave consumers more ways to customize their annuities to achieve their goals, even when payout rates were modest.

Changes in Payout Rates Compared to Previous Years

In 2021, annuity payout rates were reflective of the low-interest-rate environment of the time. Compared to the higher rates seen in later years, payouts were more modest. Payout rates are directly influenced by what insurance companies can safely earn on their investments, which are typically high-quality bonds. When bond yields are low, annuity rates follow suit.

It is crucial not to confuse a payout rate with an interest rate. A payout rate often includes a return of your own principal, especially in an immediate annuity. An interest rate, on the other hand, is the actual growth or rate of return your money is earning. Understanding this distinction was key to accurately comparing annuity payments in 2021.

Here’s a breakdown of different rate types: | Rate Type | What It Means | Example | |—|—|—| | Declared Interest Rate | The guaranteed growth rate on a fixed annuity. | A 3.0% 5-Year MYGA | | Payout Rate | The annual payment as a percentage of your premium. | $5,500/year from a $100k annuity = 5.5% | | Cash Flow Rate | The annual income you receive, including principal and interest. | Often the same figure as the payout rate. |

New Features and Innovations in Annuity Products

To stay competitive in 2021, insurance companies introduced a variety of new features and innovations in their annuity products. These optional features were designed to provide greater flexibility, security, and peace of mind for retirees. Instead of just focusing on rates, the trend was to add value through customizable benefits.

A financial advisor could help you sort through these options to find the ones that best suited your retirement plan. These riders often came with an additional fee but could provide significant advantages, such as guaranteeing a minimum income level for life or enhancing the amount left to your beneficiaries.

Some of the innovative new features included:

• Guaranteed lifetime withdrawal benefit (GLWB) riders, which ensure a lifelong income stream.
• Enhanced death benefit riders that could increase the legacy passed to heirs.
• Return-of-premium features that guaranteed you could get your initial investment back.

Conclusion

In summary, choosing the right annuity can provide you with the peace of mind that comes from guaranteed income during retirement. The options available in 2021, from fixed to indexed annuities, cater to various financial goals and risk tolerances. By understanding the key features, types, and current trends in annuity products, you can make an informed decision that aligns with your financial future. Whether you’re looking for flexibility, stability, or specific payout options, there’s an annuity that will meet your needs. If you’re ready to explore how these options can work for you, get a free trial or consultation to start your journey towards a secure retirement.

Frequently Asked Questions

How does an annuity generate guaranteed income for retirement?

An annuity generates income by converting your retirement savings into a reliable payment stream. You give a lump sum or a series of payments to one of the major insurance companies, and they contractually agree to pay you back over time. This creates a source of lifetime income, which is taxed as ordinary income upon withdrawal.

What makes certain annuities stand out in terms of returns and security?

Standout annuities offer a competitive rate of return while ensuring your money is safe. This security comes from the high financial strength rating of the issuing insurance company. Features within the annuity contract, like principal protection, a guaranteed interest rate, or a substantial death benefit, also make an annuity stand out.

Were there any awards or recognitions for annuities in 2021?

Formal awards for annuity products exist, but recognition often comes from independent ratings. High marks for customer satisfaction from sources like J.D. Power, or top financial strength awards from A.M. Best, are key indicators of quality. Companies like New York Life are consistently recognized by rating agencies for their stability and performance.