Michael Fox — Licensed Insurance Advisor
Michael Fox Insurance
Phone: 856-676-9358
Email: michaelfox133@icloud.com
michaelfoxinsurance.online
Annuities Overview
Printed September 16, 2026
Annuity guidance
Plan how to live on the money you have accumulated.
A main focus of Michael's work is retirement income planning: figuring out how to turn years of savings into income you can actually live on. Annuities may help provide guaranteed income or principal protection, but the details matter.
Talk through my optionsWhat this can help with
- Income options designed to last for a set period or for life
- Potential protection from market losses depending on product type
- Clear review of surrender periods, fees, riders, and access to money
- Income planning alongside accumulated savings, Social Security, pensions, and legacy goals
Smart questions to ask
Do I need guaranteed income, growth potential, principal protection, or liquidity?
What fees, caps, participation rates, or surrender charges apply?
How soon do I need income, and how much access should I keep?
How does this fit with my broader retirement plan and tax situation?
Often a good fit for
Retirees and pre-retirees who want a clearer plan for living on accumulated money
People worried about outliving savings or market volatility
Households that want to compare guarantees before moving money
Annuities Explained in Plain English
What is an annuity and how does it work?
An annuity is a contract with an insurance company that converts a lump sum or series of payments into tax-deferred growth and, when elected, guaranteed income the owner cannot outlive.
Key facts
- Guarantees in an annuity are backed by the claims-paying ability of the issuing insurance company, not by the FDIC.
- Fixed annuities credit a stated rate; fixed indexed annuities credit interest tied to an index subject to caps or participation rates and do not lose value from index declines.
- Growth inside a deferred annuity is tax-deferred; withdrawals of gain are taxed as ordinary income, and withdrawals before age 59 1/2 may incur a 10% IRS penalty.
- Most deferred annuities carry a surrender-charge period, typically five to ten years, during which early withdrawals above the free-withdrawal amount incur a charge.
- Income riders can guarantee a lifetime payout amount for an explicit annual fee disclosed in the contract.
Common questions
- Are annuities safe?
- Annuity guarantees depend on the financial strength and claims-paying ability of the issuing insurance company rather than FDIC insurance. Carriers must hold statutory reserves, and each state operates a guaranty association with coverage limits that vary by state.
- How are annuity withdrawals taxed?
- In a non-qualified deferred annuity, gains come out first and are taxed as ordinary income; the original principal is returned tax-free. Withdrawals before age 59 1/2 may also trigger a 10% IRS penalty. IRA-funded annuities follow standard IRA tax rules.
- What is the difference between a fixed and a fixed indexed annuity?
- A fixed annuity credits a declared interest rate for a set term. A fixed indexed annuity credits interest linked to a market index subject to a cap, spread, or participation rate, with the principal protected from index losses. Neither invests directly in the market.
- Can I get my money back out of an annuity?
- Most contracts allow a penalty-free withdrawal each year, commonly around 10% of the value. Amounts above that during the surrender-charge period incur a declining surrender charge disclosed in the contract.
Reviewed by Michael Fox, licensed insurance professional, Cherry Hill, New Jersey. Educational information only — not tax, legal, or investment advice. Product availability and features vary by state and carrier.
The pension was the greatest retirement check ever invented.
For most of the 20th century, retirement was simple: you worked, you retired, and a check showed up every single month for the rest of your life. No spreadsheets. No market timing. No fear of running out. That check was a pension, and it remains the gold standard of retirement income.
Here's the secret most people never learn:
Pensions are funded with annuities. When a corporation, a state, or the federal government promises to pay a retiree for life, they don't keep that money in a checking account hoping it lasts. They hand the obligation to an insurance company — through what's called a group annuity contract — and the insurance company guarantees the lifetime payments.
General Motors, 2012
Transferred $25 billion in pension obligations covering 110,000 retirees to Prudential — funded entirely through a group annuity.
Verizon, 2012 & 2018
Moved over $8.5 billion in pension liabilities to Prudential, converting corporate promises into annuity-backed lifetime checks.
IBM, Lockheed Martin, AT&T
Each transferred billions in pension obligations to insurers like MetLife and Athene — the same insurers that sell annuities to individuals like you.
State & federal plans
Public pension boards routinely use annuity contracts to lock in guaranteed payouts for retirees, especially as long-term liabilities grow.
You can build your own pension. The same way they did.
Most workers today will never receive a traditional pension. The 401(k) replaced it — and handed every employee the job of being their own pension manager, actuary, and investment committee. That's a heavy burden, especially in retirement.
But here's the good news: the same insurance companies that fund corporate pensions sell annuities directly to individuals. You can take a portion of your 401(k), IRA, or savings and convert it into a personal pension — a check that arrives every month for the rest of your life, regardless of what the market does.
A quick real-world example:
A 65-year-old who places $250,000 into a single-premium immediate annuity in today's rate environment could typically generate roughly $1,600–$1,900 per month for life — and a joint version continues paying as long as either spouse is alive, depending on the payout option chosen. This is an illustrative example only; actual figures vary by age, health, carrier, product, interest-rate environment, and the payout option selected, and guarantees depend on the claims-paying ability of the issuing insurance company.
You don't have to annuitize everything. Most plans Michael builds use annuities to cover the essential bills — housing, food, healthcare, utilities — so the rest of your portfolio can stay invested for growth, legacy, and freedom.
Want to see what your personal pension could look like?
Michael will model real numbers using your age, savings, and income goals and show you illustrative income figures for annuity products that offer a lifetime income option. Guarantees depend on the terms of the contract, the payout option selected, and the claims-paying ability of the issuing insurance company. Not all annuities provide lifetime income, and annuities may include surrender charges, liquidity restrictions, fees, and inflation risk.
Bring these numbers to your first conversation.
These prompts help make your recommendation more accurate and save time when comparing carriers or product types.
Two accounts. Same dollars in. Which would you pick?
11 quick rounds. Pick a winner each round. We'll keep score and reveal what each account actually is — with real-life scenarios.
See what a personal pension would pay you
Tell Michael your age, the amount you're considering, and when you'd want income to start. He'll come back with side-by-side personalized carrier illustrations and preliminary rate comparisons from financially established carriers.
Free consultation
Let’s make the next decision clearer.
Bring your questions, existing policies, and goals. You’ll leave with a clearer understanding of your options — even if now is not the right time to make a change.
Keep exploring
Related resources worth your time
The honest annuity Q&A
Every common objection answered in plain English — including the fair ones.
Read: The honest annuity Q&AFee Reveal
What annuity fees actually look like vs. mutual funds and managed accounts.
Read: Fee RevealAccount Showdown
Where annuities win, where they lose, and what to compare them against.
Read: Account ShowdownRetirement Income Planning
How (and whether) an annuity fits into a complete income plan.
Read: Retirement Income PlanningSources and further reading
- SEC Investor.gov — Annuities
- NAIC — Annuities consumer information
- IRS.gov — Publication 575, Pension and Annuity Income
Government program rules, limits and tax figures change. Always confirm current details at the official sources above.
Written or reviewed by Michael Fox
Licensed insurance professional · More than 25 years of financial-services experience
Last reviewed: August 2026