Secure Your Future: 2026 Retirement Planning with Annuities

Posted on December 18th, 2025.

Planning for retirement in 2026 raises a big question: how will you replace your paycheck with reliable income that lasts? Market ups and downs can make that question feel stressful. Many people want stability without giving up all growth potential.

Annuities can help answer that question by turning part of your savings into predictable payments. Used thoughtfully, they support retirement planning by adding structure and certainty to your income. They can also work alongside your existing accounts instead of replacing them.

This blog post explains how annuities work, where they fit in a retirement strategy, and how to weigh fixed versus variable options. The goal is simple: help you understand the tradeoffs so you can decide whether annuities deserve a place in your 2026 retirement plan.

Understanding Annuities: A Safe Bet or Just Another Option?

Annuities are contracts between you and an insurance company. You contribute money, either as a lump sum or through a series of payments. In return, the insurer agrees to provide an income stream in the future. That income can start right away or at a date you choose. The structure is straightforward, even if some features seem technical at first glance.

Most annuities have two stages: an accumulation phase and a payout phase. During the accumulation phase, your money grows inside the contract, often on a tax-deferred basis. In the payout phase, the contract begins sending income back to you according to the schedule and options you selected. This could mean regular payments for a set number of years or for the rest of your life. Knowing that those payments continue regardless of market swings can be reassuring.

There are several main types of annuities:

• Fixed annuities pay a guaranteed rate of interest and offer predictable future payments.
• Variable annuities tie growth to investment subaccounts, introducing market risk but also more upside potential.
• Indexed annuities sit between those two, linking returns to a market index with limits on both gains and losses.

While the names can sound technical, all these products share a single purpose: turning savings into dependable income.

For many people, the most appealing feature is the possibility of guaranteed lifetime income. Traditional retirement accounts typically do not promise payments that last as long as you do. Annuities can fill that gap by shifting the longevity risk from you to the insurer. That is why they are often considered for people who worry about outliving their savings.

There are, however, important details to review. Annuities may include surrender periods, during which early withdrawals trigger fees. Some contracts charge ongoing costs for extra features like income riders or death benefits. These charges are not inherently negative, but they need to be weighed against the value you receive. 

So, are annuities a safe bet or just another option? The answer depends on your goals, risk tolerance, and time horizon. For someone who values predictable income and is comfortable committing funds for the long term, annuities can be a strong addition. For others who prioritize flexibility or aggressive growth, they may play a smaller role. The key is to see them as one tool among many, not a one-size-fits-all solution.

The Role of Annuities in Retirement Strategy

Annuities make the most sense when you see them in the context of your entire retirement picture. Most people will rely on a mix of Social Security, retirement accounts, and possibly a pension. Adding annuities can turn part of that mix into a stable monthly amount, easing the pressure on investments during market downturns. Instead of wondering how much you can safely withdraw, you have a known income floor.

One of the biggest risks in retirement is outliving your savings. People are living longer, and that is good news, but it also stretches financial resources. Annuities are designed to manage this longevity risk by providing income you cannot outlive if you choose a lifetime payout option. That structure can give you more confidence to spend on travel, hobbies, or family without constant worry about running out of money.

Tax treatment is another reason annuities often appear in retirement strategies. In a deferred annuity, earnings grow tax-deferred until you begin taking withdrawals. This can help if you expect to be in a lower tax bracket later or want more control over when income is recognized. Coordinating annuity withdrawals with other accounts can support thoughtful tax planning, especially when Required Minimum Distributions and Social Security are in the mix.

Some annuities also include options to help address inflation. Certain contracts allow for cost-of-living increases to payments, while others offer growth tied to a market index. These features do not eliminate inflation risk, but they can help preserve purchasing power over time. Choosing whether to include these options depends on your budget, health, and how much flexibility you want in other parts of your portfolio.

Key benefits of annuities in a retirement strategy often include:

• Avoids Market Risk: In specific annuity types, your principal is shielded from day-to-day market volatility.
• Guarantees Lifetime Income: Payments can continue for life, helping you manage longevity risk.
• Offers Tax Advantages: Earnings grow tax-deferred until you withdraw them.
• Inflation Protection Options: Some contracts provide features that can increase income over time.
• Diversifies Income Streams: Annuities can work alongside Social Security, pensions, and investments.

Even with these benefits, it is important to consider liquidity and flexibility. Funds placed in an annuity may be harder to access quickly without fees, especially during surrender periods. A thoughtful plan often uses annuities to cover essential expenses such as housing, food, and basic healthcare, while keeping other assets more flexible. 

Choosing the Right Annuity: Fixed vs. Variable

Once you decide that an annuity might belong in your retirement plan, the next question is which type to choose. The most common comparison is between fixed and variable annuities. Both can support retirement income, but they serve different preferences and risk levels. 

Fixed annuities offer a guaranteed interest rate for a set period. During that time, you know exactly how much your money will grow. When you begin taking income, your payments are based on that predictable growth and the terms of your contract. This can be very appealing if you prefer stability, dislike surprises, and want a clear number you can plug into your retirement budget each month.

The tradeoff with fixed annuities is that they might not keep pace with strong markets. Because the insurance company takes on the investment risk, returns tend to be more modest than long-term stock market averages. Over many years, inflation can also erode the value of fixed payments if there is no adjustment feature. When evaluating fixed annuities, comparing interest rates, terms, and any options for future changes becomes an important step.

Variable annuities work differently. Your money is invested in subaccounts similar to mutual funds, and your account value moves with market performance. When markets do well, your contract value and potential income can increase. This growth potential can be attractive if you have a longer time frame and are comfortable with fluctuations. In certain designs, optional riders can provide minimum income guarantees alongside market participation.

However, variable annuities often come with higher fees due to investment management, insurance guarantees, and added features. Those costs can reduce returns if the underlying investments underperform. Risk is also higher, since your principal is exposed to market swings. Before choosing a variable annuity, it is important to understand the subaccounts used, the fee structure, and the guarantees included so you know what you are paying for.

Many people find that the right answer is not strictly fixed or variable but a mix that matches their comfort level and goals. For example, you might use a fixed annuity to cover a portion of essential bills and consider a variable annuity or other investments for long-term growth. The key is to make sure any annuity choice supports your overall plan, instead of working against your preferred level of risk and flexibility.

Related: Why a Personalized Insurance Review is a Must for 2026

Plan Your 2026 Retirement With Confidence

Retirement planning should give you clarity, not confusion. Annuities are one way to turn savings into steady income, but choosing and structuring them correctly takes careful thought. At Securitas, we focus on explaining your options in clear terms so you can make decisions that feel right for you and your family.

We work with you to review your income needs, time horizon, and comfort with risk, then explore whether fixed annuities, variable annuities, or a blend fits your 2026 retirement plan. Our role is to help you understand contract details, fees, and features so you can see how an annuity could support your broader strategy.

Not sure which annuity fits your retirement goals? Schedule a personalized consultation with us to build a retirement income strategy you can rely on.

Give us a call at (630) 768-5815 or email [email protected]. Together, let's pave the path to a retirement filled with security and joy.