Fixed vs. Variable Annuities: What Fayetteville Investors Should Know

Planning for retirement often involves choosing financial tools that can provide stability, growth, or a balance of both. For many Fayetteville, GA residents, annuities are an option worth considering because they can offer long-term income and tax-deferred growth.

Two of the most common types are fixed annuities and variable annuities. While both can play a role in a retirement strategy, they function differently and carry different levels of risk.

What Is a Fixed Annuity?

A fixed annuity provides a guaranteed interest rate for a set period. This makes it appealing to investors who want predictable growth and steady income. The insurance company assumes the investment risk, which means your returns do not fluctuate with market performance.

Fixed annuities may be a suitable option for conservative investors or those seeking a stable income stream with limited market volatility exposure.

Potential Benefits of Fixed Annuities

• Predictable interest rates
• Steady income during retirement
• Lower risk compared to market-based products
• Tax-deferred growth

Potential Drawbacks of Fixed Annuities

• Lower growth potential compared to variable annuities
• Limited flexibility once the contract is in place
• Possible surrender charges for early withdrawals

What Is a Variable Annuity?

A variable annuity allows you to invest in a selection of subaccounts that function similarly to mutual funds. Your returns depend on how these investments perform. This means you have the potential for higher growth, but you also take on more risk.

Variable annuities may appeal to investors who are comfortable with market fluctuations and seek the potential for stronger long-term growth.

Potential Benefits of Variable Annuities

• Opportunity for higher returns
• Investment flexibility
• Optional riders for income guarantees or death benefits
• Tax-deferred growth

Potential Drawbacks of Variable Annuities

• Greater exposure to market risk
• Higher fees compared to fixed annuities
• Returns are not guaranteed

Which Option Fits Your Retirement Goals?

Choosing between a fixed and variable annuity depends on your financial priorities, risk tolerance, and retirement timeline. Consider the following questions as you evaluate your options:

• Do you prefer guaranteed returns or are you comfortable with market risk?
• Are you seeking steady income or long-term growth?
• How soon do you plan to retire?
• Do you want flexibility in how your money is invested?

How The Derek Campbell Agency Helps Fayetteville Investors

The Derek Campbell Agency works with individuals throughout Fayetteville and surrounding Georgia communities to explain annuity options, compare features, and help determine which products align with their retirement plans.

If you are considering fixed or variable annuities and want guidance tailored to your financial goals, contact The Derek Campbell Agency for support.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.