What is a fixed annuity, a variable annuity?
Simply put, both a fixed annuity and a variable annuity are amounts payable annually. More specifically, they are contracts offered by insurance companies which allow you to accumulate funds for retirement on a tax-favored basis and then, if you choose, receive a guaranteed income payable for life or for a period certain such as five, ten or twenty years. Usually the payments are made monthly, but many companies offer to make the payments quarterly, semi-annually, or annually. Most of this discussion will focus on the fixed annuity.
