How Do Different Retirement Annuity Rates Compare?

Retirement annuity rates differ widely from company to company. Every company that offers these products has different results. Retirement annuities are usually obtained through an employer-sponsored pension plan. They provide a guaranteed monthly stream of income to the annuity holder for a specified period, including the life of the holder. Retirement annuities can also be purchased individually by a person planning for retirement, funded with after-tax dollars.  A retirement annuity can either be a fixed or variable rate annuity.

Retirement Annuities Based on Variable Rates

Retirement annuity rates based on variable annuities fluctuate, depending on the performance of the underlying stock market.  Because it is tied heavily to stocks, the rates in a variable annuity are not guaranteed.  Wild swings in the stock market result in huge fluctuations in returns and rates credited to the variable annuity.  The rate posted for a given year will not be the same rate in the variable annuity the following year.

Retirement Annuities Based on Fixed Rates

Retirement annuities are also based on fixed rates.  The difference between variable and fixed annuities is that an insurance company will guarantee the rates in a fixed annuity.  This gives the annuitant, or holder, of the annuity contract some stability about their retirement account.