As a thumb rule, if you are interested in a form of investment in annuities that will lead to a steady dependable income for a long period, it is advisable to invest in a fixed annuity. With fixed annuities the prime advantage is a guaranteed return of the money with interests, especially when you need the money the most, i.e., after your retirement. Annuities are becoming increasingly popular as a savings tool than a normal retirement savings plan. This is primarily because of a higher rate of return.

Annuities can be selected from various types available in the market. However, one should always compare the benefits they offer and match them with your financial condition. A ‘deferred fixed annuity’ helps in maximizing the savings for retirement purposes. Deferred annuities are the ones where the returns from it are deferred over a larger period of time, for example 20 years. In this manner you get covered for a longer time in times of having a steady income. Even though the net amount you receive back is similar, your repayment option is increased.

There are a number of advantages associated with annuities that ensure fixed and guaranteed income. Some are discussed below –

Tax advantages: You are allowed to reduce or have no taxes on any earnings from annuities until you actually begin to make withdrawals. In this manner your principal amount, your earnings and any money you would have otherwise paid in taxes every year, to continue growing until you're ready to take it out.

Flexibility: Most guaranteed return annuities have different options of repayment depending on your health and age. Choosing among a variety of annuities with varying surrender charge schedules, features and benefits is very good exercise, leading to customized solutions.

Surplus security: If you opt for an added security in a fixed annuity then you can allocate part of your premiums into a fixed account within a variable annuity, both of which can eventually offer a guaranteed rate of return. In this manner you can add more security to a variable annuity. The option also allows you to further protect yourself from market uncertainty. With electing a Guaranteed Minimum Withdrawal Benefit (Withdrawal Benefit) one can have the protection of the principal while enjoying the market performance benefits.

Risk reduction: Fixed annuities are a tested financial instrument to reduce risk of loosing your money. A fixed annuity reduces risk associated with the volatilities of market ups and downs.

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