One guarantees your money; the other rides the market. Call 1-800-MEDIGAP for unbiased guidance.
What is the core difference between fixed and variable annuities?
The core difference is who bears investment risk. A fixed annuity pays a guaranteed interest rate set by the insurer and protects your principal; your balance cannot fall due to market drops. A variable annuity invests your premium in market subaccounts similar to mutual funds, so your value rises and falls with those investments. Variable annuities offer higher growth potential but real risk of loss and typically carry higher fees, including mortality and expense charges plus fund costs. Fixed annuities are simpler and cheaper. Which fits depends on your risk tolerance, time horizon, and need for guarantees. A 1-800-MEDIGAP specialist can explain both without sales pressure.
Which annuity is right for a retiree?
Many retirees lean toward fixed annuities because protecting principal and securing predictable income usually matter more than chasing market gains in retirement. Fixed annuities deliver certainty and low fees, ideal for money earmarked for essential expenses. Variable annuities may appeal to retirees with a longer horizon and an appetite for growth who can stomach declines, but their fees and complexity demand careful review of the prospectus. There is no universal answer; it hinges on your goals, other assets, and comfort with risk. To weigh fixed versus variable against your full retirement and Medicare picture, call 1-800-MEDIGAP for a no-pressure conversation.