Annuities
With life expectancy on the rise, many people are spending 15 years or more in retirement. That makes it more important than ever to have a financial plan that goes the distance. Annuities are a smart, stable option for building long-term income and peace of mind. They’re designed to help you grow your savings safely and convert them into guaranteed income when you need it most.
What is an annuity?
An annuity is a long-term insurance contract that helps you grow your savings tax-deferred and provides guaranteed income in retirement. Depending on the type you choose, you can either build your funds for the future or start receiving income right away. Annuities can also complement other retirement accounts like 401(k)s or IRAs and help protect against the risk of outliving your money.
How annuities work
Annuities are designed to grow your savings and turn it into reliable income. How they function depends on three key factors:
1. How you fund an annuity
There are two main ways to fund an annuity: with pre-tax or after-tax dollars. Each option impacts how your withdrawals are taxed.
- Qualified annuities: These are funded with pre-tax dollars, most commonly through rollovers or transfers from retirement plans like a 401(k) or traditional IRA. Because the money hasn’t been taxed yet, all withdrawals are taxed as ordinary income when you begin taking distributions.
- Non-qualified annuities:These are funded with after-tax dollars, typically from personal savings or other non-retirement accounts. Since you’ve already paid taxes on the money you contribute, only the interest earned is taxable when you withdraw it. Your original principal is returned to you tax-free.
Amica offers both qualified and non-qualified annuities, giving you options to fit your specific savings goals and retirement timeline.
2. How your money grows
Amica offers only fixed annuities, focusing on secure, reliable growth that helps customers plan their retirement with confidence.
- Fixed annuities: With a fixed annuity, your contributions earn a guaranteed interest rate over a specific period. This means you’ll know exactly how much your money will grow, regardless of how the market performs. It’s a stable, low-risk approach, making it ideal if you’re focused on protecting your savings while earning predictable returns.
3. When you start receiving payments
If you choose to convert your fixed annuity into a stream of regular income payments, you have flexibility in how those payments are structured. The options available will depend on the type of annuity you chose.
- Deferred annuities : You can fund this type of annuity with either one lump sum or multiple payments, and your money then grows tax-deferred during the accumulation phase. When you're ready, you can turn the balance into a steady income stream — either for a set number of years or for life.
- Immediate annuities: With this option, you contribute a lump sum and begin receiving payments shortly after — often within 30 days. The payments are guaranteed and can be structured in several ways: for life, for a certain number of years, or for the longer of the two. Joint life annuities will pay for the longer of your lifetime and the lifetime of your spouse.
Comparing Amica’s annuity options
The variety of Amica’s annuity options can make them a valuable part of your retirement strategy. They’re designed for simplicity, steady growth and long-term financial confidence.
Deferred annuities
- Multi-Year Guaranteed Annuity (MYGA): A MYGA starts with a single lump-sum contribution, with the option to add more within the first 60 days. It earns a fixed interest rate and grows tax-deferred, typically over a three-, five- or seven-year period – making it a solid choice for short or medium term growth.
- Flexible Premium Deferred Annuity (FPDA): With an FPDA, you make an initial contribution and continue to add funds on your own schedule. Each contribution earns a fixed interest rate and grows tax-deferred, guaranteed for 12 months, making it a smart choice for ongoing retirement savers.
Immediate annuities
- Single Premium Immediate Annuity (SPIA): A SPIA is funded with a single lump sum, and you can start receiving guaranteed payments within 30 days to one year, depending on your contract. It’s a good fit if you’re retired or close to retirement and want to start drawing income right away.
| Key Benefit | MYGA | FPDA | SPIA |
|---|---|---|---|
Contribution type | Lump sum | Flexible | Lump sum |
Guaranteed interest | ✅* | ✅** | ✅* |
Tax-deferred growth | ✅ | ✅ |
|
Access to funds before income | ✅*** | ✅*** |
|
Guaranteed income | ✅ | ✅ | ✅ |
Income starts right away | ✅ |
*Fixed, guaranteed for term.
** Fixed, guaranteed for 12 months after contribution, subject to renewal thereafter
*** Withdrawals may be subject to surrender charges.
Common questions about annuities
Unlike 401(k)s and IRAs, which are typically offered through employers or financial institutions, annuities are issued by insurance companies. This gives them benefits like guaranteed income, protection from market loss and flexible payout options that traditional retirement accounts may not offer.
Annuities are a strong option for people nearing or in retirement who want guaranteed, steady income. They also work well for those looking to protect their savings, grow assets safely and benefit from tax-deferred growth over time.
You can choose how often to receive payments – monthly, quarterly, semiannually or annually – based on your needs.
Yes. If your annuity was funded with pre-tax dollars, the entire withdrawal is taxable. For annuities funded with after-tax dollars, only the interest is taxable.
Insights and guidance for annuities
Explore more insights in our retirement resource center
Why choose Amica for your annuity needs
With flexible income options, consistent and reliable payouts, and the backing of over a century of financial strength, Amica annuities are built to support your retirement with confidence. You’ll receive personalized guidance from our experienced retirement specialists every step of the way, along with the exceptional service and trust that generations of customers have come to rely on. Hear more about the Amica experience directly from them.
Have questions or ready to take the next step?
Our annuity representatives are here to help you choose the right annuity for your goals.
Call 800-234-5433
ALIC10525 Aug-27