Frequently Asked Questions
Annuity and retirement planning FAQs
These are the questions we hear most often from people researching annuities, retirement income, principal protection, and how this process works.
We answer them in plain English so you can get clarity first and decide on your next step without pressure.
If you are just getting started, begin with the basics below. If you already have a specific question, jump to the section that fits it best.
Browse by topic
Choose the section that matches your question. Each link jumps to a focused group of answers.
Start with the basic contract, safety, and fit questions.
MYGA and fixed annuity questions
Compare guaranteed rates, CDs, maturity, and access.
Fixed indexed annuity questions
Understand index crediting, caps, participation, and riders.
Costs, access, and planning fit
Review liquidity, fees, surrender charges, and income fit.
Start with the questions people ask most often
These are the high-friction questions we usually answer before anything else.
Are annuities safe?
Annuity guarantees depend on the issuing insurance company, not a bank. Carrier strength and contract design matter.
What is the difference between a MYGA and a CD?
Both offer guaranteed growth, but MYGAs usually add tax deferral and insurance-company backing instead of bank backing.
Can I lose money in a fixed indexed annuity?
Not from direct market loss in the typical FIA structure, but surrender charges, rider fees, and fit still matter.
What happens on the first call?
It is a conversation, not a pitch. Fairway starts by listening, then explains options clearly and honestly.
A quick note before you dive in
These answers are written to be clear and practical, not overly technical. If you come across a term you do not recognize, the glossary is the best place to look up the definition.
If you need the full explanation behind an answer, use the linked pages under each question or return to the resources hub.
General annuity questions
Start here for the basic safety, structure, and planning-fit questions.
What is an annuity?
An annuity is a contract with an insurance company built for long-term savings, retirement income, or both. On this site, the focus is mainly on fixed annuities, MYGAs, and fixed indexed annuities rather than market-risk annuity products. The goal is usually principal protection, tax deferral, predictable growth rules, or guaranteed income.
How do annuities work?
You place money with an insurance company, and the contract follows a specific set of rules for growth, access, and optional income. Some annuities offer a fixed guaranteed rate. Others tie interest crediting to an index with limits. The details depend on the product type, which is why it helps to start with the right explainer page.
Are annuities safe?
Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. They are not FDIC-insured bank products. That is why safety conversations should include carrier quality, contract guarantees, and what state guaranty associations do and do not do.
Are annuities FDIC insured?
No. Annuities are insurance products, not bank deposits, so they are not covered by FDIC insurance. Instead, they rely on the claims-paying ability of the insurer and the backstop structure that exists through state guaranty associations.
What types of annuities do you work with?
Fairway specializes in fixed annuities, including MYGAs, and fixed indexed annuities. These products are used for protected growth, income planning, and principal-focused retirement strategies. Fairway does not position itself around variable annuities.
Who should consider an annuity?
Annuities tend to make the most sense for people nearing retirement or already retired who want to protect a portion of their savings, create more predictable income, or reduce exposure to market loss on money they may need soon. They are often used for the safer portion of a retirement plan, not necessarily all of it.
Who should probably not buy an annuity?
Annuities are usually a poor fit for people who need full short-term liquidity, have not built an emergency reserve yet, or are far from retirement and primarily seeking aggressive growth. A good advisor should be willing to say when an annuity is not the right tool. A good place to start is to learn about the "sequence-of-returns risk" concept.
Can I roll over an IRA or 401(k) into an annuity?
In many cases, yes. Qualified money from accounts like Traditional IRAs and old 401(k)s can often be moved into a qualified annuity without creating a taxable event when handled properly. The account type, transfer method, and destination contract all matter, so this is worth reviewing before moving anything.
MYGA and fixed annuity questions
Short answers about guaranteed-rate annuities, CDs, maturity windows, and liquidity.
What is a MYGA?
A MYGA, or multi-year guaranteed annuity, is a fixed annuity that locks in a guaranteed interest rate for a set term, often 3, 5, 7, or 10 years. It is often compared to a CD, but it typically adds tax-deferred growth and uses insurance-company guarantees instead of bank guarantees.
How is a MYGA different from a CD?
A MYGA and a CD both offer guaranteed growth for a set period, but they are not identical. MYGAs usually offer tax deferral and may be better suited for long-term retirement money, while CDs are bank products with a different protection structure and often more familiar short-term use.
What are current MYGA rates?
MYGA rates change with market conditions, carrier pricing, state availability, deposit size, and term length. Check our current MYGA rates, then contact us to confirm which options are available for your situation.
What happens when my MYGA matures?
When a MYGA matures, you usually have a window to decide what to do next. That may include renewing, transferring into a different annuity through a 1035 exchange, taking money out, or repositioning the contract for income planning. The best move depends on rates, taxes, and what job the money needs to do next.
Are MYGAs liquid?
MYGAs are not meant to function like a checking account. Most allow a free-withdrawal amount each year, but larger withdrawals during the holding period can trigger charges. That is why they fit best when the money has a defined timeline and is not needed for short-term spending.
Fixed indexed annuity questions
Use this group for index crediting, market-loss questions, caps, participation rates, and riders.
What is a fixed indexed annuity?
A fixed indexed annuity, or FIA, is an insurance contract that credits interest based on an index strategy rather than directly investing your money in the stock market. In the typical FIA structure, market declines do not directly reduce your account value, but upside is shaped by rules like caps, participation rates, and spreads.
How does a fixed indexed annuity work?
The simple version is this: your money stays inside an insurance contract, and the contract uses a formula to determine how much interest gets credited during a given period. If the index does well, you may receive interest up to the product's limits. If the index performs poorly, the credited interest may be zero for that period rather than negative.
Can I lose money in a fixed indexed annuity?
In the common FIA design, you do not lose money because of direct market performance the way you can in a brokerage account. But that does not mean every outcome is risk-free. Early withdrawals, rider fees, inflation, and poor fit for your timeline can still create a bad result if the product is used the wrong way.
What is a cap rate?
A cap rate is the maximum amount of interest a particular indexed strategy can credit during a stated period. If the index gains more than the cap, the contract is still limited to the cap for that strategy. It is one of the main tradeoffs that comes with principal-focused design.
What is a participation rate?
A participation rate is the percentage of the index gain that is credited under a specific strategy. If the strategy has a 60% participation rate, the contract credits 60% of the measured gain, subject to any other rules that apply. It is one of the main levers that shapes FIA growth potential.
What is an income rider?
An income rider is an optional feature that can create a future stream of guaranteed income. It usually uses a separate value for income calculations, which is different from the contract's cash value. That distinction is one of the most important things to understand before choosing an income-focused design.
Are fixed indexed annuities good for everyone?
No. FIAs can be useful for people who want principal-focused growth rules and may need guaranteed income later, but they are not ideal for every person or every dollar. They make the most sense when the timeline, liquidity needs, and tradeoffs all match the job the money needs to do.
Costs, access, and planning-fit questions
These answers help you separate product features from whether the contract fits your timeline.
What are surrender charges?
Surrender charges are contract charges that can apply if you withdraw more than the free amount during the holding period. They usually start higher in the early years and decline over time. They are one of the biggest reasons annuities should be matched carefully to your timeline.
Are there fees?
Many MYGAs have no annual product fee. Some fixed indexed annuities also have no annual fee unless you add an optional rider, such as an income rider. The important point is not whether a product has a fee in isolation, but what you are getting in return and whether it fits your objective.
Can I access my money?
Yes, but with structure. Most annuities allow some level of penalty-free annual access, often around 10%, while larger withdrawals during the holding period may create charges. This is why annuities work best when emergency cash is kept elsewhere.
What is the 10% free withdrawal?
Many annuity contracts allow you to withdraw up to 10% of the value each year without surrender charges. The exact rules vary by contract, and some products also include special waiver provisions for specific life events. This feature helps, but it does not turn a long-term annuity into fully liquid cash.
Are annuities better for growth or income?
That depends on the product and the job the money needs to do. Some annuities are designed around guaranteed rates. Others are built more for future income planning. The right question is not which annuity is best in general, but which design best fits your timeline, liquidity needs, and retirement goals.
Working with Fairway Retirement
A few practical answers about the first call, cost, compensation, and fit-first guidance.
What does it cost to work with you?
Fairway does not charge you a direct advisory fee for annuity guidance. If a policy is placed, compensation comes from the insurance carrier. We explain how we are compensated so there are no surprises.
How are you compensated?
Insurance carriers pay Fairway a commission when a client purchases an annuity or enrolls in a Medicare plan through the agency. This compensation is built into the product structure rather than added as a separate advice invoice. The key message here is openness, not defensiveness.
What states do you serve?
Fairway has advisors based in Newnan, Georgia, and Bentonville, Arkansas, and serves clients in multiple states where licensed. Contact us to confirm availability in your state.
What happens on the first call?
The first call should be framed as a low-pressure conversation focused on your goals, timeline, concerns, and current situation. Fairway listens first, explains clearly, and answers questions without rushing the decision. This answer should help remove anxiety from the CTA.
Will you tell me if an annuity is not the right fit?
Yes. Honest guidance matters more to us than forcing a sale. If an annuity does not fit your goals, timeline, or liquidity needs, we will tell you.
Still have a question?
If your question is not here, ask it directly. We are happy to explain your options, clarify a term, or help you understand whether an annuity even belongs in your plan.
No pressure. No jargon. Just clear answers.