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Annuity & Index Comparison

Compare annuity performance with the S&P 500 index over the past century

Annuity vs. S&P 500 Index Comparison

Compare the performance of different annuity types against the S&P 500 index over time

Annuity Type

Provides a guaranteed interest rate for a specified period

Market Scenario

Initial Investment: $100,000

Investment Period: 30 years

Starting Age: 45

Include Inflation Effects

Include RMD Calculations (after age 73)

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Understanding Annuities vs. Market Indexes

Key Considerations

•Risk Profile: Annuities typically offer lower risk but also lower potential returns compared to direct market investments.
•Fees and Expenses: Annuity fees can significantly impact long-term performance compared to low-cost index funds.
•Guaranteed Income: Unlike market investments, many annuities offer guaranteed lifetime income that can't be outlived.
•RMD Considerations: Certain annuities like QLACs can help manage Required Minimum Distributions from retirement accounts.
•Liquidity: Market investments typically offer greater liquidity than annuities, which may have surrender charges.

Historical Performance Context

The S&P 500 has delivered an average annual return of approximately 10% since its inception in 1926 (about 7% when adjusted for inflation). However, this comes with significant volatility, including multiple periods of substantial drawdowns.

Fixed annuities have historically offered rates between 3-5% during normal interest rate environments, while indexed annuities typically capture 30-60% of market gains with downside protection.

This simulator allows you to explore how these different approaches would have performed over various time periods, helping you make more informed decisions about the role annuities might play in your retirement strategy.