There are three main types of retirement plans in the United States, including: Social Security, company and government pensions, and individual pensions (including 401Ks, IRAs, etc.). Typically, 401Ks are selected by the company, while IRA plans are selected by the individual. The money is deposited into a retirement account each month, and the individual (or a professional investor) selects and invests in a combination of products in the market, taking responsibility for their own profits and losses based on market trends.

An annuity, on the other hand, is a contract between an individual and an insurance company, a retirement savings vehicle provided by the insurance company, which is relatively less risky regardless of market conditions. After purchasing an annuity, the insured can receive a certain amount every month until he/she passes away when he/she reaches the age to receive it. If the insured is still healthy after exceeding the insured amount, then the insurance company needs to keep paying

Advantages of Annuities

• An annuity can be tax-deferred (tax-deferral), where the money put into the account is not taxed as long as it is not withdrawn until the pension is received. The benefits are usually lower than when you were working, and you don't have to pay taxes every year, so the interest rolls over so that you end up with a higher return than if you paid taxes every year.
• Unlike a 401K or IRA, there is no cap on deposits in an annuity, which means you can set a reasonable amount of deposits based on your needs.
• Money from other retirement accounts can be rolled over into the annuity in a lump sum. Most annuity products will pay dividends in the first year or after, depending on the specific number of years of contributions.
• In addition to the policyholder receiving a lifetime retirement income, a beneficiary can be designated. If the insured dies before receiving the annuity, the beneficiary can receive the entire principal amount. Of course, if there is still an unused balance in the account at the time of the policyholder's death, the beneficiary can continue to receive it.

In the U.S. family and individual retirement income annuity insurance market, U.S. annuity insurance products, are divided into the following four major categories.

• Fixed Annuity Fixed Income Annuity: The return is determined by the performance of the stock market index. If the underlying stock index rises, then the annuitant receives the return under the contract's return line; if the stock index falls, then he or she receives the contract's guaranteed minimum yield return.
• Variable Annuity: It is an investment type annuity with high risk and high return. The insurance company generally does not guarantee the investment return and the amount paid to the annuitant varies according to the market conditions.
• Indexed Annuity: The income is determined by the performance of the stock market index. If the underlying stock index rises, then the annuity beneficiary receives the return under the contract's return line; if the stock index falls, then the receipt is the minimum yield return guaranteed by the contract.
• Immediate Annuity: The policyholder opens an Immediate Annuity Guarantee Account with the insurance company and deposits a large lump sum of money (which can come from life insurance accounts, RAS, cash deposits, 401Ks, 403(b), other annuity accounts, etc.) and the insurance company then pays the pension on a monthly or annual basis. This is similar to the concept of a "lump sum" that can be taken for life.