Annuity vs. 457 Withdrawal: Advantages and Disadvantages

Shawn Plummer

CEO, The Annuity Expert

Advantages of Fixed Indexed Annuities with Guaranteed Lifetime Income Riders

  1. Stable Income: Fixed-indexed annuities provide a guaranteed income stream for life, offering financial stability.
  2. Market Protection: Offers protection against market downturns, as your income is not directly tied to market performance.
  3. Tax Benefits: Earnings grow tax-deferred until withdrawal.
  4. Inflation Protection: Some annuities include riders that adjust payouts for inflation.

Disadvantages of Fixed Indexed Annuities

  1. Complexity: They can be complex and difficult to understand.
  2. Fees and Charges: Higher fees and surrender charges may apply, reducing the overall return.
  3. Limited Growth Potential: The growth potential might be lower compared to direct market investments.

Advantages of 457 Retirement Plan Withdrawals (4% Rule)

  1. Flexibility: Offers more control over investment choices and withdrawal amounts.
  2. Potential for Higher Returns: Direct market exposure can lead to higher growth potential.
  3. Liquidity: Generally, more liquid than annuities, providing easier access to funds.
  4. Lower Fees: Typically lower management and administrative fees than annuities.

Disadvantages of 457 Retirement Plan Withdrawals

  1. Market Risk: Exposed to market volatility, which can affect retirement income.
  2. No Guaranteed Income: No guaranteed income stream, unlike annuities.
  3. Longevity Risk: Risk of outliving your savings, especially if withdrawals exceed 4% annually.
  4. Inflation Impact: Withdrawal amounts may not keep pace with inflation.

Get a clearer picture of your retirement finances with our calculator.

Comparison with Annuity Calculator

To compare withdrawals from fixed indexed annuities with guaranteed lifetime income riders and 457 retirement plan withdrawals, use The Annuity Expert’s annuity calculator at Annuity Expert’s Calculator.


Choosing between an annuity and 457 withdrawals depends on individual financial goals, risk tolerance, and retirement plans. Annuities offer a guaranteed income with protection against market downturns but at the cost of higher fees and limited growth. In contrast, 457 plans provide more flexibility and potential for higher returns but come with market risk and no guaranteed income. Utilizing tools like annuity calculators can aid in making an informed decision. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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