Are Annuities Better Than CD’s?

Shawn Plummer

CEO, The Annuity Expert

Reasons Annuities Are Better Than CDs

Annuities and Certificates of Deposit (CDs) are both popular investment options

Deferred annuities like CDs are safe investments; however, they offer guaranteed income and tax deferral that CDs do not offer.

Here are some other reasons why various types of annuities might be considered better than CDs:

Fixed Annuities

Variable Annuities

  • Investment Growth Potential: Offers potential for higher returns through investment in the stock market.
  • Customizable Investment Choices: Investors can choose from a range of investment options.
  • Tax Deferral: Like fixed annuities, they offer tax-deferred growth.

Indexed Annuities

  • Balanced Risk and Reward: Ties growth to a market index, offering more growth potential than fixed annuities but less risk than variable annuities.
  • Principal Protection: Offers protection against loss of principal.

Immediate Annuities

  • Instant Income Stream: Begins paying out almost immediately after investment.
  • Income for Life: Can provide a guaranteed income for the rest of your life.

Deferred Annuities

  • Long-term Growth: Ideal for long-term growth as they allow investments to grow tax-deferred over a long period.
  • Flexible Payout Options: Offers a range of payout options to meet different retirement needs.

Longevity Annuities

  • Later-Life Financial Security: Designed to provide income in later stages of retirement, addressing longevity risk.
  • Deferred Income: Helps in planning for income needs in advanced ages.

Qualified Longevity Annuity Contracts (QLACs)

  • Tax Advantages for Retirement Accounts: Designed specifically for 401(k)s and IRAs, offering tax benefits.
  • RMD Strategy: Helps in managing Required Minimum Distributions (RMDs) by deferring them.

Comparison of Annuities and CDs

FeatureFixed AnnuityVariable AnnuityIndexed AnnuityImmediate AnnuityDeferred AnnuityLongevity AnnuityCD
Interest Rate/RiskHigher/StableVariable/HigherBalanced/ModerateGuaranteed/StableGrowth Potential/ModerateLater-Life Security/LowLower/Stable
Tax DeferralYesYesYesYesYesYesNo
Investment OptionsNoYesLimitedNoYesNoNo
Income GuaranteeYesOptionalOptionalYesOptionalYesNo
Payout OptionsFlexibleFlexibleFlexibleImmediateFlexibleLater-LifeAt Maturity


Annuities offer a range of benefits over CDs, including higher potential returns, tax advantages, and flexible income options tailored to various stages of retirement. Each type of annuity presents unique features that cater to different investment goals and risk tolerances, making them a versatile choice for long-term financial planning.

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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