Understanding The 10-Year Annuity

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

What is a 10-Year Annuity?

A 10-year deferred annuity is a financial contract where you invest money with an insurance company for a period of 10 years before you start receiving payments. This type of annuity is a long-term investment strategy often used for retirement planning. There are three main types:

  1. 10-Year Deferred Fixed Annuity: Here, your money earns interest at a fixed rate the insurance company sets. It’s a low-risk option with predictable growth.
  2. 10-Year Deferred Fixed Indexed Annuity: This annuity ties your earnings to a market index (like the S&P 500) while protecting your principal from market downturns. Your returns vary, but have a safety net.
  3. 10-Year Deferred Variable Annuity: Your money is invested in various funds, similar to mutual funds, offering higher potential returns but with more risk.

How Does a 10-Year Annuity Work?

  • Initial Investment: You make a lump sum or a series of payments to the insurance company.
  • Accumulation Phase: The money you invest grows over 10 years. The growth method depends on the type of annuity you choose (fixed, indexed, or variable).
  • Payout Phase: After 10 years, you can start receiving payments, which can be structured in various ways based on your needs.
10-Year Annuity

What Happens at the End of a 10-Year Annuity?

At the end of the 10-year period, you have several options:

  1. Start Receiving Payments: You can receive regular payments over several years or for life.
  2. Lump-Sum Withdrawal: Take out all your money simultaneously, though this may have tax implications.
  3. Reinvest: You can reinvest in another annuity or a different financial product.

Who Should Consider a 10-Year Annuity and Why?

  • Retirement Planning: Ideal for individuals looking for a stable income source in retirement.
  • Risk-Averse Investors: Those who prefer predictable returns (fixed and indexed annuities).
  • Market-Savvy Investors: Individuals comfortable with market risks (variable annuities).
  • Long-Term Growth Seekers: If you do not need funds and want your investment to grow.

Comparison of 10-Year Annuity Types

Annuity TypeRisk LevelGrowth PotentialBest For
Fixed AnnuityLowStable, PredictableRisk-averse investors, stable growth seekers
Fixed Indexed AnnuityModerateVariable, Safety NetBalanced investors, moderate growth seekers
Variable AnnuityHighHigh, Market-LinkedMarket-savvy investors, high growth seekers

How Much Does a 10-Year Period Certain Annuity Pay?

A 10-year period certain annuity guarantees payments for exactly ten years. Let’s say you invest $100,000. The payout depends on the interest rate, typically around 3%. For a $100,000 investment, you’d receive approximately $1,000 monthly. However, rates can vary, so confirming with your provider is crucial.

How Much Does a 10-Year Multi-Year Guaranteed Annuity Pay?

A 10-year, multi-year guaranteed annuity (MYGA) offers a ten-year fixed interest rate. Suppose the rate is 4%. On a $100,000 investment, after ten years, you’d accumulate around $148,024. This option is ideal for those seeking stable growth without market risk.

How Much Does a 10-Year Fixed Indexed Annuity Pay?

Fixed-indexed annuities are tied to a stock index, like the S&P 500. They offer a balance between risk and reward. For example, with a $100,000 investment and an average 5% annual return, you could end up with around $162,889 after ten years. Remember, the market’s performance heavily influences your returns.

Understanding 10-Year Annuity Options

Annuity TypeInitial InvestmentEstimated Rate of ReturnEstimated Total After 10 YearsBest For
10-Year Period Certain$100,000~3%$120,000 (approx. $1,000/month)Guaranteed income for 10 years
10-Year Multi-Year Guaranteed$100,000~4%$148,024Stable, risk-free growth
10-Year Fixed Indexed$100,000~5% (Varies with market)$162,889Balancing risk and reward


A 10-year deferred annuity is a versatile financial tool for retirement planning, offering various options to suit different investment styles and risk tolerances. Whether you prefer the stability of a fixed annuity, the balanced approach of a fixed indexed annuity, or the growth potential of a variable annuity, understanding how these products work can significantly impact your financial future. By investing wisely today, you can enjoy a more secure and comfortable retirement tomorrow.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, 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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