Find the Annuity that Fits Your Retirement Income Strategy

Choosing the right annuity starts with the income strategy you put in place for retirement

Choosing an effective strategy to receive income from your retirement assets is crucial to making them last as long as possible. But the challenge lies with understanding what types of tools to use to maintain your desired income level, where you can address longer life expectancies, health care costs, cost of living increases, and the uncertainty of financial markets.

Two important income-generating tools to carefully consider using are a process of systematic withdrawals and creating a stream of income from an annuity.

When reviewing whether it’s appropriate to incorporate an annuity as part of your strategy, your Citi Personal Wealth Management (CPWM) Wealth Advisor can work with a CPWM Annuity Business Development Specialist and your tax advisor to create a customized annuity proposal for you to grow your wealth, and plan for future or current income needs.

Different types of annuities offer distinct benefits

Designed for retirement purposes or other long–term goals, an annuity can provide you with the ability to accumulate assets on a tax–deferred basis. Annuities can also provide lifetime income and a variety of investment options.

These products serve as a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you starting immediately or sometime in the future. You can purchase an annuity contract by making either a single purchase payment or a series of purchase payments.

Annuities are most common for retirees looking for a stable income stream, pre-retirees looking to grow their principal, and people looking to grow their nest egg or leave behind a legacy to their beneficiaries.

There are many different types of annuities, but two general categories are fixed and variable annuities. During the savings phase, a fixed annuity offers a fixed rate of return guaranteed by an insurance company for a period of time, while a variable annuity offers a range of variable investment options that are subject to market risk, including the possible loss of principal.

The ability to receive lifetime income

Annuities offer several income options for receiving payments, including the option to receive payments for the rest of your life (or your life and the life of your spouse, or another person you designate). This feature, known as annuitization, offers protection against the possibility that you will outlive your assets. The lifetime income is subject to an insurance company’s claims-paying ability, so it’s important to make sure an annuity is backed by a financially strong company. Also, income payments from variable annuities fluctuate, based on investment performance of your selected subaccounts.

Quick overview of fixed and variable annuities

What is it primarily for	Fixed Annuity	Variable Annuity
Overview	Most basic type of annuity Collects a fixed rate of interest during the accumulation phase of the contract When you choose to start receiving income, payouts can last one or two lifetimes or a certain number of years	Typically includes the allocation of investment to subaccounts similar to mutual funds When you choose to start receiving income, payments you receive fluctuate with the performance of the selected sub-accounts Can purchase with one lump sum or a series of payments Can receive deferred income payments
Use for	Building wealth	Long–term investment goals
Main Feature	Fixed interest rate	Market exposure

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This table summarizes the main differences between a fixed and variable annuity.

Pros and Cons of the different types of annuities

Depending on your needs, some types of annuities may be more suitable for you than others. It’s important to discuss state availability of features and benefits of each annuity with your Wealth Advisor.

Here’s a quick overview of pros and cons of each type of some of the more commonly known annuities.

PROS	Single Premium Immediate	Deferred Income	Fixed	Indexed	Buffer	Variable
Tax-Deferred Growth Potential (Savings Phase)	No	Pro	Pro	Pro	Pro	Pro
Tax-free/penalty-free transfers among underlying investment options	No	No	No	Pro	Pro	Pro
Death benefit options for beneficiaries (bypasses probate)	Pro¹	Pro	Pro	Pro	Pro	Pro
Investment flexibility, such as dollar cost averaging and automatic rebalancing	No	No	No	No	Pro	Pro
Lifetime income options without giving up access to assets	No	No	Pro	Pro	Pro	Pro
Certainty of lifetime income amount at time of purchase	Pro	Pro	No	No	No	No
May allow limited access to funds (e.g., free withdrawal amounts, nursing care or terminal illness provisions)	No	Pro	Pro	Pro	Pro²	Pro
Safety of Principal	Pro	Pro	Pro	Pro	No	No

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This table summarizes the pros to using different types of annuities

¹ There is no death benefit if a “Life Only” option is elected and payments have commenced.
² An interim value adjustment may apply with a buffer annuity if the annual free withdrawal amount is taken prior to the end of the selected duration.

CONS	Single Premium Immediate	Deferred Income	Fixed	Indexed	Buffer	Variable
Withdrawals of taxable amounts taxed as ordinary income instead of lower capital gains rates (e.g., liquidations of investments)	Con⁴	Con⁴	Con	Con	Con	Con
Withdrawals in excess of stated allowable percentage generally subject to surrender charges (if made within contract’s holding period)	No	Con	Con	Con	Con	Con
10% federal tax penalty may apply on taxable amounts withdrawn before age 59 1/2	Con	Con	Con	Con	Con	Con
Lack of access to principal	Con	Con	Con³	Con³	Con³	Con³
Average fees/expenses tend to be higher than other investments	No	No	No	No	No	Con
Lack of or limited market participation	Con	Con	Con	Con	Con	No
Investment performance may decrease contract value	No	No	No	No	Con	Con

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This table summarizes the cons for using different types of annuities

³ A surrender charge or other adjustment may apply to withdrawals above the annual free withdrawal amount. An interim value adjustment may also apply within a buffer annuity if the annual free withdrawalamount is taken prior to the end of the selected duration.
⁴ Withdrawals may not be available from single premium immediate or deferred income annuities.

Annuities on the risk spectrum

Variable (Aggressive)

Full market participation
Contracts offer a full suite of variable sub-accounts for you to invest in
Purchase payments subject to full market risk, but you may have optional protection features to choose from

Buffer (Moderate)

Reduced market downside risk
Greater rate of return potential than a fixed or indexed annuity, based on index crediting, up to a higher limit
By taking some market risk, you have more upside potential

Indexed (Moderate)

100% Principal Protection
Greater potential annual rate of return than a fixed annuity, based on index crediting, up to a limit
Minimum return can be no less than 0%

Fixed (Conservative)

100% Principal Protection
Fixed rate of return guaranteed for specified number of years

Single Premium Immediate Annuity (SPIA)/Deferred Income Annuity (DIA) (Conservative)

Immediate or deferred income stream
No account value, just a guaranteed income payment
Income payments guaranteed by insurance carrier

Would you benefit from a customized annuity solution?

Your Citi Personal Wealth Management (CPWM) Wealth Advisor can work with a CPWM Annuity Business Development Specialist and your tax advisor and other specialists where needed, to create an income strategy to grow your wealth, and plan for future or current income needs. This customized proposal may consist of different types of retirement products, including one or more fixed and variable annuities, or a more specialized annuity.

As an example of a more specialized annuity, take the Qualified Longevity Annuity Contract, known as the QLAC, which is designed to address longevity risk by using proceeds from a retirement account to purchase a deferred income annuity. This tool allows you to carve out up to $200k (increased from $145k to $200k after the Secure 2.0 Act) to shield you from required minimum distributions (RMDs). You purchase it with funds from a qualified retirement plan or an IRA. You can then select when to receive income payments, which are exempt from RMD rules until you reach age 85. Using the QLAC can create the potential for leveraged growth of income at the tail end of life when you might need a long-term care facility or additional income.

Whether your income needs can be addressed with a range of retirement products, be it an IRA, a basic annuity, a more specialized annuity, or a combination, your Dedicated Wealth Team can create a financial plan and implement customized solutions to meet your specific needs.

A brief introduction to commonly used annuity words and phrases.

Annuity
A contract between you and an insurance company, under which the insurer agrees to make periodic payments to you at some future date. You can purchase an annuity contract by making either a single purchase payment or a series of purchase payments.

Annuitization
The option to receive payments for the rest of your life (or your life and the life of your spouse, or any other person you designate) or a specified period.

Buffer Annuity
Incorporates traits of both variable and indexed annuities by linking growth to the movement of a market index, allowing you to participate in some market gains, and providing a limited form of downside protection against losses.

Death Benefit
A payment made to the beneficiary of an annuity contract holder upon their death.

Deferred Income Annuity
Enables you to make a lump sum or multiple purchases to receive guaranteed income beginning at a future date of your choice (generally 13 months to 30 years from the initial purchase).

Fixed Annuity
Offers a fixed rate of return that is guaranteed by the insurance company for a period of one or more years.

Indexed Annuity
A type of annuity that typically seeks to provide the contract owner with an investment return based on a formula linked to the change in the level of one or more widely followed market indices, such as the Standard & Poor’s 500 Composite Stock Price Index, which tracks the performance of the 500 largest publicly traded securities.

Single Premium Immediate Annuity
Enables you to make a lump sum contribution to receive guaranteed lifetime income (rest of your life, rest of spouse’s life, or joint life option).

Variable Annuity
The savings phase offers a wide range of variable investment options with different objectives and strategies. The value will vary depending on the performance of the selected investment options.

To learn more details about annuities, please ask your Wealth Advisor for a copy of “An Overview of Annuities,” or go to www.citi.com/investorinfo to access a copy.

Important Information

¹ Source: Citi Global Investment Lab, Bloomberg, 30 April 2025 Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Past performance is no guarantee of future results. Real results may vary.

² Source: Citi Global Investment Lab, S&P Dow Jones Indices, Factsheet,30 April 2025. For all charts and table data: Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Past performance is no guarantee of future results. Real results may vary.

The market and planning commentary on this site may discuss topics that are timely to current events at the time they were written. The relevance of such topics may change at future dates.

Please consult your Financial Advisor before making any investment decisions.

The above content is for informational purposes only and contains a summary of the topic and is not intended to be a comprehensive discussion, including any legal or tax ramifications of the strategies or concepts described herein.

Citigroup Inc. and its affiliates do not provide tax or legal advice.

Citi Personal Wealth Management is a business of Citigroup Inc., which offers investment products through Citigroup Global Markets Inc. (“CGMI”), member SIPC. Insurance products are offered through Citigroup Life Agency LLC (“CLA”). In California, CLA does business as Citigroup Life Agency LLC (license number OG56746). CGMI, CLA and Citibank, N.A. are affiliated companies under the common control of Citigroup Inc.

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