Annuities & Retirement Income Strategies in Southern Minnesota
Designed to help provide steady retirement income — even when markets are unpredictable.
Start the ConversationLast updated: April 2026
What Annuities Can DoWhat Are Annuities and How Do They Work for Retirement Income?
An annuity is an insurance product designed to help your money grow with less exposure to market risk — and in many cases, convert into a reliable income stream when you’re ready. Fixed annuities provide a defined interest rate with no market exposure. Fixed indexed annuities link growth potential to a market index while protecting against downside loss. Variable annuities invest in sub-accounts with market participation and carry more risk. At DMW Financial, we evaluate annuity options within the context of your full financial plan before recommending anything.
One of the central challenges of retirement is converting a lifetime of savings into reliable income without knowing how long you will need it. A market downturn early in retirement can have a disproportionate impact on how long your money lasts. Annuities are not right for every situation — they come with costs, surrender periods, and trade-offs — but for certain income needs, they can play a meaningful role.
We serve clients in Northfield, New Prague, Lakeville, Prior Lake, Farmington, Elko New Market, and communities across the south metro and Southern Minnesota.
Understanding Your Annuity Options
Fixed Annuities
Provide a defined interest rate for a set period, similar to a CD but issued by an insurance company. The value grows at a fixed and predictable rate. Guarantees are subject to the claims-paying ability of the issuing insurer.
Fixed Indexed Annuities
Growth potential linked to a market index (such as the S&P 500) with a floor that may limit or eliminate downside. Returns are typically capped or subject to a participation rate. Not a direct investment in the index. Guarantees subject to claims-paying ability of the insurer.
Variable Annuities
Allow investment in subaccounts similar to mutual funds, with growth potential tied to market performance. Values fluctuate based on market conditions and involve investment risk, including the possible loss of principal. Often include optional riders for income or death benefits at an added cost.
Income Annuities (SPIAs & DIAs)
Single Premium Immediate Annuities (SPIAs) and Deferred Income Annuities (DIAs) convert a lump sum into a stream of payments, either immediately or at a future date. Often used to create a "personal pension" layer in retirement. Subject to claims-paying ability of the issuing insurer.
Riders
Optional features on many annuity contracts that provide a guaranteed minimum level of income regardless of contract performance — even if the account value drops to zero, or enhanced earnings death benefits. These riders typically come with an added annual fee, which affects overall returns.
Annuity Reviews
Already own an annuity? We can help you understand what you have, what it's costing you, what the surrender terms are, and how it fits with your current retirement plan. Not every annuity stays appropriate as your situation evolves.
What You Should Know Before Purchasing an Annuity
Annuities are complex products. Before considering one, there are several key factors to understand:
- Surrender periods and charges: Most annuities include a surrender period — typically 5 to 10 years — during which early withdrawals may result in surrender charges. Liquidity is limited during this period.
- Fees: Variable annuities in particular can carry significant annual fees for mortality and expense charges, investment management, and optional riders. Typically Fixed and Index annuities do not. These reduce your net return in exchange for predictability.
- Tax treatment: Annuity growth is tax-deferred, but withdrawals are taxed as ordinary income. Early withdrawals before age 59½ may be subject to a 10% IRS penalty in addition to income tax.
- Issuer strength: Guarantees are only as strong as the issuing insurance company's ability to pay claims. Company financial strength matters.
An Annuity is a long-term financial product designed largely for asset accumulation and retirement needs. Annuities generally contain fees and charges which include, but are not limited to, surrender charges, administrative fees and for optional contract riders and benefits. Withdrawals and death benefits are subject to income tax. If withdrawals and other distributions are received prior to age 59 1/2, a 10% penalty may apply. Annuities typically carry surrender charges for several years that may be assessed against withdrawals. Certain annuity product features, offered by some Annuity companies, such as stepped-up death benefit, a bonus credit and a guaranteed minimum income benefit, carry added fees. If you are investing in an Annuity through a tax-advantaged plan such as an IRA, you will get no added tax advantage. Under these circumstances you should only consider buying an Annuity if it makes sense because of the Annuities other features, such as lifetime income payments and death benefit protection. All guarantees of an Annuity are backed by the claims paying ability of the issuing insurer.
Services That Work Alongside Annuities
Want to Know If an Annuity Fits Your Retirement Plan?
Let's have an honest conversation about your retirement income needs. No pressure, no product pitch — just clarity about your options.
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