Short Term Annuity Options for Retirees

Q: When do short-term annuities make sense for retirees?

They can bridge income until Social Security or a pension begins, cover planned expenses over a few years, reduce market risk while earning predictable returns, and provide short-term certainty without lifetime commitments.

Q: What kinds of short-term annuities are available?

Fixed deferred annuities with short guarantee periods, period-certain immediate annuities, Multi-Year Guaranteed Annuities (MYGAs) with shorter durations, and some fixed indexed annuities offering short guarantee windows.

Q: How much income can I expect?

Income depends on premium size, term length, crediting or interest rate, start date, and payout option. Shorter terms typically provide predictable cash flow over a defined period.

Short Term Annuity Options for Retirees

Over 100 Carriers to Quote From. Here are a few of them!

Many retirees want safe, flexible solutions that don’t require locking up money for decades. Short term annuity options for retirees are designed to provide guaranteed growth or income over a limited period—typically 2 to 10 years—making them an attractive choice for retirees seeking stability without long-term commitments. At Diversified Insurance Brokers, we compare short term annuity options across 75+ A-rated carriers to find the right fit for your goals.

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What Are Short Term Annuities?

Unlike traditional lifetime annuities, short term annuities provide guaranteed growth or income for a set number of years. After the term ends, you can withdraw your money, roll it into another annuity, or use it for retirement expenses. These contracts are often used as safe alternatives to CDs, bonds, or money market accounts.

Common Short Term Annuity Options

Type	Term Length	Features	Best For
Multi-Year Guaranteed Annuity (MYGA)	2–10 years	Fixed interest rate, principal protection	Savers seeking safe, CD-like growth
Short Term Fixed Annuity	3–7 years	Guaranteed fixed growth with liquidity options	Retirees wanting predictable returns
Period Certain Income Annuity	5–10 years	Provides guaranteed income for a set term	Those who want income for a limited time

Benefits of Short Term Annuities

✅ Guaranteed growth or income with no market risk
✅ Flexible terms (2–10 years)
✅ Higher interest rates than CDs or savings accounts
✅ Tax-deferred growth until withdrawal

Why Work With Diversified Insurance Brokers?

Since 1980, our family-owned firm has helped retirees balance safety and growth. We compare short term annuity rates from 75+ carriers and tailor strategies to your unique needs. Learn more about annuities and explore our life insurance solutions to complete your retirement plan.

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Short-Term Annuity Options for Retirees — FAQs

What is a short-term annuity?

A short-term annuity (sometimes called a fixed-term, period-certain, or a short-duration deferred fixed annuity) pays guaranteed income for a defined period rather than for life. Payments can start immediately or after a short deferral.

How does a short-term annuity differ from a lifetime income annuity?

Lifetime annuities pay for as long as you live. Short-term annuities have a set end date—after the term, payments stop unless you renew or allocate to another product.

When do short-term annuities make sense for retirees?

• Bridging income until Social Security or a pension begins.
• Covering planned expenses over a few years.
• Reducing market risk while earning predictable returns.
• Preferring short-term certainty over long-term commitments.

What are the risks and trade-offs?

Limited growth potential versus markets, loss of liquidity during surrender periods, payments end when the term ends, and inflation can erode purchasing power if payouts are fixed.

What kinds of short-term annuities are available?

• Fixed deferred annuities with short guarantee periods (e.g., 3–5 years).
• Period-certain immediate annuities that start paying now for a set term.
• Multi-Year Guaranteed Annuities (MYGAs) with shorter durations.
• Some fixed indexed annuities offering short guarantee windows.

How are income payments structured?

Payments can be monthly, quarterly, or annual. Period-certain contracts guarantee payments for the full term; if death occurs earlier, remaining payments may go to beneficiaries if the contract includes that feature.

What is the tax treatment?

Growth is typically tax-deferred. In non-qualified contracts, each payment is part principal and part earnings; only the earnings portion is taxable. In qualified accounts (e.g., IRA), distributions are generally fully taxable as ordinary income. Early withdrawals may face penalties based on account type and age.

Are there fees, surrender periods, or other constraints?

Most contracts include surrender charges for early withdrawals and may have administrative fees or withdrawal limits. Review the contract for liquidity provisions and the insurer’s financial strength.

How much income can I expect?

Income depends on premium size, term length, crediting/interest rate, start date, and payout option. Shorter terms typically have lower total payout durations but provide predictable cash flow.

What happens at the end of the term?

You can take a lump sum, annuitize again, roll into another annuity, or reallocate to other investments—subject to contract options and any tax considerations.

How do I choose the right insurer and product?

Compare guarantee rates, surrender schedules, liquidity features, minimum premiums, available riders (e.g., inflation adjusters), and the insurer’s ratings. Request multiple quotes and illustrations to evaluate trade-offs.

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