Fixed vs. Variable Annuities
Which Type Is Right for Your Retirement?
Not all annuities are the same. The two main categories — fixed and variable — work very differently. Understanding the difference can save you thousands of dollars and a lot of stress. Here's the plain-English breakdown.
Fixed vs. Variable Annuity Stats — 2026
- Top 5-yr fixed (MYGA) rate, Apr 2026
-
5.85%
Top 5-yr fixed (MYGA) rate, Apr 2026
- Avg FIA S&P 500 cap rate, 2026
-
9–11%
Avg FIA S&P 500 cap rate, 2026
- Typical variable annuity M&E fee
-
1–1.5%
Typical variable annuity M&E fee
- Fixed annuity principal loss
-
0%
Fixed annuity principal loss
Sources: LIMRA Q1 2026, AnnuityAdvantage rate survey, ACM internal data.
The 30-Second Summary
Fixed annuities guarantee your principal and a minimum interest rate. Your money grows safely and predictably. You'll never see a negative return.
Variable annuities let you invest in market-linked sub-accounts. Your value goes up and down with the market. Higher growth potential, but you can lose money.
Fixed Annuity
- ✓ Guaranteed interest rate
- ✓ Principal protection
- ✓ Predictable growth
- ✓ Lower fees
- ✓ Tax-deferred
- ✗ Limited upside potential
Fixed Indexed
- ✓ Principal protection
- ✓ Market-linked gains (capped)
- ✓ Zero floor — can't lose money
- ✓ Income rider options
- ✓ Tax-deferred
- ✗ Gains are capped
Variable Annuity
- ✓ Unlimited upside potential
- ✓ Many investment options
- ✓ Tax-deferred
- ✗ Can lose principal
- ✗ Higher fees (1-3%)
- ✗ More complex
What We Recommend at ACM
For most retirees and pre-retirees we work with in St. Petersburg and Pinellas County, we lean toward fixed and fixed indexed annuities. Why? Because when you're at or near retirement, protecting what you've saved matters more than chasing market returns.
Variable annuities have their place — but the higher fees and market risk make them a poor fit for people who need reliable income. We've helped hundreds of clients switch from expensive variable annuities into lower-cost fixed alternatives using tax-free 1035 exchanges.
Frequently Asked Questions
What is the main difference between fixed and variable annuities?
Which is better for retirees — fixed or variable?
What about fixed indexed annuities?
Are variable annuities more expensive?
Can I switch from a variable annuity to a fixed annuity?
Related Pages
Ready to see which annuity actually fits your goals?
Run the numbers in our free Annuity Calculator to estimate guaranteed monthly income, then book a 20-minute review with John. We'll compare fixed and variable options side by side from 12+ A-rated carriers.