Many in Generation X (born in the late 1960s and...

Many in Generation X (born in the late 1960s and 1970s) started saving for retirement at age 28, according to a study. Credit: iStock

If you're confused about annuities, there's a good reason: They are confusing.

There are primarily three different types of annuities: fixed, variable and indexed. Fixed annuities guarantee a fixed payment amount, typically monthly and typically until the person dies. Variable annuities are tied to the performance of an investment portfolio, though they usually guarantee a minimum payment amount. Indexed annuities are tied to the performance of a stock-market index, commonly the S&P 500.

While many investment advisers believe annuities are good retirement investments, the FDIC, which regulates the nation's banks, says be aware that annuities do not qualify for FDIC insurance, even if you bought them through a bank. The FDIC notes that "payments on an annuity are likely to depend almost entirely on the stability and strength of the insurance company offering the product."

The U.S. Securities and Exchange Commission offers more information on annuities at


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