A fixed annuity provides guaranteed interest on contributions for a set period, offering stability and predictable growth. These contracts are often used by individuals seeking a conservative option for retirement income without exposure to market volatility. Fixed annuities can be structured for immediate income or deferred growth, depending on the client’s needs. They are popular for those who value security and guaranteed returns over higher growth potential.

Indexed annuities credit interest based on the performance of a market index, such as the S&P 500, while protecting against market losses with a guaranteed minimum return. They typically include caps, participation rates, and spreads that limit upside potential but provide downside protection. This balance makes indexed annuities appealing for individuals who want some market-linked growth without risking principal. Structured annuities are a variation that allows more customization of risk and reward through different crediting strategies.

Variable annuities allow the contract owner to invest in sub-accounts similar to mutual funds, offering growth potential tied to market performance. While this creates the opportunity for higher returns, it also introduces investment risk, including possible loss of principal. Many variable annuities include optional riders for income guarantees or death benefits, which can help mitigate risk. These products are often chosen by individuals with higher risk tolerance who want tax-deferred growth and flexible income options.

Riders are optional features that can be added to an annuity contract for an additional cost, designed to enhance flexibility and provide extra protection. They allow you to customize your annuity to meet specific goals, such as guaranteed income, long-term care coverage, or enhanced benefits for beneficiaries. While riders can add value, they also increase complexity and cost, so it’s important to evaluate whether they align with your retirement strategy.

Common Riders Include:

• Guaranteed Lifetime Withdrawal Benefit (GLWB): Ensures income for life, even if the account value drops to zero.
• Guaranteed Minimum Income Benefit (GMIB): Locks in a future income stream based on a minimum growth rate.
• Long-Term Care Rider: Provides additional funds if you need qualified long-term care services.
• Enhanced Death Benefit Rider: Increases the benefit paid to beneficiaries beyond the account value.
• Return of Premium Rider: Guarantees that at least your original premium will be returned under certain conditions.

Variable annuities are long-term investments appropriate for retirement funding and are subject to market fluctuations and investment risk.

Guarantees are based on the claims-paying ability of the issuing insurance company. Guarantees apply to minimum income from an annuity; they do not guarantee an investment return or the safety of the underlying investment choices.

Indexed Variable Annuities (IVAs) combine the long-term growth potential of variable annuities with the downside protection features of fixed indexed annuities. They feature a capped upside that’s usually higher than indexed annuities in exchange for the client taking on some, but not all of the downside risk.

A Guaranteed Lifetime Withdrawal Benefit is an optional rider on a variable annuity that is available for an additional charge. It generally may only be selected at the time of contract purchase and cannot be changed later. It is not a cash or account value in the contract.

A Guaranteed Minimum Income Benefit (GMIB) feature is an optional rider on a variable annuity that is available for an additional annual charge against the income base. It generally may only be selected at the time of contract purchase and cannot be changed later. It can usually be exercised only after a waiting period. A GMIB feature is not a cash or account value. Please be advised that depending on the performance of the investment option selected, the contract value at the time of annuitization could be such that the investor would incur a higher expense with the GMIB option without receiving any additional benefit.

Wells Fargo Advisors does not provide legal or tax advice.

Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.