At 60 many people are within about ten years of needing their savings to produce income, which is when an annuity is worth a look. It moves a specific risk, living a long time or a bad run of markets early in retirement, to an insurance company, on terms written into the contract.
It asks for something in return. The premium stays in the contract for a surrender period, some features carry fees, and lifetime income starts only when you elect an income option or rider. Every guarantee rests on the issuing carrier's claims-paying ability, and annuities are not bank deposits or FDIC-insured.
Surrender periods and rider terms vary widely between carriers for the same money.
Decide how much you need to keep reachable for emergencies or a gap before other income starts. That money stays out of the annuity.
Most contracts let you take out about 10% a year; beyond that, a surrender charge applies until the period ends. Some contracts add a market value adjustment that can raise or lower what you receive on an early exit, depending on interest rates.
Income and other riders carry annual fees. The “income value” a rider quotes is a number used to calculate payments, not a balance you can walk away with.
Recommendations are held to California's best-interest standard, so the basis for mine is documented in writing. If you are 60 or older, California gives you a 30-day free-look after delivery (Cal. Ins. Code §10127.10).
General information, not tax or legal advice; your contract and the carrier's disclosures control. The four kinds of annuity: Annuities → Meeting in the Sacramento area? How I work locally →
Neither, on its own. Timing matters more than age: when the income needs to start and how much of your savings must stay reachable. A deferred annuity can be funded now and switched on later; an immediate annuity suits someone who needs the paycheck within about a year, and commits the money.
Most contracts let you take out about 10% a year without a surrender charge. Beyond that, a surrender charge applies until the period ends, and some contracts add a market value adjustment. You can get back less than you put in if you leave early.
Once the contract owner is past 59½, the 10% additional federal tax on early withdrawals generally no longer applies. Ordinary income tax still applies to the taxable part of any withdrawal, and a surrender charge is separate from tax: reaching 59½ does not waive it. Your tax adviser should confirm how this applies to you.
Often, once you have left the employer, and some plans also allow in-service rollovers. A direct rollover into an IRA annuity avoids the mandatory withholding that comes with taking a check. Leaving the money in the plan can also be the right answer. Under California's best-interest standard I document why any recommendation suits you; your tax adviser should confirm the tax side.
If you are 60 or older, California gives you 30 days after the annuity is delivered to review it and return it; for a fixed or fixed indexed annuity, that means a full refund of premium. After the free-look period ends, the contract's surrender schedule applies.
Tell me the amount, your age, when the income needs to start and how much you need to keep reachable. I will come back with quotes from several carriers, with each surrender schedule and any rider fees on the same page.