If you’re planning your retirement, you’ve likely heard two common strategies for generating income: dividends and annuities. Both can be valuable tools — but when it comes to reliable, guaranteed income, the differences are massive.
Let’s break it down so you can decide which makes more sense for your goals.
Need help choosing the best annuity for your unique situation? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)
Tip: See how much an annuity could pay you using our annuity calculator.
💰 Dividends: Great Income… Until They’re Not
Dividend-paying stocks can be attractive, especially if you like seeing regular income hit your account. Some dividend yields today are in the 5–7% range — and certain companies like Coca-Cola or Johnson & Johnson have paid dividends for decades.
But here’s the catch:
- Dividends are not guaranteed.
- Companies can cut or suspend them at any time.
- Your income depends on market performance and management decisions.
Even the most “stable” dividend stocks can see dips or stops in tough economic times.
💡 Pro Tip: Dividend portfolios require active management. If your spouse doesn’t know how to handle investments after you pass away, it can quickly turn into a financial headache.
👉 Want to see how guaranteed income compares? Schedule a call to explore your options.
🔒 Annuities: Contractual, Guaranteed Income for Life
An annuity flips the script. Instead of relying on market performance or company decisions, you get a contractual promise from an insurance company:
You will receive a set amount of income — for life.
For example: A 62-year-old investing $1,000,000 into an immediate annuity today could receive around $73,000 per year for life.
If it’s set up as a joint payout (for both spouses), the payout is slightly lower — around $67,000 per year — but it continues as long as either spouse is alive.
That’s roughly a 6.7–7.3% lifetime payout rate, guaranteed.
Even if the account balance runs out by your mid-70s or later, the payments keep coming. Live to 95 or 105? You’ll still be getting paid. That’s peace of mind dividends just can’t match.
🧮 What About Multi-Year Guaranteed Annuities (MYGAs)?
If you’re not ready to lock in lifetime income yet, Multi-Year Guaranteed Annuities (MYGAs) are another strong option.
They act like a high-yield CD — you earn a fixed rate for a set term. Right now, top MYGAs offer around 6% interest for 5–10 years.
So, if you invested $1,000,000 at 5.9%, that’s $59,000 per year in interest — and at the end of the term, you still have your principal.
It’s like earning dividend-style income, but with a guaranteed rate and no market risk.
💡Pro Tip: Choose a MYGA that allows interest-only withdrawals if you plan to live off the earnings without dipping into your principal.
🧭 The Big Picture: Reliability Over Risk
When comparing dividends vs annuities, it really comes down to control vs certainty.
| Feature | Dividends | Annuities |
| Income Guarantee | ❌ Not guaranteed | ✅ Guaranteed for life |
| Market Risk | ✅ Exposed | ❌ Protected |
| Spousal Continuation | ❌ Optional | ✅ Built-in with joint payout |
| Management Needed | ✅ Ongoing | ❌ None required |
| Tax Treatment | Varies | Often tax-deferred |
If your goal is stable, lifelong income — annuities win every time.
Conclusion
Dividends can be a great supplement, but annuities are built for reliability.
They provide guaranteed lifetime income that won’t disappear when the market dips or a company changes direction.
Need help with finding the best annuity for your retirement?
Click here to schedule a call with me.
On the call, I can help you:
- Determine what type of annuity is best for you
- Find the highest paying annuities for your unique situation
- Answer any other questions you may have