By: Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.Posted on: May 20, 2025
As financial professionals, we know that sustainable retirement income is a cornerstone of long-term financial security. Annuities can serve as a strategic complement to a client's retirement income plan, providing predictable cash flow regardless of market conditions. While annuities are relevant for all retirees, they may be especially beneficial for women, who often face structural and demographic challenges that impact their financial readiness.
"Due to factors like career interruptions for caregiving and persistent income disparities, many women retire with less in savings," says Abbe F. Large, Managing Director at Lenox Advisors in New York. "Guaranteed income from annuities can help bridge the gap between assets and retirement needs."
Indeed, women typically:
Live longer in retirement. The average life expectancy for women is 80.2, compared with 74.8 for men.1
Have less saved for retirement. Women still typically earn roughly 85 percent of what men earn for the same job.2 They also have less access to workplace retirement savings plans and are more likely to take time out of the workforce to care for children and aging parents — all of which make it harder to save and build wealth. The average account balance of female participants in defined contribution retirement plans, such as a 401(k), was $112,401 in 2023 compared with $157,489 for men, according to Vanguard.3
Incur higher health care costs as they age. Longer lifespans mean that women typically pay more in total health insurance costs — an average of nearly $200,000 more during their lifetime than men.4 They are also more likely to develop chronic health conditions during their twilight years, and incur long-term care costs as they outlive their partners (and would-be caregiver).
“Women need their retirement savings to last for a more extended period,” said Large. “Annuities, particularly those offering lifetime income, can provide a stream of payments that continues for as long as the annuitant lives, reducing the risk of outliving their savings. This can help women cover their essential expenses throughout retirement.”
An annuity is a contract, typically between you and an insurance company, that offers a guaranteed payment stream either for life or for a specified period of time in exchange for an upfront payment or series of payments. (Learn more: Different types of annuities explained)
Depending on how they are structured, annuities may also allow for tax-deferred growth, meaning you don't pay taxes on the interest you earn until it’s withdrawn in retirement, at which point you may be in a lower tax bracket.
Types of annuities to consider
Financial professionals can tailor solutions by evaluating several product categories:
Fixed annuities: Provide a guaranteed minimum interest rate for a set accumulation period—ideal for risk-averse clients seeking market insulation.
Income annuities: Available in immediate and deferred formats. A deferred income annuity guarantees future payments starting on a fixed date, allowing for retirement income planning with precision.
Variable annuities: Offer growth potential through market exposure but come with investment risk. Suitable for clients willing to trade security for upside.
“Annuities offer a guaranteed rate of return or level of income,” said Large. “This can provide peace of mind and protect savings from potential market downturns, which can be especially important for those relying on their savings for a longer duration.”
Another annuity feature that may disproportionately benefit women? Some deferred annuities offer long-term care benefits to help pay for costs associated with nursing homes, assisted living, and in-home care.
Client considerations and guidance
Not every client needs an annuity. For those with pensions, strong Social Security benefits, or other reliable income sources, an annuity may be unnecessary. However, it’s critical to assess inflation’s potential erosion of purchasing power.
Lisa Frankovich, a financial professional with GoldBook Financial, points to her public-sector clients with COLA-capped pensions: “Over time, inflation can shrink the real value of their income. In those cases, annuities can offer a hedge against that risk.”
She emphasizes the goal of covering at least 50–70% of a client’s basic monthly expenses with guaranteed income—and annuities are often the most flexible tool to fill any gaps.
Risks and due diligence
While annuities can provide long-term security, they’re not a one-size-fits-all solution. Some may come with high fees, inflexible terms, or underwhelming returns compared to other investment vehicles. Moreover, annuity guarantees depend on the financial strength of the issuing insurer—not federal backing—so due diligence is key.
The bottom line
For women navigating longer retirements with potentially fewer financial resources, annuities offer a meaningful tool to build stability and independence. When incorporated thoughtfully, annuities can help women—and all retirees—face retirement with more confidence and less worry.
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1 U.S. Centers for Disease Control and Prevention, “Life Expectancy,” Oct. 25, 2024.
2 Pew Research Center, “Gender pay gap in U.S. has narrowed slightly over two decades,” March 4, 2025.
3 Vanguard, “How America Saves 2024,” June 2024.
4 HealthView Services, “Addressing the Women’s Longevity Gap,” March 7, 2023.
This article was originally published in September, 2016. It has been updated.