Is This the Key to Unlocking Guaranteed Income in Retirement?

Understand, too, the true costs, benefits, and caveats of any contract before adding an annuity to your retirement plan.

Vanguard is launching a new 401(k) that will allow older workers to convert some of their savings into a . The product, launched in partnership with financial services company TIAA, will be available in 2026.

"It provides retirement plan participants with a straightforward, cost-effective way to receive guaranteed lifetime income and supports the evolving needs of Americans as they prepare for retirement," David Stinnett, Vanguard's head of strategic retirement consulting, said in a written statement.

Vanguard's announcement comes as annuities are surging in popularity. Total U.S. sales increased to a record high $119.2 billion in the second quarter of 2025, according to LIMRA.

But the complex financial instrument, which functions much like a self-funded plan, has its pros and cons. Learn how to decide if an annuity is right for you.

Annuities are typically sold by insurance companies. They allow users to set up a steady income stream, usually for retirement, by making either a lump sum or a series of payments, which the insurer later pays back at regular intervals for a set period or potentially the rest of your life.

There are different types of annuities. offer a guaranteed but modest return. Variable and indexed annuities are market-based and offer more opportunity for growth. Most come with tax benefits. Any earnings, for instance, are -- that is, you pay taxes on your annuity when you start taking withdrawals.

"Annuities can work well for retirees who worry about outliving their savings or who struggle emotionally with market volatility and want a predictable 'paycheck' in retirement," said Carson Odom, wealth advisor at Adams Wealth Partners.

But they're not for everyone, as are often quite complex and expensive. In addition to your lump-sum or premium payments, many charge administrative and maintenance fees, mortality expenses, an