What is the best age to claim Social Security in Indiana?

There is no single best age to claim Social Security — the right time depends on your health, life expectancy, other income sources, spouse's situation, and tax picture. Claiming at 62 results in a permanent reduction of up to 30%. Claiming at your Full Retirement Age (67 for most people) means receiving 100% of your earned benefit. Delaying to age 70 can increase your monthly benefit by approximately 24% above your full retirement age amount. A retirement income review with a fiduciary advisor can help model the right strategy for your specific situation.

What is the Full Retirement Age for Social Security?

For those born in 1960 or later, the Full Retirement Age (FRA) is 67. For those born in 1959, the FRA is 66 years and 10 months. Your FRA is the age at which you receive 100% of your earned Social Security benefit with no reductions applied.

Does Indiana tax Social Security income?

Indiana does not tax Social Security income at the state level, which is a meaningful advantage for retirees compared to many other states. However, Social Security benefits may still be subject to federal income tax depending on your combined income. Up to 85% of your Social Security benefit can be included in federally taxable income based on your adjusted gross income, nontaxable interest, and half of your Social Security benefit.

Can I collect Social Security while still working in Indiana?

Yes, but if you claim before your Full Retirement Age and continue working, the Social Security earnings test applies. In 2025, the annual earnings limit is $23,400 for those under FRA all year. For every $2 earned above that limit, $1 in benefits is temporarily withheld. Once you reach your Full Retirement Age, the earnings test no longer applies regardless of how much you earn.

How does Social Security work for married couples?

Married couples have important Social Security coordination decisions to make. A spouse who did not work or earned significantly less can receive up to 50% of the higher-earning spouse's full retirement age benefit. The surviving spouse also inherits the higher of the two benefit amounts when one spouse passes away. Coordinating spousal claims strategically can significantly increase lifetime household income and surviving spouse income security.

What happens if I delay Social Security past age 70?

There is no additional benefit to delaying Social Security past age 70. Delayed retirement credits stop accruing at age 70, so waiting beyond that age does not increase your monthly benefit. Age 70 is the maximum benefit age under current Social Security rules.

What is a fiduciary financial advisor, and is Patten Financial Group one?

Yes — as fiduciaries through our affiliation with Redhawk Wealth Advisors, Inc. (an SEC-registered Investment Adviser), we are legally required to act in your best interest at all times. We put your interests above our own, avoid conflicts of interest, disclose any potential issues, and provide accurate, thorough advice.

How do you get paid, and are you fee-only?

We operate as a fee-based fiduciary firm with transparent compensation focused on your success. This structure helps minimize conflicts and aligns our interests with yours, so you always know how and what you're being charged.

I'm not happy with my current financial advisor or wirehouse. How do I know if it's time to switch?

Common signs include: you rarely hear from your advisor outside of account statements, you're not sure exactly what you're being charged or why, your portfolio hasn't been reviewed against your current goals in over a year, you've been passed between different advisors at the same firm, or you feel like a number rather than a relationship. If any of that sounds familiar, a complimentary second-opinion conversation can help you see where you stand — with no obligation to move anything.

What's the difference between a fiduciary advisor and a wirehouse broker?

A fiduciary is legally required to act in your best interest at all times. Many wirehouse brokers, by contrast, are held only to a 'suitability' standard, meaning a recommendation only has to be reasonable for your general situation — not necessarily the best available option — and may be influenced by commissions or proprietary products. As fiduciaries, we don't have that conflict: our recommendations are based on what's best for you, and our fees are transparent.

Do you work with high-net-worth individuals, executives, and business owners?

Yes. A significant part of our practice is dedicated to executives, business owners, and pre-retirees and retirees with more complex financial pictures — including concentrated stock positions, equity compensation, business succession and exit planning, tax strategy, and estate planning coordination alongside retirement income planning.

Is switching financial advisors complicated?

It's more straightforward than most people expect. In most cases, assets transfer directly between custodians without you needing to liquidate anything, and we handle the paperwork alongside you. We'll walk you through exactly what to expect before you decide to move forward.

Fixed Annuity vs. Variable Annuity: Which Is Right for You?

Apr 17

Written By Aaron Patten

If you’ve been exploring retirement income strategies, chances are someone has mentioned annuities. And if you’ve started digging in, you’ve probably already encountered one of the most common questions in the space: What’s the difference between a fixed annuity and a variable annuity — and which one belongs in my retirement plan?

They’re both insurance contracts. They both offer tax-deferred growth and the potential for lifetime income. But beyond that, they work very differently — and choosing the wrong one for your situation can create real problems down the road.

At Patten Financial Group, annuities are a core tool in the retirement income plans we build for clients across Northwest Indiana and the Greater Chicagoland area. This guide will walk you through how each type works, what the key differences are, and how to think about which option fits your goals.

What Is a Fixed Annuity?

A fixed annuity is a contract between you and an insurance company. You make a lump sum payment or a series of payments in exchange for a guaranteed amount of income starting on a certain date. The money in the annuity grows tax-deferred at a set interest rate — known as the minimum credited interest rate — during the accumulation phase.

Think of it like a CD from an insurance company, but with additional retirement income benefits and tax-deferred growth.

There are two common types of fixed annuities worth knowing:

Multi-Year Guarantee Annuities (MYGAs): These lock in a fixed interest rate for a specified term, such as three, five, or seven years. They’re straightforward, predictable, and easy to understand.

Fixed Indexed Annuities (FIAs): FIAs offer growth potential linked to a market index like the S&P 500, while helping protect your principal from market losses. When the index rises, your account is credited a portion of the gain. When the index falls, your principal is designed to be protected from market losses. You don’t participate fully in market upside, but you don’t absorb the downside either.

The core features of a fixed annuity: your principal is not subject to market losses, your growth is predictable, and your future income can be more predictable.

What Is a Variable Annuity?

A variable annuity is a contract that provides fluctuating rather than fixed returns. The key feature is that you control how your premiums are invested. Most variable annuity contracts offer a variety of professionally managed portfolios called subaccounts — similar to mutual funds — that invest in stocks, bonds, and money market instruments.

The upside: if the market performs well, your account grows accordingly. The downside: if the market drops, so does your account value. Variable annuities invest directly in market-based subaccounts, fully exposing your funds to fluctuations. There is generally no principal protection without the inclusion of a rider.

Variable annuities also tend to carry a wider array of fees. The expenses of a variable annuity and all of the optional riders can be as high as 4% or more annually, including mortality and expense charges, administrative fees, and subaccount management costs. These costs can significantly erode returns over time and should be clearly understood before purchasing.

Side-by-Side: The Key Differences

Here is a straightforward comparison of how the two products differ across the factors that matter most in retirement planning:

Principal Protection

Fixed annuity: Your principal is protected from market volatility. You cannot lose your original investment due to market performance.

Variable annuity: Your principal is exposed to market risk. Account value can decline significantly in a down market.

Growth Potential

Fixed annuity: Growth is steady and predictable, tied to a guaranteed rate or index-linked credits with a floor.

Variable annuity: Growth potential is higher but entirely dependent on the performance of the subaccounts you choose.

Risk

Fixed annuity: Low. The insurance company absorbs the market risk.

Variable annuity: Higher. You bear the investment risk directly.

FeeS

Fixed annuity: Generally low. Most fixed annuities carry minimal ongoing fees, though surrender charges apply for early withdrawal.

Variable annuity: Significantly higher. Annual fees of 2–4% or more are common when riders and subaccount costs are included.

Income Guarantees

Both types can provide lifetime income through annuitization or income riders. However, the income amount from a variable annuity will vary based on market performance unless a guaranteed minimum income rider is added — which comes at additional cost.

Complexity

Fixed annuities are straightforward and easy to understand. Variable annuities require a working knowledge of investment subaccounts, fee structures, and optional benefit riders.

Who Is a Fixed Annuity Best For?

Fixed annuities may be a suitable option for some pre-retirees and retirees who prioritize stability, predictability, and income over maximum growth potential.

You may be a strong candidate for a fixed annuity if you:

Are within 5 to 10 years of retirement and want to help protect accumulated savings from market volatility. Are looking to create a guaranteed income floor that covers your essential monthly expenses in retirement. Have already built substantial wealth in market-exposed accounts like a 401(k) or IRA and want to balance your risk profile. Want the simplicity of knowing exactly what your retirement income will look like. Are concerned about sequence-of-returns risk — the danger of a major market downturn hitting your portfolio right at the start of retirement.

For clients in Northwest Indiana who want more predictability in their retirement income and less exposure to market volatility, a fixed annuity is often a valuable tool in a comprehensive plan.

Who Is a Variable Annuity Best For?

Variable annuities can make sense in specific situations, but they require careful scrutiny — particularly around fees and the true value of any optional riders included.

A variable annuity may be worth considering if you: Have a longer time horizon and want tax-deferred growth tied to market performance. Have already maximized your 401(k) and IRA contributions and are looking for additional tax-deferred savings vehicles. Have a higher risk tolerance and don’t need guaranteed income from this particular asset. Fully understand the fee structure and have modeled how those ongoing costs affect your net returns over time.

That last point is critical. A variable annuity carrying 3% or more in annual fees needs to meaningfully outperform alternatives — after fees — to justify its place in your retirement plan. That is a bar that many variable annuities struggle to clear consistently.

Don’t Forget the Fixed Indexed Annuity — A Middle Ground

Many pre-retirees we work with are surprised to learn there’s a third option that sits between traditional fixed and variable annuities: the Fixed Indexed Annuity (FIA).

A fixed indexed annuity has the potential for growth like a variable annuity, while also carrying a guaranteed minimum rate of return like a fixed annuity. Your account can grow when the linked market index rises, but your principal isn’t at risk when the index falls.

FIAs are not a perfect product — participation rates, caps, and spreads limit how much of the market’s upside you capture. But for retirement income planning, they offer a compelling combination of principal protection and growth potential that traditional fixed annuities and variable annuities don’t fully provide on their own.

FIAs are a product we use regularly in client retirement income plans here at Patten Financial, and they’re worth a dedicated conversation if you’re in the pre-retirement planning phase.

A Word on Surrender Charges and Liquidity

Both fixed and variable annuities typically come with surrender charge periods — usually 5 to 10 years — during which withdrawing more than a specified amount triggers a penalty. Most contracts allow a free withdrawal of 10% of the account value annually without penalty, but understanding these terms before you commit is essential.

Annuities are long-term retirement vehicles. They are not designed to replace your emergency fund or serve as a source of short-term liquidity. A well-built retirement income plan accounts for this by ensuring you have sufficient accessible assets outside of your annuity before funding one.

Tax Treatment: What You Need to Know

Both fixed and variable annuities offer tax-deferred growth during the accumulation phase — meaning you don’t pay taxes on interest or investment gains until you withdraw the money. This can be a meaningful advantage when held over many years.

Annuity withdrawals are taxed as ordinary income and may be subject to surrender charges plus a 10% federal tax penalty if made prior to age 59½.

For clients who are using annuities inside an IRA or other qualified account, it’s important to work with an advisor who understands the interaction between annuity distributions, RMDs, and your overall tax bracket in retirement. The sequencing of withdrawals across taxable, tax-deferred, and annuity accounts can meaningfully change your tax bill year over year.

Five Questions to Ask Before Purchasing Any Annuity

Whether you’re considering a fixed, indexed, or variable annuity, these are the questions every pre-retiree should be able to answer clearly before signing a contract:

1. What specific problem is this annuity solving in my retirement plan?

An annuity should serve a clear purpose — guaranteed income, principal protection, tax-deferred growth, or legacy planning. If the answer is vague, keep asking.

2. What are the total annual costs, including all riders and fees?

Get the all-in number in writing. For variable annuities especially, the difference between stated returns and net-of-fee returns can be dramatic.

3. What is the surrender period and what are the penalties for early withdrawal?

Understand the liquidity constraints before you commit capital.

4. What is the financial strength rating of the issuing insurance company?

Annuity guarantees are backed by the claims-paying ability of the issuing carrier — not the federal government. Carrier strength matters.

5. How does this annuity fit into my overall retirement income plan?

No annuity should be evaluated in isolation. It belongs inside a complete plan that accounts for Social Security, investment accounts, healthcare costs, taxes, and your estate goals.

Working With a Fiduciary Makes a Difference Here

The annuity marketplace is large, complex, and not always transparent. Many annuities are sold by commission-based agents who may have an incentive to recommend products that pay higher commissions rather than products that fit your situation best.

At Patten Financial Group, we are a fee-based fiduciary firm. Our job is to evaluate annuity options — fixed, indexed, and variable — objectively, in the context of your complete retirement income plan, and recommend only what genuinely serves your best interest.

If you’re a pre-retiree in Northwest Indiana or the Greater Chicagoland area and you want an honest, no-pressure conversation about whether an annuity belongs in your retirement plan — and if so, which type — we’d welcome that conversation.

📞 Call us to schedule a complimentary retirement income review—(219) 312-4128

📍 Serving Valparaiso, Indiana and the surrounding region.

Schedule Complimentary Retirement Income Plan Review

[This article is intended for educational purposes only and does not constitute personalized financial, tax, legal, or investment advice. Annuity products vary significantly and are subject to fees, surrender charges, and terms that should be reviewed carefully. All guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company. Consult with a qualified financial advisor before making any annuity purchase decisions.]

Investment advisory services offered through Redhawk Wealth Advisors, Inc., an SEC

Registered Investment Advisor. SEC Registration does not imply any level of skill or

understanding. Redhawk Wealth Advisors and Patten Financial Group are unaffiliated and

separate legal entities.

Reference Sources

1. Gainbridge — Fixed Index Annuity vs. Variable Annuity: Key Differences

https://gainbridge.com/post/fixed-index-annuity-vs-variable-annuity

2. Insurance Information Institute — What Is the Difference Between a Fixed and Variable Annuity?

https://www.iii.org/article/what-difference-between-fixed-and-variable-annuity

3. SmartAsset — Fixed vs. Variable Annuities

https://smartasset.com/financial-advisor/fixed-vs-variable-annuity

4. AnnuityAdvantage — Difference Between Fixed, Fixed-Indexed, and Variable Annuities