According to the Employee Benefit Research Institute, 37 percent of workers are confident that they have enough money saved up for retirement. The EBRI’s 2015 Retirement Confidence Survey reveals confidence about having enough money for retirement has increased steadily after reaching record lows between 2009 and 2013, but today’s numbers reveal that less than half of working America is still unsettled or even anxious about their financial future.

Fortunately, there are several attractive options available for soon-to-be retirees. Those who are within a decade or two of retirement may be especially interested in purchasing annuities, which can be a valuable addition to retirement planning.

What Are Annuities?

Annuities are a unique type of financial product because unlike savings and investments you would set up with a bank, annuities are sold by insurance companies and financial institutions. When you buy an annuity, you are socking away money for a few years that you don’t expect to touch until the surrender period — the length of the annuity — is over. Although, most annuities allow up to 10% to be withdrawn annually during the surrender period.

One of the reasons why people buy Fixed Indexed Annuities is because they are looking for a no-risk or low-risk investment opportunity and want to protect their hard-earned money from income taxes. If you have already made your full contributions to 401(k) plans and IRAs and have some extra money available for retirement, you may consider purchasing an annuity. You can buy an annuity for several thousand dollars and earn tax-free interest as long as you don’t make any withdrawals during the surrender period. Of course, you will need to consider the fee structure and overall cost of your annuity before signing the dotted line. In many cases, annuities earn higher interest than bank CDs and savings accounts.

Generating Income with Annuities

You get to play investor when purchasing annuities and can choose from several different types — including multi-year fixed income annuities (MYGA) where you receive a guaranteed payout or a variable annuity where you receive a payout based on performance. Variable annuities, naturally, are riskier investments but offer more attractive returns.

If you want to receive payments as soon as you make your investment because you are very close to retirement or are already retired, an immediate annuity will be your best option. If you are comfortable leaving your account alone to earn interest that you can enjoy later, you can purchase a deferred annuity to defer your payment to a certain time.

When exploring different types of annuities, it’s important to consider what type of insurance company is guaranteeing the plan, what types of costs are involved, and what stipulations there are for termination of your annuity contract.

As many Americans struggle with the idea of not having enough saved up for retirement or wonder if they will be able to get by on Social Security and pension funds during retirement, it’s never too late to start planning for the future. If you are looking for financial products for our retirement strategy, don’t overlook the benefits of annuities. Tax-free earnings and flexible buying and earning options make annuities an attractive option for soon-to-be retirees and those who are already in their retirement years.