Annuity funding is the strategy of allocating client assets into annuity contracts to support specific financial goals, such as creating guaranteed lifetime income, protecting principal, or diversifying retirement income sources. Funding decisions include how much to invest, whether to use lump sums or periodic contributions, and whether to use qualified, IRA, or nonqualified dollars. Advisors consider liquidity needs, surrender schedules, tax treatment, and coordination with other investments. Annuity funding must be aligned with regulatory suitability and best-interest requirements, particularly for older clients or those with limited assets.

Advisors design annuity funding strategies as part of comprehensive retirement income plans, often carving out a portion of a portfolio or rollover balance for annuity solutions. They model how funding different amounts changes guaranteed income, legacy potential, and liquidity. In advanced cases, funding may occur through systematic transfers, rebalancing from risk assets, or 1035 exchanges from older annuities. Compliance teams review funding rationales to ensure that clients retain adequate emergency reserves and that annuity allocations are not excessive. Understanding annuity funding helps advisors tailor recommendations to client-specific risk tolerance, income needs, and behavioral preferences around guaranteed income versus market-based strategies.