What characteristic is shared by both fixed and variable annuities?

The shared characteristic of both fixed and variable annuities is the tax-deferral of earnings. This means that the growth of the investment within the annuity is not taxed until withdrawals are made. Both types of annuities allow individuals to grow their investment over time without immediate tax implications, making them appealing for retirement savings. This feature encourages long-term investment, as the compounding effect can lead to substantial growth before taxes are applied.

In contrast, guaranteed returns are typically associated with fixed annuities but not variable annuities, which can fluctuate based on the performance of underlying investments. High liquidity is generally not a characteristic of either type of annuity since withdrawing funds can come with penalties, especially in the early years. Immediate payout is primarily a feature of immediate annuities, rather than fixed or variable ones that usually require some accumulation phase before payouts begin.