FIXED INDEX ANNUITIES FOR RETIREMENT INCOME PROTECTION

What is a fixed index annuity?

A fixed index annuity is a type of annuity that provides the potential for income growth while protecting your principal investment from market declines. Your growth is generally capped at a percentage of the stock market. So let’s say the market goes up 20%. Your annuity growth might have a ceiling of 6% or it might be capped at 50% of the market gains. While that may seem like you’re leaving money on the table, the main goal of an annuity is the preservation of principal because when the market drops 20%, a fixed index annuity doesn’t lose out.

For many in 2008, that protection of principal right before their retirement years would have helped protect them from the 50% drop in the market. With that kind of market loss in mind, a 0% loss in your retirement account sounds better than a 20% gain in a bull year. If the stock market index goes up, your account value will go up. If the stock market index goes down, your account value will not go down.

Is an annuity a good option for retirement?

Specially designed for retirement, fixed index annuities help provide income that is steady and can last for the rest of your life, even if the stock market crashes. This makes them a retirement income planning tool that can provide added peace of mind. And because they’re linked to the market, but your funds are not directly invested, you won’t lose when the market drops, but you will still earn growth on your investments over the years when the market increases.

What is a fixed index annuity?

A fixed index annuity is a financial product designed to provide growth potential based on the performance of a market index while offering protection against market losses. This means your account value can benefit from positive market performance without being directly invested in the market.

Fixed index annuities are designed to protect your principal from market downturns. While your account may not receive interest during periods of negative index performance, market losses are generally not credited against your contract value due to index declines.

Many fixed index annuities offer options for guaranteed lifetime income, helping create a predictable stream of retirement income that you can rely on throughout retirement. This can complement other sources of income such as Social Security and retirement accounts.

Not necessarily. The suitability of a fixed index annuity depends on your retirement goals, income needs, liquidity requirements, risk tolerance, and overall financial strategy. We can help evaluate whether a fixed index annuity may be appropriate as part of your personalized retirement plan.

Is an annuity right for me? Find out today!

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