Why Do Baby Boomers Love Annuities?
Fixed Indexed Annuities
Safety for your hard earned retirement account is essential. However, hoping to increase your income in retirement with a minimum of risk is the goal many retirees share. Where do you turn? Finding a place to keep your money safe, while drawing a consistent income can be a challenge. How do you get the combination of safety of principal, protection from market downturns, interest growth and a minimum guaranteed interest rate? The answer is a fixed-indexed annuity. A fixed indexed annuity is a fixed annuity that also provides an opportunity for potential interest growth based on changes in one or more market indexes without participating in the market.
Why You Should Consider A Fixed Indexed Annuity for Your "Safe" Money
If you have worked a lifetime and seen your IRA or 401(k) balance grow to a substantial sum, what will you do with that money when you actually retire? In today’s low interest rate environment, it can be a challenge to generate much income. While you may get double-digit returns in the stock market, you can also lose money when the market goes down. And the stock market is currently at all time highs, presenting yet another challenge.
When you are nearing retirement, or already retired, the money you need to pay your bills and live a comfortable lifestyle should be considered your “safe” money. If you want protection of principal from market downturns, some interest growth, and a minimum guaranteed interest rate, a fixed-indexed annuity may be just the financial product for you.
What Is A Fixed Indexed Annuity?
Sold by some of the largest and most reputable insurance companies, a fixed indexed annuity is a fixed annuity that also provides an opportunity for potential interest growth based on changes in one or more market indexes without participating in the market.
Even though an external market index or indexes can affect your contract values, the contract does not directly participate in any stock or equity investments. You are not buying shares of any stock or index fund.
With a fixed index annuity, you can allocate its value to one or more chosen indexes. The insurance company then uses a crediting method to track the performance of the index(es). At the end of each contract year, the company calculates the index interest. If the result is positive, the contract will be credited with the index interest, subject to a cap or spread. That interest is locked in each year and cannot be lost due to index declines at some point in the future. If the result is negative, the contract will not be credited with index interest for the year, but the annuity's value doesn't decline either.
Understanding What You Are Buying
It is safe to say that the average consumer may not fully understand the terminology used with fixed indexed annuities. Even sophisticated consumers find annuities require understanding. Not all fixed indexed annuities are alike.
With so many annuity products on the market being offered by a wide range of insurance companies, it may benefit you to work with an independent financial professional, that represents more than just one insurance company. That's where we come in. By offering a full range of companies and policies we can find just the right fir for you and your needs.