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  • Writer's pictureFreddie Vernon


It sure is fun to see the positive returns of a bull market.  But, if you are cringing at the sight of significant downturns and losses when a big, bad, bear comes into view, perhaps the slow, steady, performance of a fixed indexed annuity should be part of your retirement savings mix.

Fixed indexed annuities (FIAs) are contracts between you and an insurance company. This financial product guarantees a minimum rate of return for a fixed number of years. Interest is earned based in part on changes in a market index, which measures how the market, or part of the market, performs.

Just as in the fable of The Tortoise and the Hare, FIAs don’t jump dramatically ahead when the market soars, but they do provide greater potential for interest crediting than a traditional fixed annuity and a guaranteed stream of income that cannot be outlived.

Many savers think that they only have two options when it comes to saving for the future:

Putting their money in the bank, which earns little to no interest, but keeps their money safe, orPutting their money in stock-market based investments, which historically have performed well but can also be offset by the risk of loss of principal.

Most people don’t realize that there is a third option, utilizing an FIA that provides the potential to earn higher rates of interest based on a chosen market index strategy, but still provides protection against losses from market volatility. Additionally, this type of retirement vehicle also solves for the common problem of income disbursement that many retirees face, because the funds accumulated in an FIA can be converted to a guaranteed stream of income that can never be outlived.

Financial markets can be volatile. A balanced approach helps minimize risk, yet only 9 percent of Americans prioritize financial diversity, according to the Indexed Annuity Leadership Council. Products like fixed indexed annuities (FIAs) can help by protecting premiums paid and interest earned from market loss, without giving up the potential for growth.

If you’ve grown tired of chasing the bull and fearing the bite of the bear, the steadfast fixed indexed annuity may be the tortoise that helps you win your race to retirement.

1 Guarantees are dependent upon the claims-paying ability of the issuing company.

2 Indexed annuities do not directly participate in any stock or equity investments.

3 Guaranteed lifetime income may be provided either by annuitizing an annuity, or through an annuity income rider. Riders are supplemental benefits that can be added to an annuity. Riders are optional, may require additional premium and may not be available in all states or on all products. This is not a solicitation of any specific annuity.

4 Assuming no withdrawals during the withdrawal charge period. Rider charges continue to be deducted regardless of whether interest is credited.

Annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. In addition, withdrawals prior to age 59 ½ may be subject to a 10% Federal Tax Penalty.

Authored by Maria McLendon

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