The Retirement Challenge

Retirement is a time to do the things that you never before had a chance to do. When you're working, you may be raising a family and paying a mortgage. So you may put off doing other things. But how can you take advantage of asset growth when market indexes rise while reducing the downside risk, so you can look forward to a reliable income stream in retirement.

Plan For a Longer Retirement

Americans are living longer on average than ever before. You may even spend more years in retirement than you spent at work. That's time to be with family, travel, or do volunteer work. Or even start a new career doing something you love--whatever "retirement" means to you.

But living longer means you may need more financial resources. When it comes to something as important as your retirement assets, you would like to have both growth and protection--remember that there is often a trade-off, however, Generally, the higher the potential return of an investment, the higher the risk.

 

Look for Growth and Protection

The challenge is to find ways to both grow and protect your retirement money, even in times of economic and market uncertainty. One option is to purchase a fixed index annuity (FIA). The FIA is designed to help you accumulate funds for retirement without exposing your hard-earned money to market risk.

Living Longer Means You May Need More Financial Resources

A FIA is a long-term contract with an insurance company, created to help you build assets for retirement it offers guaranteed principal like a traditional fixed annuity. But a FIA also gives you an opportunity to earn interest based on the performance of a stock market index. (Note: A FIA does not invest directly in securities.) It's a solution designed for use in all the chapters of your life. This means growing and protecting your savings during your working life, but it also means making sure you have enough money as long as you live.

 

In My Opinion I feel one of the best attributes of a Fixed Indexed Annuity is the benefit of participating in the UPSIDE Potential of the Market  and NEVER worrying about feeling and seeing the effects of the downside. In more simple terms.....When the market goes up you get the gains, when the market goes down, the lowest you will see is ZERO, that is 0%. 

 

What is the catch? Caps, Participation Rates and Spreads. I will use one of my favorite FIA Products to explain. When the market (Specific Index you've chosen) goes up 15%, you participate in it fully MINUS 2.6%, So that is the catch, you do not get the full upswing gain, BUT in return you NEVER EVER participate in any loss. The Index gained 15% but only 12.4% will be used to credit your balance. If you gained 12.4% interest credited to your investment and did not have the risk of losing when the market flattened or went down, you have WON!! (In my humble opinion)

CAPS, PARTICIPATION RATES AND SPREADS

Crediting methods can have components such as caps, participation rates and spreads that may limit the amount of indexed interest you receive. These components are subject to change (for example, caps may be raised or lowered).

  •     A cap is the maximum interest rate the FIA can earn.
  •     A participation rate is the percentage of the gains achieved by the underlying index that will be credited to the FIA.
  •     A spread will subtract a certain percentage from any gain that the underlying index achieves.

A FIA may credit interest to your account based on the performance of a specific index. (Example:S&P 500, CROCI Sectors III etc.) Companies that issue FIAs often offer a choice of indexes and methods used to calculate the interest you can earn.

GUARANTEED PRINCIPAL

Both your premium payment and any interest locked in at the end of each term are protected from loss by the claims-paying ability and financial strength of the issuing insurance company. Some FIAs have an optional benefit (available for an additional fee) that allows you to get at least your premium payments back at any time, with no surrender charge.

TAX DEFERRED GROWTH

All your earnings grow 100% tax deferred, until you start taking withdrawals or income payments. In most cases, that will be after retirement, when your tax bracket may be lower. Withdrawals are taxed as ordinary income and if taken prior to 59 1/2, you may have to pay a 10% federal tax penalty.

FIAs OFFER THE CHANCE TO BENEFIT FROM RISING MARKET INDEXES, WITH NO PRINCIPAL RISK!*

*Withdrawals will reduce your future retirement earnings, and may result in a surrender charge or a market value adjustment.

Many FIAs include a feature called an "annual rest," which uses the previous year's ending value as the starting value in the next year. At that point, the earning are locked in and protected from loss. However, if the market stayed flat or went down during the year, your value does not decrease.

Fixed Indexed Annuities are designed to provide a combination of growth potential and principal protection that can help you to reach your long-term retirement income goals. Since you are not invested in any stock or bond, you don't have to worry about whether your retirement money will be lost to market and economic surprises.

The really good thing about FIAs is that you can customize the annuity with index and crediting options to fit your individual needs. But regardless of the index option you choose, you cannot lose money. (But remember, if you make withdrawals or surrender your contract during the first 10 years, there is a penalty. Also, you can incur fees related to optional benefits.)