We each have our own ideas about how we want to live in retirement, and how much money we’ll need. For many approaching retirement, this stage of their life will last for decades, and you cannot count on a predictable stock market or economy over all of that time.
So, what’s someone planning for retirement to do? Diversify your portfolio to balance risk and growth. That includes protecting some of your money from the steep downsides of a volatile stock market. Of course, you can find risk protection in CDs, savings accounts, and the like. But, at current interest rates, your money won’t have much chance to grow.
That’s why many planning for retirement are choosing Indexed annuities. With all basic fixed indexed annuity products, your principal can never decline, but it can grow with a rising index. And because they are insurance products, indexed annuities can offer a guaranteed income for your lifetime. Imagine not having to worry about outliving your money!
Many retirees say that Indexed Annuities give them the peace of mind that they lost, along with much of their nest eggs, during the volatile markets of 2008 and 2009. That alone makes them worth a look.
There Are Two categories Of Annuities
A Fixed Indexed Annuity uses a unique formula to calculate annual interest based on the performance of a stock, bond or commodity index. The index is used as a benchmark, however, your money is not actually invested in it, offering a balance and protection against the ups and downs in the market. In this situation, the Insurance company assumes the risk.
A Variable Annuity is the rate of return depending on the stock, bond or money market investment, but does NOT offer protection against the downs in the market. The Consumer assumes the risk.
Because of the Fixed Index Annuity features, the value of your money will never decline for as long as it is in the annuity. But it can increase with a rising index, offering growth potential. Once interest is credited to your portfolio, it can never be lost due to interest rate adjustments or negative market fluctuations, and it may even compound.
The bottom line? Indexed annuities offer low risk, guaranteed income and protection for market ups and downs.