Are Fixed Indexed Annuities a remedy for the retirement income problem?Submitted by GRP Advisor Alliance on July 29th, 2019
Many Americans will rely on Social Security, retirement plan accounts and non-qualified assets to generate retirement income. Their concern, however, is that invested assets are not guaranteed. Additional factors may impact the ability of accumulated assets to provide enough income to sustain them for the rest of their lives:
o Market volatility
o Interest rate risk
o Sequence of return risk
o Longevity risk
Uncertainty is stressful. Given the option, over 70% of people would choose a source of guaranteed income in retirement which for many will be a Fixed Indexed Annuity (FIA).
An FIA, where the credited return is tied to a market index like the S&P 500 without actual market participation, can provide:
o Downside protection against market losses
o Market upside
o Protection of principal
o Tax-deferred growth o Potential for guaranteed lifetime income
o Peace of mind
Fixed Indexed Annuities do have drawbacks. You generally won’t get stock market returns due to fees, participation levels and caps on growth. But they may be an appropriate solution for clients looking for guaranteed retirement income.