Who doesn’t want a guaranteed income in retirement? The answer is no one! That’s why the appeal of annuities has been growing over the years. If you are curious about annuities, the good news is you have options. The bad news is there is so much to consider, you may feel overwhelmed choosing an annuity that’s right for you. But we can help.
A Fixed-Indexed Annuity is something we recommend to clients looking to diversify their portfolios while limiting risk. With an FIA, you’ll be purchasing an insurance product that provides set yearly gains. Your money will be considered safe because the insurance company backing your initial investment guarantees your money will never be lost. Not to mention, the gains that are locked in each year aren’t based on the market but rather on the performance of a single market index.
To make it easier to understand, the insurance company chose to set their rate of return on the S&P 500 which had a return of 10%. If the participation rate for your FIA is 70%, your gains will be locked in at 7% for the year. Keep in mind, all insurance companies set cap rates to minimize their risk. Who can blame them. So, your profits will be limited to the set rate or the cap rate depending. Yet, a guaranteed income in retirement is a guaranteed income.
It’s important to understand that all annuities pay out in different ways and have various fees as well as rules and restrictions. And annuities aren’t right for everyone. Before considering a new investment of any kind, contact Alloy Wealth. Our fiduciary financial advisors have a legal and ethical responsibility to ensure our clients’ best interests remain front and center, always. Call 800-689-3935 to speak with one of our team members.