Have you been wondering what makes fixed index annuities different from other annuities? If you’ve been doing some research on this, chances are good you are not alone. In 2019, a whopping 15% of Americans reported having no retirement money saved up at all!
If you’ve been looking for a way to have guaranteed income when you retire, you’ve come to the right place. Keep reading our guide to learn how fixed annuities may make better retirement investments.
What Are Fixed Index Annuities?
Fixed index annuities (FIA) are choices that money-smart investors make when they want a stable investment. Some people may not want to risk losing some of their money when the stock market doesn’t perform well.
When you invest in an FIA, you sign a contract with an insurance company. The company agrees to pay you a specific amount of interest despite the volatility of the market. That rate gets guaranteed based on your contribution.
The Safety Factor
To learn how these are better investments, you can compare them to variable annuities. The interest on a variable annuity can change depending on the highs and lows of the stock market.
Fixed annuities make better investments for risk-averse people. The taxes on your earnings get deferred until you make your first withdrawal. A fixed annuity gives you a dependable income when you retire and removes any fears about what you might lose.
How Fixed Index Annuities Work
With fixed annuities, you can deposit one lump sum of money or make payments over time. When you get ready to retire, the insurance company will calculate your distributions.
The company lets you know upfront what the smallest percentage is you can get. Since it is tax-deferred, you have more money to grow until you get ready to retire.
The rates on fixed index annuities get based on the money the company gets from its investments. Some consider these better investments because the company chooses its portfolio. It takes the work away from the owner, so they appeal to money-smart investors who don’t have time to play the market.
When you get ready to retire, you can convert the FIA into an immediate annuity. That will make your retirement income payments begin almost immediately. You can get your money monthly, quarterly, or yearly if you need higher amounts at a time.
The Money Smart Annuity
What sets these fixed index annuities apart from other types is their stability. Many people get overwhelmed by the idea of figuring out how investments work. Fixed annuities take all the guesswork out of the equation.
You don’t have to worry about how your investment is doing. The insurance company promises a guaranteed smallest and largest interest rate. These allowances give you an amount you can depend on for the future.
Planning for your retirement doesn’t need to get confusing. If a fixed index annuity looks like a perfect option for you, contact us to learn more. We will provide you with the information to make the best decision for your future!