Fixed Index Annuity with an Income Rider
Baby boomers are buying annuities in record numbers today to supplement their guaranteed income in retirement. There are very good reasons for this.
All working people who have accumulated 40 credit units will receive a social security annuity in retirement. Most government employees also have government annuity pensions for retirement.
That said, the days of full corporate pensions in the private sector are long gone. As a result, most people want additional guaranteed income to supplement their social security and small corporate annuities.
That’s where personal annuities come in. It’s a way for people to create their desired guaranteed pension in retirement. But first, a few basics on annuities and income riders.
What is an Annuity?
An annuity is a contract with an insurance company to pay you an income for the rest of your life. Think of it as a personal pension plan or paycheck for life – a safe, guaranteed income stream you can never outlive. Your personal pension plan can be used to:
- supplement Social Security or other retirement income
- accumulate assets for retirement
- receive guaranteed lifetime income
What is a Fixed Index Annuity?
A Fixed Index Annuity (FIA) is a fixed annuity with an interest rate linked to the performance of a stock index, for example, the S&P 500. A fixed index annuity allows you to participate in market gains according to your contract, while avoiding market losses if the market declines. Unlike a variable annuity, a FIA offers safety of principal and a guaranteed minimum return. Some fixed index annuities offer an up-front bonus as well.
Many fixed-indexed annuities have caps that limit your investment gains. Additionally, fixed-indexed annuities have a surrender charge, a penalty for making an early withdrawal above the free withdrawal amount. In most cases you’re allowed to withdraw 10% every year without surrender charges.
Fixed Index Annuity Features and Benefits:
- Protection of principal
- Guaranteed minimum returns
- Provides a paycheck for life
- Tax-deferred growth
- Guaranteed death benefit for your beneficiaries
- No penalties for mandatory distributions at age 70 1/2
- May avoid probate (depending on your state’s laws)
What is an Income Rider?
Available for a fee, an income rider provides the owner of the annuity contract with a guaranteed income stream for as long as you live. It’s a way to take the worry out of your retirement years and insure a certain lifestyle.
Having an annuity with an income rider means the insurance company is contractually obligated to provide you with a certain level of income for life — regardless of how the annuity performs, regardless of what’s going on in the economy, regardless of how the stock market performs, and regardless of how long you live.
Who buys a fixed index annuity with an income rider?
- People concerned about outliving their retirement savings.
- Those planning to be retired for 20 years or more.
- Investors who want to protect their retirement portfolio from market downturns like we saw in 2000 and 2008.
- Pre-retirees who expect to need more income during retirement than what Social Security and other pensions provide.
- Individuals who want to transfer wealth or leave a legacy for family members or to a favorite charity.
- Men and women who choose to spend their retirement years enjoying life rather than worrying about the ups-and-downs of the stock market.
Call or email today to see how a fixed index annuity can help you achieve your guaranteed retirement income goals. Remember, they are not your father’s annuities.
* Annuities are designed for long term financial planning and are not designed for short term investment strategies. Guarantee periods or annuity payments may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.