When it comes to building your retirement future, fixed indexed annuities (FIAs) can be a valuable addition to your financial strategy because they offer a blend of stability and growth potential that can help you achieve your goals while also providing peace of mind.

Understanding fixed indexed annuities

FIAs are retirement products that provide opportunities to grow your money based on the performance of one or more market indexes, such as the S&P 500®. Unlike traditional fixed annuities that offer only fixed interest rates, FIAs allow you to participate in interest crediting based on the positive performance of an index, while also protecting your principal from market losses—a feature that may be particularly appealing during times of economic uncertainty.

With a FIA, you’ll generally make a one-time purchase payment, and your money will be held for a certain number of years while your indexed accounts have opportunities to grow. Any growth in your accounts is locked in and cannot decline due to market performance. At the end of the contract period, you can get your accumulated interest back as a lump-sum or turn it into guaranteed income payments for your retirement.


Fixed indexed annuities can offer a strong blend of stability and growth potential to your financial portfolio.


The features of fixed indexed annuities

FIAs can serve as a valuable tool in your retirement income strategy by providing growth opportunities for your money and a reliable income stream to maintain your lifestyle in retirement. Their key features include:

  • Stability in uncertain times: One of the primary advantages of FIAs is the protection they offer against market downturns. While your purchase payment can grow based on market performance, it also won’t lose value due to market volatility. This stability can be comforting for those who are risk-averse or approaching retirement and want to safeguard their money.
  • More potential for growth: Growth in your FIA is linked to the performance of one or more market indexes, giving you the potential to earn more interest from market upswings. Although interest is typically subject to a cap and may not match the full market’s growth, the trade-off is found in the reduced risk of losses.
  • Flexibility and customization: FIAs can be tailored to your specific financial goals and risk tolerance. You can typically choose between multiple crediting methods and index options to align your annuity with your unique objectives.

FIAs offer stability and growth potential that could make them a valuable addition to your financial portfolio. As with any product, it’s important to carefully consider your financial goals, risk tolerance and the terms of the annuity before making a commitment. A financial professional can help you determine if a FIA is an option for your overall financial strategy.


Additional reading:

Why women save less for retirement, and strategies that can help

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