Retirement Planning
Retirement planning with safe money strategies in mind can better ensure that your principal is protected in any type of market conditions. Typically, safe money strategies include using financial vehicles with a set or guaranteed return.
Because many of the common safe money investments such as bonds, money markets, and CDs (certificates of deposit) are currently paying historically low interest rates, it is important to add other options that can help you to generate a higher rate of return, while at the same time keeping your principal safe.
One option is the fixed indexed annuity. The return on these financial vehicles is determined by the performance of an underlying market index, such as the S&P 500. In contract years where the index performs well, a positive return is credited to the annuity.
But if the index generates a loss in a given contract year, there is no loss incurred in the annuity’s account value. Rather, it is simply credited with a guaranteed “floor” rate (which today is generally in the 0% to 2% range).
In addition, fixed indexed annuities can also provide a safe and ongoing stream of income in retirement that is paid out for a set period of time, such as 10 or 20 years, or even for the remainder of your lifetime – no matter how long that may be.
Because there are many different “versions” of fixed indexed annuities, though, it is recommended that you discuss your short- and long-term financial goals with a retirement income planning specialist who can point you in the right direction.
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