Indexed annuities may include a guaranteed minimum interest rate, helping protect your principal. Because interest is linked to a market index, you also have the opportunity to earn more during positive market years.
indexed annuities
Indexed annuities, also known as fixed indexed annuities (FIAs), are designed to give you the opportunity for growth linked to a market index while protecting your principal from market losses. Your money is not directly invested in the stock market, but your interest is credited based on how the index performs. While growth may be limited by caps or participation rates, you won’t lose value due to market downturns. Earnings grow tax-deferred until you choose to withdraw them. Indexed annuities are often used by individuals who want growth potential with built-in protection for retirement.
Benefits of Indexed Annuities
protected growth w/ upside potential
access to your funds
Many indexed annuities allow you to withdraw up to 10% of your contract value each year without surrender charges.* Keep in mind, unused withdrawal amounts typically do not roll over to future years.
flexible income options
You can structure payments to last for a set number of years or for your lifetime. Some options also include a guaranteed period, ensuring payments continue to your beneficiary if you pass away during that timeframe.
*The contract value after each withdrawal must be at least $10,000.
Withdrawals reduce the annuity’s remaining death benefit, contract value, cash surrender value and future earnings. Withdrawals may be subject to income tax and, if taken prior to age 59 ½, an additional 10% IRS tax penalty may apply. More frequent withdrawals may reduce earnings more than annual withdrawals.
Is an Indexed Annuity Right for You?
If you’re looking for the opportunity to grow your retirement savings but feel uneasy about stock market volatility, an indexed annuity may be worth considering.
If creating a dependable retirement income stream is important to you — while still allowing for growth potential with controlled risk — an indexed annuity could be a strong fit for your strategy.
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