FIAs - The Best Of Both Worlds!

When it comes to strategies designed to help bolster your eventual retirement income, the eternal dilemma is whether to choose a safe, guaranteed option that yields lower returns or one that has greater earning potential but carries high risks. The great thing about fixed index annuities (FIAs) is that they act as a "middle option" that avoids this quandary.

An FIA can be a well-balanced savings strategy and in many instances is specifically designed with lifetime income for retirees in mind. Here are the 4 biggest benefits of using an FIA as part of your overall retirement strategy.

1. Fixed Index Annuities Have A Guaranteed Principal
Unlike investment accounts, when you protect your money with an FIA you do not bear the full risk of market declines. Your principal is guaranteed, so that you won’t suffer a loss. Period.

This basic element of security makes it wise to include an FIA in your retirement strategy. After all, you may not want to risk losing your retirement income due to a sudden market downturn.

2. FIAs Can Give You Long-Term Tax Deferral
Another key reason to choose FIAs is that you can defer paying income taxes on the money deposited in your account for years, even decades - until you withdraw it. And you will likely be in a lower tax bracket by the time you pay those taxes.

Note also that you will be earning interest on money that otherwise would have gone to pay the tax bill - and that interest will compound over time.

3. Your Earning Potential Is Significant
You can always find a savings strategy that promises huge returns, but they always also involve gigantic risks that your nest egg will carry. To avoid this, many opt for CDs or bonds, but their rates are often way too low to be sustainable long term.

An FIA is indexed to the stock market based on something like the S&P 500 (most commonly), the Nasdaq 100, or some other select indexes like Bloomberg - for example. These indexes gauge the overall performance of the US market, which means your earnings will go up or down based on general market trends year by year.

In some situations, you can earn at least a small amount even in a bad market and a large percentage of interest in a bull market - but the edges are taken off each end so that you tend to grow moderately over several years with greater security built in.

4. Lifetime Income and Death Benefits
Finally, most FIA providers (which are insurance companies by the way) offer the benefit of guaranteed lifetime retirement income. 

That means you keep getting "paid income" out of your account regardless, no matter how long you live or whether you’ve exhausted your original funds. And when you pass on, if there is any of your principal remaining, it is returned to your chosen beneficiary as a death benefit; no probate.  

A lot of people feel like pairing the guarantee of income while they are living with the ability to still take care of their beneficiaries, is a well balanced way to prepare for the what if; no matter what that turns out to be.

Fixed index annuities are one of the best overall strategies for building secure retirement income across many years or decades. They are not a get rich quick scheme, but they give you more earnings on average than a typical CD or other safer-side investments. To learn more, or to discuss setting up an FIA with a licensed and experienced insurance agent who specializes in retirement income, contact Summerlin Benefits Consulting today!