A fixed-indexed annuity gives you interest-based earnings, which offer an opportunity to get returns in part, according to positive change in the market index. So they offer several key points where a fixed-indexed annuity adds stability and accumulation of funds to your retirement savings. Also, it protects your investment and any interest credited from downturns in the market. It is long-term retirement savings that provide opportunities for growth.
Fixed indexed annuities and their benefits:
Principal protection: you are not investing in the market. A fixed index annuity offers you the opportunity to be credited with an interest. Also, it is added using a cap or spread, based on the performance of certain market indexes and it comes with the assurance of knowing your principal is protected from losses.
Annuity savings are intended for retirement investing; fixed-indexed annuities are one of them. Therefore withdrawals made from an annuity before 59 years and 6 months will be subject to a 10 percent tax penalty according to the IRS. Moreover, if you use an annuity within a retirement plan that is already tax-deferred, such as an IRA, the annuity will not offer any additional tax deferral. Fixed-indexed annuities help to create a stream of lifetime income flow. It is good for your retirement savings to grow whether your income goes up and down. Its buying power remains stable.
Growth opportunities: Multiple indexed accounts, along with fixed-indexed annuities provide you with opportunities to accumulate interest.
Guaranteed income:
Fixed-indexed Annuities offer you a variety of guaranteed income on your principal investment. They are subject to the claims-paying ability of the insurance company.
In general a fixed indexed annuity is not a stock market investment. It is appropriate for individuals who are conservative and looking for safe investment options. A safe place to invest your money with guaranteed retirement dollars. It can help you plan for a more confident retirement income. It’s up to you to make a decision but talk to an insurance agent about the features, benefits, risks, and fees. Moreover, take stock of your financial situation and objectives.
Fixed-indexed annuities have become much more popular since the market collapse of 2008. You can purchase them merely for the fact that there are fluctuations in the stock market. Moreover, if you are looking for a guarantee and you don’t mind locking up your money for an extended period of time, fixed-indexed annuities are the right pick for you. And also you must be prepared to take a lower interest rate in exchange for less risk and volatility.
There is no doubt fixed-indexed annuities are confusing several individuals and investors in planning their retirement funds. They give you more potential returns and less risk than a variable annuity. Fixed-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, they also have the potential to earn better returns. The downturn in Fixed-indexed annuities is low returns, high fees, profit limits, and poor liquidity.
