Guaranteed income, market-linked growth, principal protection — the income foundation of a smart retirement plan.
A Fixed Indexed Annuity (FIA) is a contract with an insurance carrier that turns a lump sum into guaranteed income — for a set number of years or for the rest of your life. Your money grows tax-deferred, tied to a market index, with a guaranteed floor that protects you from market losses.
In retirement, you don’t want surprises. An annuity is how you create a paycheck you can’t outlive.
Most people approach retirement with a 401(k) or IRA — market-based accounts that go up and down. The problem: when the market drops 30% the year you retire, your retirement plan changes overnight. An annuity removes that risk for the portion of money you allocate to it.
You don’t replace your 401(k) with an annuity. You use an annuity to guarantee a baseline of income that covers your essentials, while the rest of your money stays invested.
How is this different from an IRA? An IRA has annual contribution limits and is invested in market funds. An annuity has no contribution limits, the carrier guarantees the principal, and you can structure it to pay you for life. Many people use both.
What about fees? Fixed indexed annuities don’t typically charge management fees the way mutual funds do. There may be surrender charges if you withdraw early — usually 7–10 years — which is why they’re for long-term money you don’t need to touch.
Can I lose money? With a fixed indexed annuity, your principal is protected. The index is used to credit interest in good years, but you don’t lose ground in bad ones. The worst-case scenario in any given year is 0% growth.
What if I die? Your beneficiaries receive the remaining account value. Some annuities offer enhanced death benefit riders.