Welcome to Fixed Index Annuity. This website is intended to provide information and resources about annuities, fixed index annuities and other savings vehicles to ensure a financially secure retirement. If you have questions on this content, or need assistance with planning your retirement you can get a personal consultation with Tim Barton, Chartered Financial Consultant
Benefits of a Fixed Index Annuity and Planning for Retirement
Perhaps the number one question future retirees think about and ask:
"How can a person keep their money guaranteed safe, growing and ready to provide guaranteed lifetime retirement income?"
On one hand, they want safety along with a guarantee of principal and earn some interest. But CD rates are so low.
On the other hand, they prefer the potential of higher returns. But these usually come with unacceptable risks of principal loss.
A fixed index annuity helps solve this dilemma.
Annuities provide safety along with a guarantee of principal and credited interest.
An index annuity allows for the potential of higher interest by linking not investing in a stock market index such as the S&P 500, Nasdaq 100 or some other index an annuity owner may choose.
Annuities can guarantee lifetime retirement income while returning any unused principal back to the annuity owner's beneficiaries.
In the past, the choices were either (1) receive the guarantee of principle and a minimum amount of interest, or (2) link to the market with the potential of higher returns, but also accept the downside risk to your principal.
Now you can have the best of both worlds: guarantee of principal, the potential of market-linked growth and guaranteed lifetime income with no risk of loss of principal due to market downturns. Enter the fixed index annuity concept, a concept designed to help you reach your retirement goals.
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A fixed index annuity provides you with the best features of a traditional fixed annuity - a guarantee of principal. Unlike most securities or mutual funds where your account balance can fluctuate due to market performance, premium deposited into a fixed index annuity is guaranteed to never go down due to market downturns. An annuity owner of an indexed annuity participates in market-indexed interest without market-type loss.
Fixed index annuities can be either non-qualified annuities or qualified.
Qualified annuities are commonly used in
IRA's, 401(k), 403(b) and many other qualified pension transfers.
The above tax qualified savings can be transferred into index annuities without triggering any income tax liabilities.
Non-qualified annuity values accumulate on a tax deferred basis until withdrawn.
Your money can grow faster because you earn interest on dollars that would otherwise be paid as taxes.
Your principal earns index credits and that interest compounds allowing you to accumulate more money over a shorter period of time.
Any after tax funds are eligible for a NQ index annuity. Certificates of deposit, savings accounts and money market funds can be transferred into an index annuity.
Unlike CD's fixed index annuity contracts offer withdrawal flexibility with some form of penalty-free withdrawals. 10% of the full accumulation value each year and some companies allow this withdrawal to accumulate for years not taken.
Fixed index annuities can provide a guaranteed lifetime retirement income that the annuity owner cannot out live.
You have the ability to choose from several different annuity payment options.
Most index annuities allow income payments to be suspended and restarted at a later date. Additional withdrawals are available if the annuity owner needs more money. Typically these withdrawals reduce future income payments.
With nonqualified plans, a portion of each annuity payment represents a return of premium that is not taxed. This reduces the income tax on your annuity payments.
Depending on an annuity owner's tax situation the amount of their Social Security payment may be taxed less.
The fixed index annuity offers many features of a traditional fixed annuity.
Index credits are a unique feature allowing for a higher interest rate than traditional safe money investments such as CD's or bonds.
Annuity premium is not invested in the stock market. Instead it is linked to the movement of a stock market index to determine interest credits without the potential of any market-type loss.
In contrast to a securities-type investment like a mutual fund where the investor bears the market risk, the fixed index annuity concept insulates the annuity owner from risk of loss due to market downturns.
Indexing is simply an investment strategy that follows the performance of select securities, such as the Standard & Poor's 500® Index. The S&P 500® is a collection of 500 select industry leaders and thus a benchmark for U.S. Stock Market performance. A fixed index annuity is linked to the performance of this type of market index, without the risk of directly participating in stock or equity investments. With indexing, you can participate in a diversified passive investment strategy: a link to the market and its potential gains without subjecting yourself to the potential downfalls of the market.
Fixed index annuities have the potential for market-linked interest without exposure to the market risk. Contract owners enjoy the guarantees and safety of principal even while being linked to indexed growth. However, they should not expect fixed index annuities to mirror the exact performance of any stock market index.
Since a fixed index annuity uses a passive investment strategy, it will not mirror the exact return of the stock market index. The fixed index annuity is a powerful financial tool designed to meet your long-term retirement needs.
Does it sound like a Fixed Indexed Annuity might be right for you?