With bonds and bank CDs paying so little interest, Americans in or nearing retirement who need to grow their money safely and generate predictable income are looking for new ideas.
“People who have worked a lifetime to accumulate money have run out of time to lose it. They can’t go backwards because they don’t have 5 or 10 years to make it up,” said Bob Lindquist, founder of Safe Retirement Strategies. "While other people were losing 30% to 40% of their lifetime savings in 2008, my client’s didn’t lose a penny.”
When the market index such as the Dow Jones Industrial Average or the S&P 500 value climbs, the annuity credits gains to your account. But when it slides, the investor loses no money. Both your principal and all previously credited gains are fully guaranteed, regardless of how the index performs in future years.
Many people brush fixed index annuities aside as a gimmick and don’t take a minute to understand how they work. They are however, well worth investigating because if you like what you learn they might have a place in your portfolio. A fixed index annuity balances safety and preservation of your principal with the potential for the gains of a market based investment.
Fixed index annuities offer a way for conservative investors to leverage a vehicle that prioritizes safety and protection of principal and still has the potential for higher returns than traditional fixed investments.
Lindquist told KMBZ's Dan Weinbaum that fixed index annuities are not popular with many financial advisors because client money that is secured in these long term savings and income vehicles is no longer money in play and is unavailable for commission-based transactions.
“This is not the 20th century annuity. It’s a brand new design that is so respectful of retirees. It may sound too good to be true. But it isn’t. Fixed index annuities are very attractive because the principal investment and market gains are protected and guaranteed from loss,” he said.
That means that your money will be there for you and your beneficiaries when you tap into it for a stream of income that continues for a lifetime. These withdrawals are guaranteed even if they completely deplete the capital in your account.
So unlike people who directly invest in the market and expose their capital to significant losses, with fixed index annuities you have a brand new starting point at the beginning of every contract year and never have to recover any previous losses.
All that being said, it’s important to work with an expert who pays attention to the details. Each fixed index annuity offers different components and characteristics and the quality of insurance companies vary. Lindquist can help you understand the underlying index, the guarantees, and the way the earnings are credited to the investment account.
For your introductory guide to fixed index annuities call 913-814-9600.
Safe Retirement Strategies
8900 Indian Creek Parkway
Building 6 Suite 250
Overland Park, KS 66210