Having a secure floor of income throughout retirement can allow professionals to take more risk with the rest of their portfolio, which can even result in professionals ending up with a higher total spending amount in retirement and a higher legacy amount.
Is Your Retirement Income Secure?
Understanding Index Annuities
An indexed annuity is a type of annuity contract that pays an interest rate based on the performance of a specified market index, such as the S&P 500. It differs from fixed annuities, which pay a fixed rate of interest, and variable annuities, which base their interest rate on a portfolio of securities chosen by the annuity owner.
Indexed annuities are sometimes referred to as equity-indexed or fixed-indexed annuities.
How Index Annuities Work
Indexed annuities offer their owners, the opportunity to earn yields that are higher than fixed annuities market performance is doing well. In some cases, they also provide some protection against market declines.
The rate on an indexed annuity is calculated based on the year-over-year gain in the index or its average monthly gain over a 12-month period.
Index Annuities are designed to offer better returns than CDs and are a fairly conservative investment. If you are nervous about upcoming market volatility and want to take some risk off the table, then a fixed-indexed annuity is an option.