Are Fixed Index Annuities Good For Retirement?

Sometimes clients ask us, “Are fixed index annuities good?” First, let’s review what an FIA is. It’s a policy agreement that both an insurance company and you have. This contract lays out the terms of the annuity insurance policy that you chose to purchase. Additionally, the document also explains any benefits, rights, and duties that each party has. For example, your annuity agreement will indicate how long your money must stay in the account, and when you can begin taking income payments (if you choose to do so).

Some fixed index annuities (FIAs) provide income for life to their owners. For instance, you may be able to have a potential reasonable rate of return.* In addition, an FIA keeps your base money safe. Remember, an FIA provides protection for your money, even if the market goes down. If a retiree wishes to secure their principal balance, than an FIA may be something to consider. Certainly, an FIA has many choices so be sure to speak with a professional before buying. Because our advisor holds a Series 65 designation, Marathon Group Financial has a fiduciary responsibility to our clients. We must always work in the best interest of our clients. Indeed, that has always been our focus.

FIA - Who Is Who?

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When you think about the “players” in an FIA transaction, you probably assume there is just you and your advisor. However, there are actually 4 total roles that play a part in the annuity contract process. Understanding these aspects of an FIA may help answer your question, “Are fixed index annuities good (for me)?” We believe learning about the annuity process is a valuable part of your decision.

Here are the main categories of those involved in an FIA:

The Issuer

An insurance company that is providing the annuity.

An Owner

Person who is buying the annuity policy.

The Annuitant

Receives payment from the annuity. Sometimes the same as the owner, but not always.

A Beneficiary or The Beneficiaries

After you pass on, these are the people (or the person) who receives the death benefit.

More Details About FIAs

Inside your policy, you’ll see details about what the insurance company is providing to you with FIA. For example, it will list which type of annuity you have and how the policy works. In addition, you’ll see time frames and terms in there as well. One of these terms may tell you how many years your annuity needs to grow before you can take money out as income. Of course, you may also see options about being able to take money out sooner, as well. There are, however, conditions as such “surrender periods” that exist in most annuities. If you decide to take money out during that point in time, you may have additional fees. Make sure you review your options with us to learn more.

Will I Have A Death Benefit With An Annuity?

Some annuities, and specifically some FIAs, allow for a death benefit to your spouse. You may even have a survival clause in your FIA. Because so many options exist, you have lots of choices. For instance, perhaps you feel that your death benefit should be paid all at one time to your spouse when you’re gone. Or, you may rather have them get monthly income payments instead. No matter how you choose to set up your fixed index annuity agreement, be sure you take time to truly understand the details. At Marathon Group Financial, we’re here every step of the way.

Income Payments - When Can They Start?

You’ll need to look at the terms of your FIA to understand when your money can start to come out as income. In addition, you may see that your FIA allows for a certain percentage to be taken out each year. These details are important to discuss with your advisor. Of course, some annuities fo have more flexibility and choices for retirees concerning access to money. Some retirees have policies where they take money out just once per year. Others may set up monthly income payments. Still others all their money to stay in the annuity and potentially grow over time. In fact, you may be able to take money out one year, and then decide not to take money out the following year. Again, each circumstance is different but the key is: income payments usually have options.

With all the “who’s who” of annuities, you may have questions for us. We’d love to connect with you, learn about your situation, and see how we can help. Contact us today.

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*Reasonable rate of return over time. 

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