Index Annuities are the simplest form of Annuities to invest in. They allow you to protect a portion of your retirement income, shielding it from losses. If you had quite a bit of money in your 401K and/or IRA account and watched as it lost value by half or worse in the 2007-2008 crash, well an annuity can protect the principal savings that you have invested for retirement. An Index Annuity participates in the index, i.e. the S&P500.
What Is An Index Annuity?
The Index Annuity is a contract between your insurance company and you that allows your retirement savings to participate in the index in order to earn more money, however it also protects the principal balance in your annuity from losing money. You can structure your index annuity to provide you a guaranteed pension for your life and the life of your spouse. Whether you or your spouse pass away the guaranteed pension payment amount that is provided by the index annuity remains the same.
Benefits of Index Annuities
After both parties (the primary and beneficiary) investors are deceased the next beneficiary on the annuity policy will receive a payout for the remaining balance left in the annuity account.
In exchange for the premium deposit made into your index annuity account the insurance company can provide a bonus for the initial deposit amount and you can choose to begin drawing payments immediately or schedule the payments to start in the future. You can also withdraw lump sum amounts up to 10% of the annuity investment balance annually. People in their late 50’s and in retirement (over the age of 65) no longer have the luxury of risk.
The retirement nest egg that you have in place today may disappear tomorrow if the stock market were to crash again. Economists around the world expect the stock market to cycle back to a crash again. When is the undetermined answer that we all have. Without psychic powers and a magic crystal ball that allows us to see in the future investing all our retirement savings in the stock market or leaving it parked in a 401K or IRA is very risky.
Why Index Annuities Protect Your Retirement Savings
You can expect the same result in the event of a stock market crash as the result that you and I experienced in 2008. That was catastrophic loss for millions of Americans. Some even lost their homes and began living on dog food. Honestly none of us want that but it happened. It is a true story and it will happen again if your retirement money remains at risk. The Retirement Solution to risk comes in the form of an Annuity, and we like Index Annuities because it allows your money to participate in gains without all the risk of loosing. See with an annuity your gains are locked it and protected. If the index goes up your money also goes up. But, if the index goes down you don’t loose money. That is the job of the insurance policy, to protect your investment and to guarantee your money will not be lost in the event of a stock market crash. That is why we love what an Index Annuity can do for you.
