If you are investing – you know there is an element of risk. Today, we are in unknown territory – a worldwide pandemic, one of the most contentious presidential elections in our lifetime, and market swings like we have never seen before. Just how much risk are you willing to take with your retirement savings? You may be asking yourself – is there such a thing as a safe place for my retirement money, where it can grow risk-free? Actually, yes, there is – we know of a few places, and today, we will tell you about one, a Fixed Indexed Annuity (FIA), Take a look here for a quick overview of the basic concepts behind an FIA.
Most people we work with have a portion of their money they do not plan on touching until retirement. They have set it aside expressly for this purpose in a qualified plan such as a 401k, 403B, TSP, or an IRA. This is money they cannot afford to lose, yet they haven’t stopped to consider the enormous risk or don’t even realize that there are better options out there. Too many times, we have conversations with clients that thought they were in good shape, riding high on their investments, but when they were ready to retire – there was a significant drop in the market, and a chunk of their hard-earned savings was gone, just like their dreams of a safe and happy retirement. Does anyone remember 2008? Don’t let this be you!
A Fixed Indexed Annuity may be less exciting – no significant gains to brag about, and they may grow a slower rate. Still, they are definitely a better option when you are looking for a place to safely store and grow your money with no market risk and a guaranteed income that you can’t outlive!
Just like any product – there are good and bad annuities. When someone says they don’t like annuities, it’s like saying they don’t like stocks. What kind of stocks – technology, financial, consumer, biotech, penny? The point is – there are many products and features to consider. That is why it is imperative that you work with an experienced professional who knows the marketplace and can make sure that the product you have can meet the goals you are trying to accomplish. The upside side to an FIA is that you get to participate in a portion of the gains when the market is doing well and when the market is down, you don’t lose any of your principal OR any of the profits you have made. The beauty of a Fixed Indexed Annuity is that you don’t have to worry about market timing, buying or selling stocks, bonds, or mutual funds; you can set it and forget it! FIAs can even thrive when the market is volatile by capturing the upticks without ANY exposure to the losses.
This is what we know for sure about the future of the market – it will do one of three things – go up, go down, or stay the same. Wouldn’t it make sense to eliminate the most concerning of these three – a market loss, for at least some of your retirement savings? If you can take away the real threat of losing money and your only market exposure is making money or not losing money – wouldn’t you be able to sleep a little easier?
Do not be caught off-guard. This year, we have seen strange volatility levels in the market, which only adds to fear and uncertainty. FIAs offer safety and stability. Even in a zero percent return scenario, when compared with a down market, especially one that is ongoing, you can see why an FIA really shines and should be considered an essential and strategic component of your retirement strategy.
Let us help you review your current situation and explore safer options.
The more your portfolio is diminished, the more significant gains you will need, just to get back to where you started. If you are even, or maybe a little ahead – good for you, make the necessary changes so you can stay that way. It is time to tuck some of your funds away where you can’t lose it! We encourage you to do something because, unfortunately, things can get worse.
