For Retirement Savers

 

As a retirement saver, we know the tax reform debate of 2017 reawakened the need for you to examine and evaluate your retirement savings plans and educate yourself on all available options for planning. Our educational videos on retirement planning and fixed indexed annuities (FIAs) is great place to start.

 

 

Examining Your Retirement Preparedness Plans

We suggest examining your retirement preparedness plans to ensure you are saving enough now. Financial certainty can be improved if you utilize financial resources, such as the Indexed Annuity Leadership Council’s (IALC) retirement calculators, to estimate your retirement living expenses and determine how much Social Security you’ll receive each month.

Diversifying portfolios and adding an array of options will also help maximize potential gains and minimize risks. Not putting all your eggs in one basket is key for successful planning.

One option to consider adding to your financial portfolio is a fixed indexed annuity (FIA), which can provide balance to financial plans and offer a steady stream of income in retirement. FIAs also offer tax-deferred growth, meaning taxes are not owed until a withdrawal is made. Complete our Retirement Planning Worksheet to see if an FIA is right for you.

Read on to learn more about the FIA facts and the changing face of retirement.

Retirement in America is Changing

You have what it take to guarantee a retirement that fits your needs. Retirement comes in all shapes and sizes. Get a snapshot of retirement in America from our Executive Director Jim Poolman.

Busting Myths, Telling Truths

Can you sort fixed indexed annuity (FIA) fact from fiction?

It’s no myth, there is a retirement crisis in America. In fact, IALC data found one in four baby boomers have less than $5,000 saved for their golden years.

Lack of diversity further puts retirement at risk and only nine percent of America is prioritizing financial diversity. A diversification strategy is essential to ensure balance and provide retirement planning peace of mind.

That said, it can be hard to create diversity if you don’t know what products to add to your portfolio. The same study found 22 percent of Americans are not familiar with the most routinely used retirement products, such as mutual funds, Certificate of Deposits (CDs), and FIAs, which are a great product to diversify.

A common misconception is that FIAs are too complicated or complex. However, FIAs offer a simple story: growth potential, without risk of loss, due to market downturns, as well as a steady income stream in retirement.

Together, let’s uncover many of the other myths on diversification, FIAs, and more.

  • FIAs are a great product to use when planning for retirement, and as a result, younger generations are considering products, like FIAS, as part of their overall portfolio due to its offerings of growth and balance.
  • Myth: Because FIAs offer little or no growth, it does not benefit my portfolio or investment strategy. Fact: It
  • Myth: I already have a well-rounded portfolio that promises high returns and won
  • Myth: I will miss out if the stock market does really well, like it is now. Fact: that
  • Myth: returns of my stocks are comparable to the returns of a FIA. Fact: FIAs are the steady portion of your portfolio. Your policy is indexed to the market without being invested directly in the market which provides range of growth and loss, ensuring your principal can never decrease due to market downturns. For comparison, FIA returns are comparable to the yield on intermediate bonds, but with no risk of losing principal to market loss
  • Myth: Any retirement account can generate guaranteed lifetime income. Fact: Only annuities can guarantee a steady income stream for your whole retirement. One if five Americans incorrectly believes a 401(k) allows you to receive guaranteed payments throughout your retirement, regardless of how the stock market performs.
  • Myth: FIAs are an investment product. Fact: No FIAs are NOT an investment product and do not participate directly in the stock market. 85% of Americans know that FIAs are indexed to stock, bond or commodity index. This relationship means your principal is protected even if the market fluctuates. Adding this safety diversifies your portfolio by balancing risk and growth
  • Myth: FIAs are only for risk-averse or conservative savers. Fact: FIAs are for anyone looking to add balance to their portfolio. One in four Americans understands FIAs provide balance and can moderate risk and reward in your financial plan. In addition to offering balance, you can
  • Myth: FIAs are complicated and complex. Fact: In contrast, almost half of Americans clearly understand one of the FIAs main benefits of providing income for the rest of their lives. FIAs offer a simple story: growth potential without risk of loss due to market downturns and a steady income stream in retirement.
  • Myth: People buy FIAs for higher returns. Fact: People buy FIAs for safety of principal from market downturns and the ability to receive a set income monthly to help cover expenses once you stop working
  • Myth: Your premium is "locked up" and not accessible. Fact: FIAs are appealing to retirees because they transform retirement savings into predictable income. Your nest egg is protected from market downtowns and many have riders or provisions to provide some liquidity when you need it most.
  • Myth: Americans know exactly what products will work best for them to save for retirement. Fact: Unfortunately 22% of Americans are not familiar with the most routinely used retirement products. Getting to know your choices is a first step to building the best retirement savings plans
  • Myth: FIAs are invested in the stock market. Fact: FIAs do not directly participate in the stock market - instead, annual interest based in part on the performance of a stock, bond or commodity index is calculated for returns.
  • Myth: A steady paycheck won
  • Myth: Americans know what financial products give guaranteed income. Fact: Almost one in three Americans don
  • Myth: FIAs are the only product to diversity a transitional portfolio. Fact: FIAs are key to providing balance, protecting your next egg from market downturns and providing a sustained, long-term income stream once you stop working. They are not for everyone but they are certainly worth researching to see if they would be beneficial to your portfolio.
  • Myth: You need a large principal to start a FIA contract. Fact: Once you decide a FIA is right for you, many contracts can be started with as little as $5,000. The key is to meet the minimum requirement and include as much nest egg as makes sense to achieve your financial goals.
  • Myth: Fixed and variable annuities are the same thing. Fact: No. The main differences are in rate of return and level of risk. Besides the potential to earn annual interest based in part on the performance of a stock, bond or commodity index, a FIA has a guaranteed minimum rate of return that never varies regardless of market swings (variable rate of return is constantly in flux and result in significant gains or losses) and the issues insurance company assumes the risk with a FIA (whereas with a variable the consumer assumes the risk).
  • Myth: Fias are tax-free. Fact: Taxes paid on interest credited are deferred which does not always translate into paying fewer taxes. Ask your tax advisor about tax impact when researching FIAs.
  • Myth: Interest rates will stay steady. Fact: Recently, the Federal Reserve System shared that short-term interest rates may be increasing. If you are worried about what happens to bonds when rates rise, you may want to consider FIAs.
  • Myth: FIA policyholders assume risk. Fact: With FIAs, your principal can never decline in value due to index volatility and the insurance company assumes the risk.
  • Myth: Withdrawing monthly from retirement accounts is the same as a FIA. Fact: FIAs offer the benefit of a steady lifetime income with minimum guaranteed interest credits. It is one of the only retirement products that can help ensure you will not run out of money and will have a steady income for the length of your entire retirement. You can ensure you do not outlive your money with a FIA which is different than drawing down another product.
  • Myth: There are no tax benefits to FIAs. Fact: FIAs can offer tax-deferred growth meaning taxes are not owed until a withdrawal is made.
  • myth: FIAs are a risky way to save for retirement. Fact: FIAs protect your principal from the uncertainty of market volatility. Earnings never fall below zero, even if the index goes down.
  • FIAs are a great product to use when planning for retirement, and as a result, younger generations are considering products, like FIAS, as part of their overall portfolio due to its offerings of growth and balance.
  • Myth: Because FIAs offer little or no growth, it does not benefit my portfolio or investment strategy. Fact: It
  • Myth: I already have a well-rounded portfolio that promises high returns and won
  • Myth: I will miss out if the stock market does really well, like it is now. Fact: that
  • Myth: returns of my stocks are comparable to the returns of a FIA. Fact: FIAs are the steady portion of your portfolio. Your policy is indexed to the market without being invested directly in the market which provides range of growth and loss, ensuring your principal can never decrease due to market downturns. For comparison, FIA returns are comparable to the yield on intermediate bonds, but with no risk of losing principal to market loss
  • Myth: Any retirement account can generate guaranteed lifetime income. Fact: Only annuities can guarantee a steady income stream for your whole retirement. One if five Americans incorrectly believes a 401(k) allows you to receive guaranteed payments throughout your retirement, regardless of how the stock market performs.
  • Myth: FIAs are an investment product. Fact: No FIAs are NOT an investment product and do not participate directly in the stock market. 85% of Americans know that FIAs are indexed to stock, bond or commodity index. This relationship means your principal is protected even if the market fluctuates. Adding this safety diversifies your portfolio by balancing risk and growth
  • Myth: FIAs are only for risk-averse or conservative savers. Fact: FIAs are for anyone looking to add balance to their portfolio. One in four Americans understands FIAs provide balance and can moderate risk and reward in your financial plan. In addition to offering balance, you can
  • Myth: FIAs are complicated and complex. Fact: In contrast, almost half of Americans clearly understand one of the FIAs main benefits of providing income for the rest of their lives. FIAs offer a simple story: growth potential without risk of loss due to market downturns and a steady income stream in retirement.
  • Myth: People buy FIAs for higher returns. Fact: People buy FIAs for safety of principal from market downturns and the ability to receive a set income monthly to help cover expenses once you stop working
  • Myth: Your premium is "locked up" and not accessible. Fact: FIAs are appealing to retirees because they transform retirement savings into predictable income. Your nest egg is protected from market downtowns and many have riders or provisions to provide some liquidity when you need it most.
  • Myth: Americans know exactly what products will work best for them to save for retirement. Fact: Unfortunately 22% of Americans are not familiar with the most routinely used retirement products. Getting to know your choices is a first step to building the best retirement savings plans
  • Myth: FIAs are invested in the stock market. Fact: FIAs do not directly participate in the stock market - instead, annual interest based in part on the performance of a stock, bond or commodity index is calculated for returns.
  • Myth: A steady paycheck won
  • Myth: Americans know what financial products give guaranteed income. Fact: Almost one in three Americans don
  • Myth: FIAs are the only product to diversity a transitional portfolio. Fact: FIAs are key to providing balance, protecting your next egg from market downturns and providing a sustained, long-term income stream once you stop working. They are not for everyone but they are certainly worth researching to see if they would be beneficial to your portfolio.
  • Myth: You need a large principal to start a FIA contract. Fact: Once you decide a FIA is right for you, many contracts can be started with as little as $5,000. The key is to meet the minimum requirement and include as much nest egg as makes sense to achieve your financial goals.
  • Myth: Fixed and variable annuities are the same thing. Fact: No. The main differences are in rate of return and level of risk. Besides the potential to earn annual interest based in part on the performance of a stock, bond or commodity index, a FIA has a guaranteed minimum rate of return that never varies regardless of market swings (variable rate of return is constantly in flux and result in significant gains or losses) and the issues insurance company assumes the risk with a FIA (whereas with a variable the consumer assumes the risk).
  • Myth: Fias are tax-free. Fact: Taxes paid on interest credited are deferred which does not always translate into paying fewer taxes. Ask your tax advisor about tax impact when researching FIAs.
  • Myth: Interest rates will stay steady. Fact: Recently, the Federal Reserve System shared that short-term interest rates may be increasing. If you are worried about what happens to bonds when rates rise, you may want to consider FIAs.
  • Myth: FIA policyholders assume risk. Fact: With FIAs, your principal can never decline in value due to index volatility and the insurance company assumes the risk.
  • Myth: Withdrawing monthly from retirement accounts is the same as a FIA. Fact: FIAs offer the benefit of a steady lifetime income with minimum guaranteed interest credits. It is one of the only retirement products that can help ensure you will not run out of money and will have a steady income for the length of your entire retirement. You can ensure you do not outlive your money with a FIA which is different than drawing down another product.
  • Myth: There are no tax benefits to FIAs. Fact: FIAs can offer tax-deferred growth meaning taxes are not owed until a withdrawal is made.
  • myth: FIAs are a risky way to save for retirement. Fact: FIAs protect your principal from the uncertainty of market volatility. Earnings never fall below zero, even if the index goes down.

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