Grow retirement savings with no market risk

It used to be that stocks and bonds alone were all you needed. Not anymore!
Today you have more options.
Fixed-Indexed Annuities are tied to major stock market indexes and not to the performance of individual stocks or mutual funds, providing complete safety of principal and interest rate guarantees. They are a fixed financial product; they are not a securities product.

Fixed Indexed Annuities were designed to offer the consumer "Zero Market Risk, and Moderate Returns". Fixed-Indexed Annuities appear in the middle of our "Spectrum of Risk and Return". They provide a rate of return expected to be greater than that of most fixed products, but less then some market sensitive products. The market risk associated with fixed-indexed annuities is still zero. Only fixed-indexed annuities can do this.
Fixed-Indexed Annuities Guarantee:

  • You cannot lose your principal (the money you invest).
  • Once you have a gain in your account it is locked-in and yours to keep.
  • You will not pay taxes on any gain, until you make a withdrawal.
  • A lifetime minimum interest rate guarantee.
  • A choice of guaranteed income options you cannot outlive.

I want to expand on point #5. If you decide you need a monthly income check, you can annuitize your annuity and receive a monthly income you cannot outlive, or you can simply take periodic withdrawals, if you prefer.

The majority of fixed Indexed annuities in the market place utilize the S&P 500. The S&P 500 is recognized worldwide as the premier benchmark for U.S. stock market performance. The S&P 500 does not simply contain the largest stocks; rather, it covers leading companies from leading industries. The S&P 500 represents a broad cross-section of the U.S. equity market, including common stocks traded on the New York Stock Exchange, American Stock Exchange and the NASDAQ Stock market.

Fixed indexed annuities provide upside potential with protection from market losses.
What if we had a $100,000 andÖ

  • when the S & P 500 Index grows, your account value grows,
  • when the S & P 500 Index declines, your account does not lose value,
  • when the S & P 500 Index has a negative return, your Index credit can never be less than zero.

Does such a savings vehicle actually exist? Yes, the fixed indexed annuity will perform in the manner described above.
Fixed-Indexed Annuities are an excellent savings choice for people who are planning to retire, or are already retired. Again, not only is there "Zero-risk" associated with Fixed-Indexed Annuities, but when the market goes up and you have a gain in account value, it is locked-in and yours to keep. It cannot be taken away. Please read the example below.

Example of How Fixed-Indexed Annuities Work.

Letís go through an example that will illustrate how a fixed -indexed annuity works. Assume we are utilizing an annual reset, fixed-indexed annuity with a 100% participation rate, and a 10% cap. Pretend you put $100,000 into a fixed- indexed annuity, and you were fortunate enough to have a 10% gain in year #1 (your account value is now $110,000), and another 10% gain in year #2 (your account value would now be $121,000), with the S&P 500 now having grown to an "index value of 1500" by the end of year #2. Now, fast forward to the end of year #3, and pretend the "S&P 500 index value" has fallen to an "index value of 1000". In this scenario, you did not make any money, but more importantly, you did not lose any money either.
If you had decided to leave your money in a mutual fund or a variable annuity that mirrored the S&P 500, you would have experienced a real loss in year #3 of 33% in your account value. If in fact you had $121,000 in a mutual fund or a variable annuity at the end of year #2, you would have only $80,600 less fees and expense at the end of year#3.

If, as we have previously discussed you lost 33% in a mutual fund in a particular year, you would need a 50% increase the following year to get back up to where you were the year before. If your money had been safely placed in a Fixed-Indexed Annuity (as in our example), you would still have $121,000 in your account at the end of year #3, because once you have a gain it is locked-in and yours to keep.

Here is where it really gets interesting. In our example, on day #1 of year #4, the S&P 500 is at an index value of 1000, and your account value is still worth $121,000. You now have the opportunity to ride the market, the S&P 500 letís say, all the way back up to an index value of 1500 and profit every step of the way, locking in your gains annually.
If the S&P 500 were to climb to just 1100 by the end of year #4, thatís another 10% gain on top of the $121,000 you had already locked in, giving you a new account balance of $133,100 at the end of year# 4.
If the S&P 500 were to continue itís recovery and climb to an index value of just 1210 by the end of year #5, thatís yet another 10% gain on top of the $133,100 you had already locked in, giving you a new account balance of $146,300 at the end of year# 5. Look at where you started on the S&P 500, an index value of 1215, you are not even back to where you started, and your account value has grown to $146,300. This is a great product for retirement assets. The stock market goes up and down, but you only participate when the market goes up.

American Annuity Advocates urges consumers to remember that fixed-indexed annuities are savings instruments.
Fixed-indexed annuities were designed to be competitive with other savings vehicles that also protect principal and credited interest. Fixed Indexed annuities shield consumers from market risk, and provide for the upside potential of only positive market increases. There will be times when index annuities outperform mutual funds and variable annuities, but remember that is not what they were designed to do. Stocks and mutual funds provide consumers the opportunity for upside potential beyond savings products, but stocks, mutual funds and variable annuities also provide consumers with the opportunity to suffer market losses. The bottom line is retirees simply may not have the time to stomach the ups and downs of the stock market. With fixed-indexed annuities, retirement minded individuals never run the risk of losing their money. Retirement savings placed in fixed-indexed annuities remain protected.

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