Annuity Products
Fixed Indexed Annuities
A fixed indexed annuity annuity for retirement can potentially protect your principal while still providing a reasonable rate of return over time.
What is a Fixed Index Annuity?
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Are FIAs right for your situation?
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Deferred Annuity Taxation
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ANNUITY INVESTMENTS 101
What is a Fixed Index Annity (FIA)?
FIAs are often misunderstood by the general public. A fixed indexed annuity for retirement can enable you to earn an income for life, while the issuing insurance agency company keeps your principal protected.
The Word “fixed” is Important
To simplify, the word “fixed” means that your principle is guaranteed, backed by the claims paying ability of the carrier. However, your interest rate does still have the possibility to rise, based on the performance of an index (hence the word “indexed”).
FIAs Then vs. FIAs Now
Within the last decade, a lot of things have changed in the annuity industry. There are different types of annuities; previously, some could offer protection, and others could offer potential growth. Now, however, you can get both of these benefits with one product.
The Most Important Benefit of FIAs
With a fixed index annuity for retirement, you can keep a portion of your hard-earned money safe. Even when the index you choose drops, your FIA will lose loose value. The issuing insurance company keeps your money in a reserve. This means, even in a market crash, both your principal and earned interest will stay protected.
ANNUITY Products 101
Is an FIA the Option For You?
There is no “one-size-fits-all” option for everyone–your retirement strategy needs to be tailor-made to you. Could an annuity for retirement be the option for you? At Creations Coastal, we can walk you through your options, learn about your situation, and help you find out.
An FIA is Not an Investment
A fixed indexed annuity for retirement offers a degree of protection that many other options do not. An FIA is issued by a life insurance company, and follow an index for the purposes of calculating your interest credit, allowing for a reasonable rate of return over time. However, even if the market drops, your FIA does not lose value.
What is the Best Option For You?
Understanding your financial situation is important when determining if an FIA is a good fit for you. Each person’s situation is different in regard to their total assets, target retirement date, liquidity in cases of emergency, and the annual income they’ll need in retirement.
ANNUITY Products 101
Annuity Taxation
There are some key differences between how taxes impact an FIA compared to other retirement options. Because an FIA is an insurance product, different tax regulations apply. For example, it can allow for tax deferral.
Deferred Taxes
An annuity for retirement is tax-deferred, meaning unless you make a withdrawal, there are no tax forms to file and, therefore, no income that needs to be reported. You only pay taxes when you withdraw money. Many other financial vehicles, in contrast, tax your interest.
FIAs vs. 401(k) and IRAs
One of the main benefits of FIAs when compared to 401(k)s and IRAs are contribution limits, or the lack thereof. FIAs do not have government-defined contribution limits. This means if you have already maxed out for 401(k) and/or IRA, an FIA could be a great option for you. In many cases, you could even “rollover” the money in your 401(k) or IRA into an FIA instead. Tax implications may vary, so be sure to seek guidance from a qualified tax professional.
Robert A. | Client since 2020
“I was ready to look at balancing my portfolio with a more conservative asset. The products available have unique qualities and I appreciate the straightforward, easy to understand approach to financial planning.
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