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How fixed indexed annuities are uniquely designed for today’s retirement challenges

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Today’s retirees are facing a long list of challenges, from increasing lifespans and health care costs to market volatility and inflation. Workers’ and retirees’ confidence in having enough money to live comfortably throughout retirement dropped significantly in the past year, the most since the 2008 financial crisis. Only 64% of workers and 73% of retirees are confident about their retirement prospects, down from 73% and 77% a year ago, according to the new EBRI Retirement Confidence Survey.

Building a resilient, sustainable retirement income plan is more important than ever, and fixed indexed annuities (FIAs) can help. In addition to a guaranteed retirement “paycheck,” a FIA  provides growth potential along with protection from loss due to market downturns.

Guaranteed retirement income

With a potentially lengthy retirement ahead of them, adding a FIA to a retirement portfolio can provide clients with a guaranteed stream of income to supplement their Social Security benefits, pensions or other income sources. By ensuring all income gaps are filled, they can feel more confident that they have taken the necessary steps to help maintain their standard of living throughout the next chapter.  

Flexible planning to meet future costs

Allowing for unexpected costs is just as important as covering the day-to-day costs of living when planning for a financially secure retirement. On top of mortgage debt and other planned expenses, many retirees may face rising health care costs. The compounding effect of rising health care inflation means that lifetime retirement health care costs for a 65-year-old couple will grow by $85,917 for a total of $673,587. The guaranteed income from a FIA can help cover health care and other unplanned, but essential expenses, decreasing the risk of running out of money in retirement. Plus, having guaranteed income streams in place can help people adjust or reallocate funds as their goals and needs change.

Growth potential, downside protection

As the events of recent years remind us, market conditions can be unpredictable and we never know if a rise or a fall is around the corner. People nearing retirement may want to shift to a strategy that balances growth and principal protection from market loss. FIAs offer the opportunity for returns tied to the performance of a stock market index without direct exposure to the risks of the stock market or individual stocks. They also guarantee protection from loss due to market downturns.

As a long-term financial product, a FIA may offer more accumulation potential than other safe-money strategies and allow people to ride out market volatility with more confidence. Additionally, with the security and predictability a FIA can bring to a retirement portfolio, clients may feel comfortable pursuing other investment opportunities more aggressively.

Navigating the challenges of retirement is no easy task, but with proper preparation and a diverse, resilient income strategy, your clients can achieve the financial future they’ve always envisioned.

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