Rethinking risk tolerance

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Many of us have some level of investment in the market — with many working-age adults choosing 401(k)s and IRAs to help save for the future. But when we experience market volatility, it may lead you to rethink how much risk you’re willing to take with your nest egg, especially if you’re in or nearing retirement.

Thinking differently about risk

It’s one thing to answer hypotheticals about saving and losing money when you’re planning for the future. But watching your 401(k) balance drop in market downturns sheds light on the real‑world implications. If experiencing market volatility has diminished your appetite for risk, now might be the right time to reassess your retirement savings plan.

What might your risk tolerance look like now? Take this quick quiz to help you gain a better understanding of what your risk tolerance and your expectations may be for the retirement products and solutions you choose.


Reducing your exposure to volatile markets and locking in some income guarantees may help you feel more confident about staying on track for the longterm. Two strategies worth considering include:

  1. Allocating more of your savings to fixed‑income options
  2. Putting a portion of your portfolio in annuities

Finding comfort across the spectrum

Annuities are designed to help you achieve your retirement savings goals and provide future income. By helping insulate you from major financial risks like stock market losses or outliving your money, they could be part of a solution that helps you stay in your financial comfort zone. In this chart, you’ll see how different kinds of annuities are mapped along a risk spectrum. The left side of the spectrum is the most conservative. Anyone with the highest tolerance for risk may feel comfortable at the far right.

Line graph maps where 5 annuity types fall on the risk tolerance spectrum, from low return, low risk, to higher return, higher risk.

Diving deeper into annuity options

While all annuities are designed to provide income for retirement, there are different kinds to align with your accumulation goals and how much risk you’re comfortable taking.

  • Immediate Annuity
    Carrying the lowest risk, immediate annuities convert your premium payment to a guaranteed income stream for life, or for a specific period.
  • Fixed Annuity
    Fixed annuities offer a fixed interest rate that’s guaranteed for a certain time period. The guarantee may appeal to you if you’re willing to sacrifice the potential for higher returns if the markets rise.
  • Fixed Indexed Annuity
    In the middle of the spectrum, fixed indexed annuities have become increasingly popular with people who have a moderate appetite for risk. You can earn interest credits based in part on the upward movement of a stock market index while enjoying the protection of a zero percent floor. If the net change in the index over a given crediting period is negative, you would earn zero interest credits for that period, but never less than zero.
  • Registered Index-Linked Annuity
    These products are designed for people with a higher risk tolerance. Registered index-linked annuities offer the potential for index credits tied to index performance while providing a measure of protection from market loss.
  • Variable Annuity
    This type carries the highest level of risk because your money is invested directly in the market. Variable annuities offer the highest growth potential of any of the products on the annuity spectrum, but they also leave you fully exposed to market loss.

Economic repercussions have led many people to rethink their appetite for risk and whether their financial strategy still meets their goals. This may be the time to talk with a financial professional about ways to help keep your retirement savings better protected, especially in the event of future downturns.

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Guarantees provided by annuities are subject to the financial strength of the issuing insurance company. Guaranteed lifetime income is available through annuitization or the purchase of an optional income rider for a charge.

Fixed indexed and registered index-linked annuities are not stock market investments and do not directly participate in any stock or equity investments. Market indices may not include dividends paid on the underlying stocks, and therefore may not reflect the total return of the underlying stocks; neither an index nor any market-indexed annuity is comparable to a direct investment in the equity markets.