Safety first: Fixed annuities provide conservative income - part I

Fixed annuities have been designed to provide a conservative way to grow one's retirement savings. This has basically been done with a principal guaranteed by the provider's financial strength. Other common features include such items as tax-deferred earnings growth, beneficiary protection and lifetime income options.

"They can be good for nervous clients or those with a lot of equity exposure," says Mark Snyder, ChFC and certified senior advisor in Medford, N.Y. "They can be dull and boring, but can help one get a better night's sleep," he says only half-kiddingly. Snyder, who's been using fixed annuities since he entered the industry in 1971, says they're generally not in favor with advisors who are more "equity oriented," especially in light of today's low-interest rate environment.

"The new income benefits on fixed and fixed-index annuities are very attractive to the consumer," says Eric Thomes, senior vice president of sales for Allianz Life Insurance Company of North America. "We have been talking about longevity risk for quite some time and the concern about outliving one's money. But an equally concerning risk is that of inflation. If you spend 30 years in retirement, the last loaf of bread you purchase could cost more than twice the amount you pay for the first one you bought after retiring. The new income benefits can now help offset this risk while increasing a consumer's income as they move through retirement."