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.