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Life Health > Annuities > Fixed Annuities

The Case for Fixed Indexed Annuities

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What You Need to Know

  • Clients may have to take some risk to earn good returns.
  • They might want to put part of their savings in products that offer guarantees.
  • FIAs offer guarantees.

A smart retirement portfolio includes a mix of products and investments that work together to create a steady stream of income during your clients’ golden years.

One product that should be part of any financial professional’s toolbox is the fixed indexed annuity (FIA), which can provide guaranteed income during retirement.

Given what we have learned about market instability in light of the global pandemic, as well as wild cards such as inflation and geopolitical unrest, offering your clients access to a guaranteed income stream is a good way to help them defend themselves against market volatility.

The Strategic Need for FIAs

COVID-19 has highlighted the insecurities and concerns Americans feel about their retirement. A survey included in the Indexed Annuity Leadership Council’s (IALC) latest report, Annuities, Retirement, and the Pandemic, found that 30% of U.S. workers who plan to retire at some point have delayed their retirement plans because of the pandemic.

This number rises to 33% among those planning to retire in the next five years. In addition, 45% say that post-pandemic, saving for the future is more of a concern, and 42% are more worried about running out of money in retirement.

Although global economies ebb and flow, research from the Brookings Institution found that millennials “face an economic future with projections of lower rates of return and economic growth than in the past; this means [they] will have a harder time than previous generations accumulating sufficient funds for retirement.”

The data is clear: Americans are stressed about their financial futures.

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They may also be willing to do something about that stress: The IALC found that 86% of Americans who plan to retire say guaranteeing their income in retirement is important, and 77% of Americans aged 18 to 34 say they are more likely to consider FIAs once someone explains to them what FIAs are.

How FIAs Work

No one should be financially caught off-guard when they retire. Although the future is uncertain, FIAs can offer your clients a steady, guaranteed lifetime income stream while protecting the principal from the uncertainty of market volatility. They are a means to portfolio diversification and should be seen as a broader way to save for retirement.

As your client holds an FIA for the entire term of the contract, and throughout their life, the company promises to provide guaranteed lifetime income.

For people working part time in retirement, FIAs can offer one more way to generate income in retirement.

Although FIAs guarantee lifetime income, inflation has the power to diminish the purchasing power of that income. Purchasers should work with a financial professional like them to meet their target income for retirement and build a balanced portfolio with enough growth potential to account for inflation.

If the last 18 to 24 months have taught us anything, it’s that preparing for the future starts now. Protecting your clients’ retirement income is about ensuring that they can maintain their quality of life. They’ve earned their retirement, so be sure they have a chance to enjoy it.


Jim Poolman is executive director of IALC — the Indexed Annuity Leadership Council. From 2001 through 2007, he was the North Dakota insurance commissioner.