Fixed Indexed Annuities
Protect Your Savings. Grow with Confidence. Plan for Retirement.
A Fixed Indexed Annuity (FIA) is a retirement strategy designed to help protect your principal while providing opportunities for tax-deferred growth based on the performance of a market index, without directly investing in the stock market.
FIAs offer protection from direct market losses, potential interest earnings, and options for guaranteed lifetime income. They can help provide greater financial confidence and stability throughout retirement.
How Does A Fixed Indexed Annuity Work?
A Fixed Indexed Annuity (FIA) is a contract issued by an insurance company. It offers the opportunity to earn interest based in part on the performance of a market index, such as the S&P 500, without directly investing your money in the stock market.
When the selected index increases, the annuity may earn interest according to the contract's crediting method. Caps, participation rates, and spreads can limit the interest credited. When the index decreases, the contract typically protects against negative index-linked interest, although withdrawals, fees, and certain contract adjustments can reduce its value.
Potential Benefits of Fixed Indexed Annuities
Protection from market declines: Contract provisions generally protect principal from negative index performance, subject to applicable terms and charges.
Interest-earning potential: Opportunities to earn index-linked interest without directly participating in the stock market.
Tax-deferred growth: Earnings generally accumulate without current income taxation until withdrawn.
Retirement income options: Some contracts offer guaranteed lifetime income through annuitization or optional income riders.
Beneficiary provisions: Depending on the contract, remaining value may be payable to designated beneficiaries.
How Interest is Credited
When the selected market index increases, the annuity may earn interest according to the contract's crediting method. Caps, participation rates, and spreads can limit the interest credited. When the index decreases, the contract typically protects against negative index-linked interest, although withdrawals, fees, and certain contract adjustments can reduce its value.
Important Considerations
Fixed Indexed Annuities are long-term insurance products and are not appropriate for everyone.
Interest earnings may be limited by caps, participation rates, spreads, and other contract provisions. Early withdrawals may result in surrender charges, market value adjustments, and applicable taxes. Withdrawals before age 59½ may also trigger a 10% federal additional tax unless an exception applies.
Optional benefits may carry additional costs, and guarantees depend on the claims-paying ability of the issuing insurance company.
Is a Fixed Indexed Annuity Right for You?
The answer depends on your retirement goals, financial circumstances, income needs, access to other savings, and comfort with financial risk.
Understanding how a fixed indexed annuity works can help you evaluate whether it may have a place in your broader retirement strategy.
Prepare for Tomorrow Today
Your retirement deserves thoughtful planning. At S&K Services, we believe informed decisions begin with education and understanding your options.
Educational information only. This content is not individualized investment, legal, or tax advice. Annuity features, limitations, and guarantees vary by contract. Review all applicable disclosures and consult qualified professionals before making financial decisions.