As we move into the 21st century, we observe the rise of the “Retirement Wave.” According to AARP International, many of the baby boomer generation are now transitioning into retirement, with about 10,000 people turning 65 daily. This significant demographic shift is fundamentally changing the landscape of retirement planning, including using fixed-indexed annuities.
Understanding fixed-indexed annuities
A fixed-indexed annuity is an insurance product designed to help individuals accumulate retirement savings, with features that can help limit exposure to market downturns. The growth of the investment account portion of the annuity is linked to the performance of a specific market index, such as the S&P 500, while a separate account pays a fixed interest rate.
What makes fixed-indexed annuities unique is that they offer the potential for interest based on positive market index performance, while protecting the annuity’s principal from losses due to market declines, as long as no withdrawals are made during surrender periods.
Fixed-indexed annuities in retirement planning
In the wake of the retirement wave, using fixed-indexed annuities is becoming increasingly vital to those in retirement. With the uncertainty of market conditions and the increasing life expectancy, retirees face the challenge that their savings will last throughout their retirement years. Here is where fixed-indexed annuities can help:
- Guaranteed income stream— Fixed-indexed annuities can provide a steady and predictable income stream to support living expenses throughout one’s life.
- Protection from market volatility—Unlike investing directly in the stock market, fixed-indexed annuities protect against market downturns. Safeguarding one’s retirement savings.
- Growth potential—Besides protecting against losses, fixed-indexed annuities offer the potential for returns when the market index portion of the annuity performs well.
The rising trend of fixed-indexed annuities
The demand for fixed-indexed annuities is growing with the imminent retirement wave. According to the U.S. Annuity Sales Survey, fixed-indexed annuities reached a record $125.5 billion in sales in 2024, a 31% increase over 2023.
In conclusion
The retirement wave presents challenges and opportunities in the financial landscape, helping to meet the aging population’s needs. Incorporating them into a retirement plan can help provide financial independence. So retirees can enjoy their golden years without worrying about outliving their savings or the market’s volatility.
SWG4558022-0625d This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. Fixed-indexed annuities are insurance products and are not direct investments in the stock market. Interest credited is based on index performance but is subject to limitations such as caps, spreads, or participation rates. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
Contact your Advisor
In addition, Greenwood Community Financial Services specializes in providing strategies and guidance for those seeking a better retirement lifestyle. If you have five million dollars or $50,000 retirement savings, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!
