Fixed Indexed Annuities
Market-linked growth potential with downside protection. Earn more than a savings account without the risk.
You participate in an index (like the S&P 500) up to a defined cap, and you never lose principal to a market drop. Actual caps and participation rates vary by carrier, product, and crediting method.
Middle-of-market range for illustration. Your actual rate depends on your age, health, and the specific product. Your Personalized Plan gives you Tom’s real recommendation with real numbers.
A fixed indexed annuity (FIA) is designed to hedge against market downturns and crashes. Your return is tied to a benchmark index like the S&P 500 — but your principal is protected when markets fall.
There are few financial products that offer both principal protection and the ability to meaningfully beat savings account rates. FIAs are built for risk-averse investors who want market participation without full volatility.
How Fixed Indexed Annuities Work
You participate in some of the market's upside. In downturns, a guaranteed minimum return protects you — your principal stays intact regardless of what the index does.
In a Bull Market
Your return is tied to index performance up to a cap or participation rate. You won't capture 100% of the upside — that's the tradeoff for downside protection — but you still participate in growth.
Example: if the S&P 500 gains 18%, your FIA might credit 10–12% depending on contract terms.
In a Bear Market
Your contract has a guaranteed minimum — typically 0% or slightly above. When markets fall, your principal is protected. You don't lose what you've accumulated.
This "floor and ceiling" design is exactly what the 5–10 years before retirement calls for.
Key Benefits
Principal Protection
Your original investment is protected from market losses. In a down year, your account value does not decrease due to index performance.
Market-Linked Growth
Earn more than a savings account or CD. Growth is indexed to the market without direct exposure to its swings.
Tax-Deferred Growth
Earnings accumulate without annual taxation. You only pay taxes when you take distributions — potentially at a lower rate in retirement.
Flexible Payout Options
Choose lump sum, periodic distributions, or a lifetime income stream. Annuitize when you're ready to convert growth into reliable income.
Carrier-Backed Security
FIAs are backed by the financial strength of the issuing insurance company — not subject to stock market volatility like variable annuities.
Guaranteed Minimum Return
Your contract specifies a floor on returns. Even in the worst market years, you won't earn less than that guaranteed minimum.
Who Should Consider a Fixed Indexed Annuity?
Major market corrections have occurred at the end of generational spending waves throughout history. With Baby Boomer retirements continuing, the question of whether a significant correction is still ahead remains open. I help clients compare FIA options across multiple carriers to find the right balance of growth potential and protection for their situation.
Common questions about Annuities
What’s the difference between a fixed annuity and a fixed indexed annuity?
A fixed annuity (often a MYGA) pays a guaranteed interest rate for a set number of years, like a CD. A fixed indexed annuity ties your growth to a market index such as the S&P 500, with a floor of 0% — you share in gains up to a cap, and you never lose principal in a down year.
Is my principal really safe?
Yes. With fixed and fixed indexed annuities, your principal is not exposed to market losses. The carrier guarantees it. That’s the core reason people move retirement dollars into annuities once they’re within ten years of needing the income.
Can I access my money if I need it?
Most annuities let you withdraw up to 10% of the value per year without surrender charges, and many include waivers for things like nursing-home stays or terminal illness. After the surrender period ends (typically 3–10 years), the whole balance is accessible. Tom picks contracts where liquidity actually matches your plan.
Does Tom sell variable annuities?
No. Tom works only with fixed and fixed indexed annuities — products where your principal is protected. Variable annuities put principal at market risk, which isn’t a fit for the conservative retirement planning most people come to Tom for.
How are annuity income payments taxed?
You pay ordinary income tax on the growth portion as you withdraw it. If the annuity was funded with after-tax money, the original principal comes back tax-free. IRA-funded annuities are fully taxable as withdrawn, just like a regular IRA.
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