Fixed Index Annuities are long-term insurance products sold by licensed insurance professionals. Also referred to as “FIAs”, they are meant to provide you with income for retirement purposes and can help cover basic monthly expenses like mortgage, rent, utilities, groceries, or transportation. They are basically a contract between you and an insurance company.
After a fixed index annuity is purchased, it begins to earn interest and grow, tax-deferred. They are a good choice for those who want their funds to be protected against market loss.
You can also allocate some or all of your money to a fixed-rate strategy which earns a guaranteed interest rate. When you feel the time is right to start receiving income payments, you can annuitize your contract for a specific period of time, or for the life of the annuitant. Fixed-indexed annuities are designed for long-term financial planning purposes. However, if you need to withdraw money, you can. Keep in mind, however, that depending on how much you take out and when you may incur penalties or fees.
It’s helpful to research the financial tools available in order to efficiently plan for retirement. Some annuity contracts can be purchased with as little as a $5,000 minimum. The minimum purchase amount varies by product and insurance company. When it comes to planning your retirement goals, it’s best to reach out to a licensed professional who can guide you through the available options.
Sources: Prudential.com, FIAbenefits, Allianzlife, American-equity, protectedincome.org