Benefits of Indexed Annuities
Indexed annuities combine the stability of fixed annuities with the growth potential of equity markets, making them an attractive option for retirement investing. Below are some key benefits:
1. Principal Protection
Your initial investment is protected from market downturns. Unlike stocks or mutual funds, indexed annuities guarantee that you won’t lose your principal, ensuring financial security for your retirement savings.
2. Growth Potential
Indexed annuities offer interest credits linked to a stock market index, like the S&P 500. This means your earnings can potentially exceed those of fixed annuities, allowing for greater long-term growth.
3. Tax-Deferred Growth
The earnings grow tax-deferred until withdrawal, meaning you won’t owe taxes on the gains until you take the money out, helping you grow your investment faster.
4. Flexible Payout Options
Indexed annuities offer various payout options, including lifetime income. This flexibility ensures that you can choose a plan that best suits your financial needs in retirement.
In summary, indexed annuities serve as a balanced investment strategy, providing both security and growth potential, making them a valuable component of a comprehensive retirement plan.