How to survive and thrive from COVID-19 market losses
As retirees, this can become very overwhelming when we wonder how to protect our hard-earned retirement funds.
Do the following fears keep you awake at night?
1. Retirees are living longer with advances in medicine and technology; it’s not uncommon to live well into your nineties.
2. Fear of running out of money as we live longer.
3. Taxes are also a big problem as our country is now running about $28 trillion in deficit and who is going to foot that bill, probably the middle class.
4. Long-term care is another concern, with more than 70% of retirees needing some form of long-term care in their golden years.
5. Retirees are spending at least as much after retirement as they are before retirement and health care expenses are skyrocketing.
Is there any hope? Is there any alternative to protect our director? Guarantee income for life? Well, the good news… there is! It’s called a Fixed Index Annuity. Note that I didn’t say a variable annuity because they get a bad rap because they’re still on the market, taking that horrible roller coaster.
How Indexed Annuities Work
Indexed annuities offer a guaranteed interest rate plus potentially additional interest credits, based on a percentage of the earnings of a specific stock index, such as the S&P 500® or other financial market indices. Indexed annuities give you the ability to credit additional interest without the risk of market downturns. One of the most attractive benefits of indexed annuities is that there is no principal loss due to stock market crashes.
No matter how much the stock market may fall, the insurance company’s customers are not affected, because their annuity premiums do not directly participate in the stock market. This downside loss protection is a hallmark of indexed annuities.
of variable annuities. With variable annuities, your funds buy investments, called “subaccounts.” For this reason, a variable annuity may have the opportunity to increase in value when the market rises. However, if the market goes down, your portfolio goes down too.
Indexed annuities have a zero floor so your invested money can never fall below zero if there are zero fees on the policy. In other words, you can never lose your principal. Indexed annuities also allow you to share some of the advantages of the market, which in simple terms we call the ceiling. For example, depending on the insurance company, it may be a percentage of say the S&P 500 or some other index in the market. However, once again, you do not risk a market loss, only the advantage detailed in the contract, and you never return any profit.
In these unprecedented times with the health care crisis and market volatility, many retirees are scared to death of a repeat of the tech bubble collapse of the early 2000s or the housing crisis of 2008. I would propose at least consider speaking with a financial professional who understands fixed indexed annuities, who can show you guaranteed income, moderate gains, and ZERO principal losses.
When properly designed, a fixed index annuity can give you and your loved one real peace of mind.