We work with insurance companies offering a new breed of no-load annuities and insurance products. Some are specifically engineered to defend against principal risk. For risk-averse investors, these solutions can help keep them confident, and invested when they need to be.
For clients in the last five years of their career, or first five years of retirement, poor market performance can be impossible to make up. Avoiding low or negative returns while taking withdrawals helps protect those assets. Allocating a portion of a portfolio in principal-protected solutions like index-linked annuities, fixed annuities, or fixed indexed annuities can reduce equity exposure, and protect from losses that can shake retirement confidence.
Conventional investing wisdom says to buy low and sell high. Unfortunately, fear and greed inspire many of us to do just the opposite. Keeping to the plan while weathering challenging markets can be impossible for conservative investors. When they are too nervous to lose principal, packaged products like no-load fixed annuities offer the assurance they may need to stay invested, and keep their money working for them to meet retirement goals and manage the risk that they may outlive their money.
The bull market of the last decade has driven account balances up. Not only is this good news for retirement account balances, but these new, higher balances can be protected with a simple, tax-free 1035 exchange into a low-cost annuity.
If your client invested $100,000 in a principal-protected annuity 10 years ago, and the account grew in value to $160,000, her principal protection benefit would only guarantee the amount that was originally invested: $100,000. If she moved that money to a low-cost, no-load fixed indexed annuity with a principal protection benefit, she could increase that death benefit value to $160,000. If the market took a sudden dip, $60,000 more of the asset would be protected.
