Many of today’s retirees find themselves in this exact predicament— not comfortable living on the lower returns of conservative investments like CDs, but unwilling to put hard-earned principal at risk in the market. Many people have been drawn to CDs as conservative savings vehicles because of their simplicity and the FDIC Insurance they provide. The returns, however, often leave much to be desired—especially when these returns are being used to supplement retirement income.
On the other end of the spectrum, more aggressive investors may look to the market because of its unlimited upside potential, but participation in stocks, mutual funds, and most variable annuities places vital retirement assets at risk of 100% loss.
A fixed index annuity—or FIA—may provide you the best of both worlds—the absolute safety of a CD combined with the upside potential for market gains. In years in which the market is strong, you reap the benefits (up to a given maximum cap), and in years in which others experience enormous market losses, every penny of your principal, bonus, and previous years earnings are protected.