FAQ
Retirement Planning FAQ
Common questions about annuities, safe money strategies, and retirement income.
What is a fixed indexed annuity?
A fixed indexed annuity is an insurance contract that offers principal protection along with growth potential linked to the performance of a market index, like the S&P 500. Your principal isn't directly invested in the market, so it isn't at risk of loss due to index downturns.
How is a fixed indexed annuity different from a variable annuity?
A variable annuity invests your premium directly in market-based subaccounts, so your principal can go up or down with the market. A fixed indexed annuity credits interest based on index performance but keeps your principal protected from market losses.
Is my money safe with a fixed indexed annuity?
Fixed indexed annuities are insurance products, not securities. Your principal is protected from market downturns, and guarantees are backed by the financial strength of the issuing insurance company.
What is a surrender period?
A surrender period is a set number of years during which withdrawing more than a certain amount from your annuity may trigger a surrender charge. Most contracts allow penalty-free withdrawals up to a set percentage each year even during this period.
Can I lose money in a fixed indexed annuity?
Your principal is protected from market-index losses — in a year the index goes down, your credited interest is typically $0, not negative. Fees or early withdrawals beyond the penalty-free amount during the surrender period are the main ways a contract's value could be reduced.
What does "safe money planning" mean?
Safe money planning means structuring a portion of your retirement savings into vehicles designed to protect principal from market risk, rather than exposing that money to potential losses, while still allowing for growth potential.
How does retirement income planning work?
Retirement income planning involves mapping out reliable income sources — like Social Security, pensions, and annuities — against your expected expenses, so you have predictable income throughout retirement rather than relying solely on market-dependent withdrawals.
When should I start planning for retirement income?
Most people benefit from starting retirement income planning 5 to 10 years before their target retirement date, giving enough time to structure guaranteed income sources and adjust strategy as retirement approaches.
What is the difference between a pension and an annuity?
A pension is an employer-funded retirement benefit, typically based on years of service and salary. An annuity is a contract you purchase yourself from an insurance company that can convert a lump sum into guaranteed income, similar to how a pension pays out.
Can I use an annuity alongside Social Security?
Yes. Many people use an annuity to supplement Social Security, creating an additional guaranteed income stream to help cover expenses Social Security alone may not fully address.
How do I know if an annuity is right for me?
It depends on your full financial picture — your other assets, income needs, risk tolerance, and time horizon. A licensed agent can review your situation and help you decide whether an annuity fits alongside your other retirement savings.
What happens to my annuity when I pass away?
Most annuities allow you to name a beneficiary who receives the remaining contract value or a death benefit, depending on the contract terms. This can help pass along value to loved ones rather than the funds being lost.