December 8, 2015 – In both the Retirement and Structured Settlements sections of The Finn Blog, we strive to keep our clients updated on current research and statistics relevant to their retirement and post-injury settlement decision making.

Because we believe people like to make their own decisions about their own lives based on facts, not conjecture, we’re partial to citing verifiable statistics in our posts while steering them away from those with an axe to grind or who otherwise have their own agenda.

Take fixed-indexed annuities (FIAs) for instance, the pros and cons of which are often hotly debated.

Despite attempts by many in the financial planning community-at-large to discredit them completely as unsuitable retirement options “pushed” by licensed agents, FIAs just seem to keep sustaining their popularity according to a recent article appearing in InvestmentNews.

For the statistically oriented among you, you might appreciate knowing FIAs are up 7 percent YTD according to LIMRA Secure Retirement Institute. Here’s a quote from the article:

“Indexed annuity [sic] reached record-breaking levels. Total sales were $14.3 billion, up 22 percent and 10 percent higher than the previous best quarterly results. This growth was driven by many companies, rather than just the top players as we have seen in the past.”

With 179.3 billion dollars worth of annuities changing hands in nine months so far this year, you’d think someone other than those losing market share would be complaining.

What makes these things so popular?

While the intricacies of FIAs can admittedly seem challenging to wrap your arms around, at the end of the day we find a few irrefutable truths about people and retirement which help explain their continued popularity.

Generally

Study after study assures us people generally like the idea of guaranteed income they can never outlive.

Annuities are the only way to contractually guarantee income for life.

People who own annuities tend to live longer on average.

People who own annuities in retirement are happier and show fewer symptoms of depression.

Running out of money, which can’t happen with life annuities, is one of the greatest fears expressed by baby boomers.

Add to all that this truth:

When we compare FIA payout projections to their traditional fixed annuity cousins, we often find the minimum (worst case scenario) guaranteed lifetime benefits from the FIAs are not much different than guaranteed benefits (best-and-only case scenario) of the fixed, non-indexed annuities.

Meaning . . .

Specifically

For about the same amount of money, a FIA offers the potential (emphasis added) for higher payouts than a traditional fixed annuity.

So if you’re looking into the future and want to guarantee your hard earned money will still be there for as long as you will, look into allocating some of your retirement dollars toward the purchase of a life annuity.

If you want the same thing but want to benefit from market increases when they occur, consider a fixed-indexed annuity with a guaranteed lifetime withdrawal benefit rider.

Either way, you’ll be assured that you’ll have cash flow to meet ongoing expenses and won’t have to worry about running out of money.

Let us know if you’d like a Retirement Income Certified Professional® to help you with your retirement analysis.

Image courtesy of bplanet at FreeDigitalPhotos.net.