baby boomer to the fresh-out-ofcollege millennial should think about retirement. More important, they should plan for retirement. Recent polls have shown that outliving retirement savings is one of the prime concerns for retirees. The concernis a justifiable one. Thirty-six percent of Americans have no retirement savings and many have not saved enough to make them feel comfortable as they approach and begin retirement. As people continueto live longer, there is worry that they will outlive their savings—if they have sufficient savings to begin with. In the post-Great Recession cli- mate, an emphasis on savings, retirement security and financial preparedness has never been as salient to the public—and so urgent. However, many people do not know how to begin to prepare a solid financial plan or what tools they should use to build an effective andreliable financial portfolio. With pensions and other employer-provided retirement plans disappearing from the retirement landscape, it is placing more responsibility than ever on the average American to provide a steady income stream for them- selves during their golden years. The thought of restful days in a sunny climate could be usurped by the thought of keeping up with bills and affording the upkeep of a home. The landscape may sound bleak, but people who take a proactive approach can find that planning ahead helps alleviate concerns about their retirement years. In fact, several financial tools exist to help people maintain a comfortable lifestyle in retirement. One of those tools is a fixed indexed annuity. A fixed indexed annuity, or FIA, is a key part of a balanced financial plan that offers the opportunity for growth through a steady, guaranteed lifetime income stream, all while protecting the principal from the uncertainty of market volatility, according to the Indexed Annuity Leadership Council. How does financial preparedness affect you? Adults who are confident in their retirement savings are morelikely to say they are in great health and morelikely to participate in moderate or vigorous physical activity four or more times per week. Confidencerelieves stress. Adults who said they were confidentin their retirement savings are also less likely to say their life is stressful. nm, i] ~ = Reduce yourretirementplanning stress with portfolio balanceincluding a guaranteedlifetime income stream and nest egg protection from a fixed indexed annuity. Visit FiAinsights.org for moreinfo on the health-wealth connection. After the lows the stock market experienced in recent years, Americans have been wearyoflosing their money in investments. With an FIA,a retiree cannot lose his or her principal balance and is guaranteed a minimum return, ensuring the buyer neverloses his or her investment. Laura Adams, an insurance analyst, personal finance expert and author of “Smart Moves to Grow Rich,” says, “Fixed indexed annuities are one of the most overlooked ways to make sure you never run out of money in retirement. They give you a set rate of return and income that’s guaranteed for your entire life, no matter what happens in the financial markets. This security can make the difference between a retirementfilled with constantfinancial worries or one with happiness and peace of mind.” FIAs are unique in that they offer the possibility of competitive interest crediting, if the markets are doing well. “Having an FIAis a smart way to balance your financial portfolio. It allows you to lock in your principal so it never declines in value due to market downturns, while also enjoying potential upside through marketlinked growth. That allows you to enjoy moderate rewards without taking on too muchfinancialrisk,” Adamssays. FIAsalso provide further bene- INDEXED ANNUITY % s an fits through optional riders. Riders provide additional income in certain situations, such as nursing home stays or terminal illnesses. Health care riders are good options for individuals who are concerned with paying for possible health costs as they age. Other riders include income, which provides guaranteed incomeforlife, and death benefit, which ensures that if the annuity purchaserdies, his or her beneficiary can receive an enhanced death benefit. Another benefit to fixed indexed annuities is tax-deferred growth, allowing money to compound year after year. Taxes are not due until moneyis withdrawn from the annuity. Also, if individuals choose to receive an annuitized income stream on a nonqualified annuity, the payment is a combination of earnings and principal. Since the principal was put in on an after-tax basis, that portion is never taxable. Individuals will only owe tax on the earnings portion of their annuitization payments. The benefits to an FIA are appealing in light of the instabil- ity of the market in recent years. When purchasing an FIA, make sure to do research and ask questions. Like any other major purchase, it’s important to make sure you are comfortable with the contract and that the productis right for your situation.
