Retirement can be as exciting as traveling the world or as relaxing as spending a day on the beach. Whatever your vision is, it takes careful planning to get there. An indexing strategy may help protect you from the downfalls of a volatile market, helping you overcome other challenges such as rising health care expenses and longer life expectancies.
As you save for retirement, growth that is linked to the market is key to helping assets keep up with inflation for the long haul. An indexing strategy attempts to mimic the performance of a market index, such as the S&P 500, while minimizing exposure to volatility by providing protection from downfalls in the market.
An indexing strategy is the foundation for the calculation and crediting of interest on an indexed annuity. An indexed annuity provides the potential for cash accumulation with an interest rate that’s linked, in part, to the performance of one or more equity indexes, without exposure to loss from potential downfalls in the market. Your annuity can grow based on how an index performs, but you’re not actually buying any stocks or shares of an index. This means the money in your annuity is not at risk due to market losses. Your annuity cannot lose money due to volatility and the interest credited will never be less than zero. For example, if an insurance company issues an indexed annuity with a 0.00% floor and the index falls by 3%, the annuity owner’s premium is protected by the floor — that is,