Many people planning for their finances in retirement focus on the need to replace their paycheck. But simply replacing your income isn’t always enough.
Income in retirement can come from a variety of sources, including Social Security, distributions from employer-sponsored retirement plans like 401(k)s, traditional pensions, and annuities.
Fixed annuities have traditionally been a popular choice for retirees because they ensure guaranteed income and other benefits for policyholders and their beneficiaries. However, because they’re based solely on a fixed interest rate, they’re limited in their ability to grow your savings through retirement.
Annuities don’t often get the attention that other investment solutions do, yet they may offer benefits that are worth exploring.
Why does this matter? The cost of living increases over time, and there’s no way to predict how this inflation will affect your lifestyle and savings after you retire. According to the U.S. Bureau of Labor Statistics, $100 in January 2020 has the same buying power as $182.71 in January 2024.1 People living on a fixed income may find the savings they need to last through their lifetimes eroding. One way to help address this inflation risk is to consider annuities that can potentially provide better asset growth, along with some protection of those assets.
Registered index-linked annuities (RILAs) were developed with those protection and growth needs in mind. These annuities offer growth opportunities linked to the performance of select market indexes, and they provide options that can help protect your savings from market downturns.
Here are five key reasons why a RILA can play an important role in your retirement portfolio:
- Opportunity: RILAs can provide opportunities for money to grow based on the performance of available indexes.
- Protection: RILAs provide options to help protect your money against downside risk.
- Flexibility: RILAs may allow access to money if your needs change.
- Control: RILAs may offer features that help tailor your balance of growth and protection.
- Family: With RILAs, your beneficiaries will never receive less than what you put into the contract (if no withdrawals have been taken).
Annuities don’t often get the attention that other investment solutions do, yet they may offer benefits that are worth exploring. Learn more about index-linked annuities and how they can work alongside your other investments to create retirement savings that can last a lifetime.
