We train our clients to learn strategies which provides guaranteed income utilizing Fixed Indexed Annuities (FIAs).  The annuities are guaranteed not to lose principal in the stock market.  This occurs because one does not have their premium invested in equities.  Their premiums are invested in bonds.  The bonds create interest.  One has the choice to take the interest from the bonds as a credit or invest the interest from the bonds into an index.  This is done by the insurance company and it is called buying calls in an index.  When the index increases, it will credit ones account up to the cap.

There are numerous indexes to choose from.  The indexes have caps which limit how much you can earn and a floor of zero.  Some (FIAs) have multipliers, this means whatever yield that create, the yield will be multiplied by the multiplier.  These multipliers go to 175%.

(FIAs) that have an accumulation period and then an income period for life.  This income period can start next month, or any year one wishes.  The longer the deferral period, the larger the income. Income can be joint for both spouses for life. 

There are (FIAs) that have level income and those that have increasing income.  One can multiply their premium many times if they select increasing and have many years to live.

There are (FIAs) that accumulate.  They are designed to increase over the years.  After ten years or any time after that, one can withdraw the total amount and walk.  This seldom happens because one will want the gains to continue.

If one believes the stock market will tank in the future, there is a (FIA) which offers a 10% bonus on the income account upon starting the annuity.  Also, each year it is in deferral, there is an addition 10% credit in the income account. This happens for 10 years, thus $100,000 can growth to $210,000 in ten years. Then this amount is used in the formula for producing income. 

The annuities can be IRAs or non-qualified money (after tax money).  Some of these annuities are user friendly to converting IRAs and 401(k)s to Roth IRAs.  The Roth IRAs will create in 5 years tax free income.  Hence this is one strategy to minimizing taxes.

(FIAs) have accumulation bonuses and income bonuses up to 30%.  One is allowed to take penalty free 10% withdrawals annually.

The conversion can be implemented by spreading the taxes payments over the five years.  This requires one to have after tax money in a savings account or disposable income.  Another strategy is to take 10% distributions of money from the annuity to pay the taxes for x years.  This works great, however there are only a few annuities which allow this strategy.

It is critical to develop documented retirement strategies.  This document provides for guaranteed income to meet one’s essential needs, i.e., food, housing, medical and transportation.  The fixed indexed annuities will be utilized to provide guaranteed income.  There are options that will allow the FIA to increase its income annually when the stock market increases to keep up with inflation.

If this document contains all Roth IRAs, it has a high probability of being under the IRS’s Provincial Income thresholds, therefore one does not have to pay tax on one’s Social Security benefits. 

By creating a retirement document, it answers the questions of which strategy should be utilized, how much dollars to be repositioned and the precise timing.

The last step would be to convert any excess assets to Roth IRAs (FIAs) which are the accumulation type.  The key in the retirement plan is to transfer all the excess income in the Taxed Bucket and Tax Deferred Bucket into the Tax-Free Bucket.

To view the video “Basics on Fixed Indexed Annuities,” go to the video section “What are Fixed Indexed Annuities.”

To view the video “Paycheck For Life,” go to the video section “Paycheck For Life.”

Disclosure:

Annuities:

 A level of protection may be provided by benefits that are either built into the 

contract or through optional riders at an additional cost.

With the purchase of any additional-cost riders, the contract’s value will be 

reduced by the cost of the rider. This may result in a loss of principal and interest in 

any year in which the contract does not earn interest or earns interest in an amount 

less than the rider charge.

Variable investment options are subject to investment risk, including possible loss of 

principal. This means investment returns and principal value will fluctuate with 

market conditions so that units, upon distribution, may be worth more or less than 

the original cost.

Although an external index may affect the interest credited, you cannot buy, directly 

participate in, or receive dividend payments from any of them through the insurance 

product.

Withdrawals will reduce the contract value and the value of any protection benefits. 

Withdrawals taken within the contract withdrawal charge schedule will be subject to a 

withdrawal charge. All withdrawals are subject to ordinary income tax and, if taken prior 

to age 59½, may be subject to a 10% federal additional tax.

Purchasing an annuity within a retirement plan that provides tax deferral under sections 

of the Internal Revenue Code results in no additional tax benefit. An annuity should be 

used to fund a qualified plan based upon the annuity’s features other than tax deferral. 

All annuity features, risks, limitations, and costs should be considered prior to 

purchasing an annuity within a tax-qualified retirement plan.

Guarantees are backed by the financial strength and claims-paying ability of the issuing 

company. Variable annuity guarantees do not apply to the performance of the variable 

subaccounts, which will fluctuate with market conditions.

• Not FDIC insured

• May lose value

• No bank or credit union guarantee

• Not a deposit 

• Not insured by any federal government agency or NCUA/NCUSIF

Go to the Additional Resources section and click on it’s FIND OUT MORE button to find out more on the discussion of the following:

Risk on all types of investments and a chart depicting the FIA and stock market performed comparable from 2006-2018.

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