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When the economy is unpredictable as it is now, investors look for ways to protect a portion of their assets from market volatility and downturns. One effective strategy to mitigate market risk is to include fixed annuities as a foundational component of your financial portfolio.

Fixed annuities offer unique benefits that provide stable growth prior to retirement and guaranteed income once you are retired, making a fixed annuity for retirement a valuable component to almost any investment strategy. Explore how annuities figure into your financial portfolio by learning the basics of fixed annuities vs variable annuities, the fixed annuity benefits, and how you can get a competitive fixed annuity for retirement. 

Understanding Fixed Annuities

Fixed annuities are insurance products that provide a guaranteed rate of return over a specified period of time that you choose, usually 3, 5 or 7 years. This “accumulation period” allows you to carefully grow a portion of your nest egg prior to retirement. When you compare a fixed annuity vs a variable annuity or fixed-index annuity, you’ll find fixed annuities have unique protections. Option like variable annuities and fixed-indexed annuities are tied to the performance of underlying investments or investment indices, while fixed annuities offer a fixed rate of return that is not affected by market fluctuations. This makes them an attractive option for investors looking to add a stable and predictable source of growth as part of their overall investment portfolio.

Annuities are the only financial product that can guarantee a stream of income in retirement. So, once you are ready for retirement, the real benefit of annuities kicks in, known as the “annuitization period.” You can choose to have this income guaranteed for life, or choose a period of time that you’d like the payments to last (say 10 years). Payments are guaranteed by the financial strength of the insurance company, so make sure you are purchasing an annuity from a carrier that has a financial strength rating of “good” or better from agencies like AM Best.

Fixed Annuity Benefits

What are the fixed annuity benefits for your financial portfolio? Learn how you can earn a stable, steady income, protect your assets, and more with a fixed annuity for retirement:

Guaranteed Income: One of the primary benefits of fixed annuities (and benefits for all annuities) is the guaranteed income stream they provide in retirement. Purchasing a fixed annuity for retirement can be particularly valuable for retirees looking to supplement their income or for investors looking for a reliable foundation of income once retired. 

Protection from Market Volatility: Fixed annuities offer protection from market volatility because the rate of return is fixed and guaranteed by the issuing insurance company. A fixed annuity for retirement can help you avoid the stress and uncertainty that often comes with the ups and downs of the stock market.

Tax Advantages: Fixed annuities offer tax-deferred growth, meaning that you do not have to pay taxes on the earnings until you withdraw money. This can help you maximize growth and potentially reduce your tax burden, since tax rates will likely be lower once you reach retirement.

Flexible Payout Options: As we mentioned above, during the annuitization phase, fixed annuities offer flexible payout options, allowing you to choose between receiving a lump sum payment or a series of periodic payments over time. This can help you tailor your annuity to meet your specific financial needs and goals.

Death Benefit: Fixed annuities often come with a death benefit that guarantees a payout to your beneficiaries when you die.

Incorporate a Fixed Annuity for Retirement Into Your Portfolio

When incorporating fixed annuities into your financial portfolio, it’s important to consider your overall investment strategy and goals. Fixed annuities can complement other investments, such as stocks and bonds, by providing a stable source of income and protection from market volatility. They can also be used to diversify your portfolio and reduce overall risk.

Explore Fixed Annuity Options for Retirement Today

In conclusion, fixed annuities offer a range of benefits that can help investors mitigate market risk and protect their assets. By providing guaranteed income, protection from market volatility, tax advantages, flexible payout options, and a death benefit, fixed annuities can be a valuable addition to almost any financial portfolio. Ohio CU Financial Services offer fixed annuity products  with some of the most competitive, guaranteed rates in the country. And you can purchase your annuity through any of our five convenient locations.