Enhancing Income Stability Using FIAs

The Story

James and Linda, recently retired, are interested in securing a guaranteed income stream without subjecting their assets to market fluctuations. They also want to protect their remaining investments from sequence-of-returns risk and reduce their reliance on withdrawals from equities, which could force them to sell assets at a loss during a downturn.

The Problem

James and Linda are relying on a mix of Social Security benefits, pension income and investment withdrawals to fund their lifestyle. However, they are concerned about market downturns reducing their nest egg. They have seen friends lose significant savings in previous market corrections and don’t want to take on unnecessary risk with their portfolio.

Client Profile

• James, age 67 and Linda, age 65
• Recently retired
• Concerned about protecting retirement savings from market volatility while ensuring stable, predictable income

How it Works

After a financial review, their advisor recommended incorporating a fixed indexed annuity (FIA) into their retirement plan. By repositioning $300,000 of their retirement savings into an FIA with a guaranteed income rider, James and Linda would take advantage of tax-deferred growth, effectively optimizing their overall retirement strategy. In addition, indexed interest credits offer allow them to participate in market upswings without direct exposure.

The Result

• Guaranteed Monthly Income: James and Linda will receive $1,750 per month for life, supplementing their Social Security and pension benefits.
• No Market Downturn Risk: Unlike withdrawals from equities, their annuity income is unaffected by stock market fluctuations.
• More Flexibility: With their FIA covering essential expenses, they can leave their investment portfolio untouched during market dips, allowing it to recover when conditions improve.

For advisors working with clients navigating retirement, stability and income security are paramount. By incorporating an FIA, James and Linda not only safeguarded their assets but also established a predictable and sustainable income strategy that allows them to enjoy their retirement with confidence. As interest rates fluctuate and market conditions shift, leveraging FIAs as part of a holistic income plan can help retirees mitigate risk, optimize income, and maintain their desired lifestyle.

Would you like to explore how FIAs could fit into your clients’ retirement strategies? Connect with us your Ash Retirement Income Consultant to learn more about the benefits of guaranteed income solutions.