The Best of Both Worlds, How to Protect Your Retirement Income

In today’s stock market, daily we are experiencing wild daily fluctuations in the security valuations. The question I often ask people when helping to plan their retirement income is, “What percentage of your retirement income would you like to come and fixed and stable resources?” If you were a sane individual, you would say that you would like 100% of your income to come from those areas.

Nowadays, there are very few opportunities out there to plan income from fixed and stable resources. One of those resources that I love to take advantage of personally are Equity Indexed Annuities. Equity Indexed Annuities are a type of tax-deferred annuity whose credited interest is linked to an equity index, typically the S&P 500 but which also guarantees a minimum interest rate (typically about 3% as of 2007) and against a loss of all or most principal. An equity index annuity is a contract with an insurance or annuity company. The returns are typically conservative and the contracts are mostly suitable for those who are retired or nearing retirement. The objective of purchasing an equity index annuity is most often to realize greater gains than those provided by fixed annuities, while still protecting principal.

In today and age, particularly for those in Indiana who are retiring, or nearing the age where they need to begin taking income from their savings, they cannot afford to experience a serious market downturn. In those instances an equity indexed annuity would be an excellent choice for them. While an equity indexed annuity is not for every investor. Those who are in the situation where their retirement funds are running the risk of running out, the equity indexed annuity is a great product for them... But then again, that is just my two cents… For what its worth.

Darrin M. Marion, PhD.
www.pergamoninvestments.com