by Kyle S. Plotkin
Investment Advisor Representative
[email protected]
Despite pressure from some corners of Washington, Federal Reserve Chairman Jerome Powell announced this week that interest rates will remain unchanged—at least until September. With rates holding steady, the advisory team here at Franklin Retirement Solutions anticipates that insurance companies will do the same when it comes to the rates and caps offered on Fixed Indexed Annuities (FIAs). And in today’s market, FIAs continue to offer some of the most attractive interest rates available on any principal-protected investment vehicle.
FIAs are particularly appealing for those who want to benefit from some of the stock market’s upside without taking on the full brunt of potential losses. These annuities credit interest annually based on the performance of a market index, most commonly the S&P 500, up to a predetermined cap. For instance, one A- rated insurance company is currently offering an annual point-to-point cap as high as 10%. That means if the market gains exceed 10% in a year, you’ll still lock in that 10% return, with no downside exposure due to market volatility.
Some FIA contracts also include upfront bonuses of up to 15%, instantly boosting your annuity’s value on day one. This feature can be especially valuable for investors approaching retirement or looking to strengthen their long-term income picture.
As the stock market hovers near record highs, now is an ideal time to reassess your portfolio’s risk exposure. Many clients find that after years of market growth, their overall risk has crept higher than intended, simply due to asset appreciation. Rebalancing and reallocating some of those gains into more stable, protected strategies like FIAs could help lock in profits while reducing future exposure.
For those planning to retire in the next 5–10 years, especially without access to a traditional pension, indexed annuities with lifetime income benefit riders can provide a reliable, guaranteed income stream for both you and your spouse. Today’s riders offer attractive guaranteed growth rates and payout levels that last as long as you do, regardless of market conditions or lifespan.
If this sounds like a strategy worth exploring, we’d be happy to walk you through how FIAs could fit into your overall retirement plan. With interest rates still at elevated levels, the window of opportunity is wide open but it may not stay that way forever.
Enjoy the cooler weather this first weekend of August—we hope it brings a little relief, at least for a few days!
Kyle