We walk through fixed indexed annuity mechanics screen-to-screen over Zoom, or by phone if you prefer — Tele-Wealth planning at your pace.
Principal protected. Gains locked in. Income you can't outlive.
Fixed Indexed Annuities (FIAs) solve three of retirement's hardest problems — sequence-of-returns risk, longevity risk, and anemic fixed-income yields — by pairing market-linked growth with a hard floor of zero.
Fixed indexed annuities, on video
Watch this short video to see how fixed indexed annuities can protect principal while tracking market growth.
Questions worth sitting with
If any of these keep you up at night, keep reading.
- “What happens to your retirement if the market crashes 50% — and stays down for 20 years, like Japan?”
- “Are you comfortable being ‘naked in the stock market’ after an 11-year run-up?”
- “If you live to 95, will your savings still be there in year 30?”
- “Are today's CD and bond yields really enough to fund the retirement you pictured?”
- “Would you trade a little upside for the promise you can never lose your principal to a market drop?”
The three problems FIAs are built to solve
Sequence-of-Returns Risk
A bad market in the first 5 years of retirement can permanently damage a portfolio you're actively drawing from — even if the long-term average looks fine.
Fear of Outliving Savings
Longevity is the risk that multiplies every other risk. Stocks, bonds, and CDs cannot mathematically hedge it — only an annuity can.
Low Fixed-Income Yields
Traditional ‘safe money’ options like CDs and short bonds often fail to keep pace with inflation, quietly eroding purchasing power year after year.
Protecting savings and income
Principal Protection
Your initial investment is shielded from stock market downturns. If the linked index (like the S&P 500) drops, your account earns 0% for the year instead of losing value.
Locking in Gains (Annual Reset)
Interest credited in a positive market year is locked in and becomes the new floor. Future market dips cannot take those gains away.
Lifetime Income Streams
An optional income rider converts a lump sum into a steady, guaranteed paycheck you cannot outlive — the only true mathematical hedge for longevity.
Growth and tax management
Better Growth Potential
FIAs aim to deliver higher potential returns than CDs or basic savings by tying interest to market index performance, without direct market exposure.
Tax-Deferred Growth
Earnings compound without yearly taxes. Your full balance keeps working until withdrawals begin, when the deferred gains are taxed as income.
A fixed indexed annuity with no fees and no spread
Most annuities are not fee products. Single-premium immediate annuities, deferred income annuities, fixed annuities, and fixed indexed annuities generally have no annual fees — only variable annuities and certain optional income riders do. Income annuities are spread products, not fee products, and a well-designed FIA can be structured with no fees and no spread at all.
“An income annuity functions inside a portfolio like a AAA-rated bond, with a CCC-rated yield, and zero standard deviation.”— Tom Hegna
Only annuities hedge longevity
Math and science are clear: stocks, bonds, and CDs cannot hedge the risk of living too long. Only some form of annuity can turn a lump sum into income you cannot outlive.
Ibbotson: FIAs vs. bonds
Roger Ibbotson's research found indexed annuities outperformed bonds over the prior 40 years — and are likely to outperform for the next 40. Consider moving the bond sleeve of your portfolio first.
PhDs agree on the floor
Retirement researchers around the world recommend covering your basic living expenses in retirement with guaranteed lifetime income — then investing the rest for growth and legacy.
Lower risk, higher return
Replace a portion of bonds with a guaranteed lifetime income annuity and the portfolio's risk goes down while expected returns go up — not opinion, mathematics.
See what an FIA could do for your plan
We'll model a no-fee, no-spread FIA against your current bond or CD allocation and show you the income, protection, and growth trade-offs — in plain English.
Request my free illustrationNot sure which type of annuity fits your situation?
We break down the three types of annuities side by side — how each one grows, what it protects, and what it actually costs — plus 10 obvious reasons an annuity may (or may not) belong in your plan.
Why a fixed index annuity can be a powerful addition to a retirement plan
Retirement is about more than maximizing returns. This plain-English guide explains how one portion of a portfolio can be assigned a different job — protection from index losses, index-linked growth potential, and lifetime income you can't outlive — plus the risks, the mortality-pooling math, and when an FIA is the wrong fit.
Read the guideCommon questions
Common questions about fixed indexed annuities.
How does a fixed indexed annuity work?+
Your principal is credited with interest linked to an index such as the S&P 500, subject to a cap, participation rate, or spread. When the index falls, the credit is zero rather than negative, and the following year starts from your new higher value — the annual reset — so you never have to climb back out of a loss.
Can you lose money in a fixed indexed annuity?+
You cannot lose value to index declines. You can end up with less than you put in if you withdraw more than the free amount during the surrender charge period, and your growth can trail the market in strong years because of caps. Guarantees depend on the issuing carrier's claims-paying ability.
What returns should I expect from an FIA?+
Credited interest varies by contract and index year, and no one can promise a number. The honest way to evaluate one is the written illustration showing guaranteed minimums, current caps, and the income the contract will pay for life — not a projected average.
Do fixed indexed annuities have fees?+
The base contract usually has no explicit annual fee; the carrier funds the guarantee through the cap. Optional riders — most commonly a guaranteed lifetime income rider — carry a stated annual charge, typically around 1% of the benefit base. Every charge is disclosed in writing before you sign.
How much of my money should go into an FIA?+
A portion, not the whole portfolio. It is sized to cover the essential expenses Social Security and pensions leave uncovered, so the rest of the portfolio can stay invested for growth and remain liquid.
Can I get my money out of an FIA?+
Most contracts allow annual withdrawals of about 10% without charge, and surrender charges decline to zero over the surrender period. Money you may need sooner should not go into the contract at all.
Keep reading
Related guides on this topic
See how annuities create retirement income
How lifetime income is built, what it guarantees, and where it fits in a plan.
Read the guideCompare the three types of annuities
Fixed, fixed indexed, and variable — how each grows, protects, and charges.
Read the guideSee why an FIA can strengthen a plan
The job a fixed indexed annuity does that stocks and bonds cannot.
Read the guideWhen you're ready to see the numbers for your own household, start with the free Retirement Income Score — then talk it through with a licensed Expert.
Get my Retirement Income Score Book a free 15-minute callOur fiduciary commitment
We only refer you to Retirement Experts who are obligated to act as a fiduciary at all times — legally bound to put your interests ahead of their own on every single recommendation they make to you.
Every Expert we refer must also be willing to give you a written Fiduciary Pledge — a signed legal statement confirming that duty to you in writing. If an Expert will not put it in writing, we will not refer you to them. Just ask for it on your call.
Read and download the Fiduciary Pledge