Choosing the Right Annuity For Safe Growth in Retirement

Troy Sharpe: We’re going to dive into the safe growth function of the fixed indexed annuity. How are they designed? How do they earn interest? How is all that calculated? What do you need to know to make a better decision when looking at fixed indexed annuities? Now, this video is part of a series. The first video we did was an intro to annuities in general. There’s a lot of misinformation out there, annuities get jumbled all together. In the first video, we talked about the different types of annuities. In the second video we talked about multi-year guaranteed rate annuities, which are essentially CDs from an insurance company. Then we did the introduction to fixed indexed annuities.
Now we’re diving into the safe growth feature, how they earn interest, what you need to know with FIA’s, fixed indexed annuities. The next video we’re going to get into the guaranteed lifetime income features. Then we’re going to transition into strategy and planning and how these work overall in the context of your personalized retirement plan.

Troy: Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, certified financial planner professional, host of the Retirement Income Show and also a certified tax specialist. We’re going to dive right into it but before we do I want to go through a brief recap of what we talked about in the last video. Now, if you haven’t seen the last video, please take the time to go back and watch that. Maybe not now. If this video doesn’t make sense, you will have to go back and watch that and tie it all together. We really want to be transparent. We want you to have all the knowledge you need to make good decisions.

At the end of this video on the end screen there will be links where you can click on to watch all the videos in this annuity series. Some of the big takeaways from last video, fixed indexed annuities have what’s called a reset period. A reset period can be one year or two years or three years and sometimes even longer, you get a choice with the product or design you choose. The reset period simply means that that is how long you are earning interest for in that one period. Then your gains lock in, they can never be lost. You can never lose money with a fixed index annuity.

If it’s a one year reset period on what we call a point to point method, then you will earn interest from this point to that point over a 12 month period, if you make 4% or 8% or 0% that gain locks in and can never be lost. Future earnings will compound on top of the gain you earned in that reset period. We talked about what’s called a participation rate. That’s how much you participate in the index that you are tracking, so fixed index annuities, tracking external index we’re going to dive deep into that today, but the participation rate is how you determine how much interest you earn.

You participate 50% in it, 100%, maybe 200% in the actual index. It is important to point out that your money is never placed in an index like the S&P 500 or any of the other ones that are out there. You simply track it to determine how much interest you earn. Your money is not in the stock market, that’s why you’re guaranteed to never lose principal or interest once it’s locked in with a fixed indexed annuity. Fixed indexed annuities can either be capped or uncapped. We want the uncapped fixed indexed annuities. There’s a lot of misinformation out there and there’s a lot of articles I’ve read where they say fixed indexed annuities have really low returns because of the caps. Well, that’s true.

If you choose to go into a method that has a 3% maximum cap, you shouldn’t expect to make more than 3%, but there are tons of options out there where there are no caps whatsoever. This is how you have the potential to have double-digit returns in any given year. Worst case scenario, you’ll never earn less than zero. It’s important to understand the liquidity provisions of your fixed indexed annuity. Most contracts out there provide access to about 10% of your account value per year. They’re longer-term contracts. They’re not designed for short-term wealth accumulation. They’re designed for long-term safe growth and lifetime income choices.

They have surrender charge schedules. If you take more money out, then the liquidity provisions, usually 10% per year, you’ll be hit with a fee and those fees can be pretty big in the beginning years. Insurance companies can’t provide 100% safety of principal, the opportunity to earn good reasonable interest and also lifetime income choices if everyone who owns these strategies are constantly putting their money in and then taking it out and then putting it in and taking it out. Insurance companies need to project out into the future. They invest in high-quality, long-term investment-grade assets.

They can’t just go on the open market and constantly sell these in order to meet everyone’s fluid needs, as far as needing tons of income. They’re not trying to lock your money away, but they do have these provisions in place. You don’t put all of your money into fixed index annuities but for a portion, it may make sense for some of you, but you have to understand the liquidity provisions and also the surrender charges that are involved with any fixed indexed annuity you’re considering. Who would consider a fixed indexed annuity? Well, first and foremost, someone who wants a portion of their nest egg to be in a situation where it has no market risk whatsoever, guaranteed 100% from losses if the market goes down.

Someone who has the goal of earning 4 to 6% per year. Not all fixed indexed annuities can achieve a 4 to 6% average rate of return, but the very best safe growth ones on the market, which is what we’re going to cover in this video, the growth mechanism, what you need to be aware of, the worst ones out there are probably going to average around 3%, maybe 2.5 to 3, the best ones out there realistically, in my opinion, I believe can hit 6, maybe even 7% if the markets cooperate. If we have a 100% safe from market risk asset and we achieve 4, 5%, most people for a portion of their nest egg, would be pretty happy with that to help sleep at night and understand that this money is safe, no matter what the market is doing.

Then finally, this last objective of course is either safe growth or lifetime income. A lot of people think with an annuity, you have to take a lifetime income. That’s not the case whatsoever. Once that surrender charge period is over, you can simply take your football and go home, just like Charlie Brown, but you do not have to have lifetime income. You can use it simply for safe growth and then when that contract period is over, the surrender charge period, you can reinvest into something else. You can roll it back into your IRA if it’s qualified money.
You have choices. That’s the recap of the last video. Now the last video was 30 minutes. Maybe I could have done it in about five minutes like that, but that’s the recap. Those are the big points. I did dive deeper, obviously in that last video, for those of you who want to know more, and I know that’s many of you out there because that’s a lot like our clients. Now we’re going to get into how do they earn interest? What do you need to know? What are the good strategies, the bad strategies and we’re going to keep this general, we’re going to keep it high level because we’re not recommending any specific insurance company, any specific product.

We don’t work for any insurance company. We are completely independent and the best strategies out there today may not be the best strategies out there when you’re watching this video. We’re going to go into high levels, so you have the knowledge to discern what’s in the marketplace when you’re doing your research in order to make the best decision for your retirement plan. The first step in understanding which FIAs give you the best growth opportunity is to really understand the growth mechanism that drives performance. Of course, that starts with the index you’re tracking.

Now some products in the marketplace have multiple indices within a singular product that you can track. You may want to diversify within that same product. 25% tracks this index, 25% tracks this one, and maybe 50% tracks that index or a lot of times there’s one index in there that’s really solid and that’s the one you want to track because the index is good and it has a really good rate being offered. Before we get into identifying that, we have to understand the different types of indices that are in these products. You have indexes like the S&P 500, which is probably the most common option within all fixed indexed annuities.
In some shape or fashion you’re going to be able to track the S&P 500 in almost all FIA in the marketplace. Now, all the rates being offered are not comparable. Some are much better, some are much worse, but understand that some indexes are just 100% equity indexes. The second type of index you’ll find in these products today is what we call a volatility controlled index. A volatility controlled index is like a tactical management style, it’s designed to essentially alternate or reallocate between different asset classes like stocks, bonds, commodities, gold for example, whenever volatility changes.

Just think of an index that automatically transfers out of stocks and into either bonds or gold or more conservative asset class, possibly cash. Whenever volatility in the marketplace gets real high. In a time like this, when right now we’re recording this in May of 2022, the market is going through a big correction here. We’re down about 20% in the S&P, about 30% in the NASDAQ, volatility controlled indices are not down nearly as much as the overall market. I’ll show you some of these in a few minutes, but all they’re doing is when volatility gets high they’re reallocating from stocks into bonds or cash.

This is designed to create more consistent returns, more stable expectations over time. Instead of trying to hit home runs, if we track a 100% equity index, the volatility controlled indices are designed to hit more singles and doubles and just be more stable with their returns so we can have a more consistent outcome. Here’s an example of a volatility controlled index in action. We have, this one is from PIMCO and we see here November of 2021, the index was weighted about 34% in bonds, 66% in equities. November was a good year, 2021 in the markets but now December of 2021, we had a volatility spike in the markets.

The index automatically shifted more money into bonds than it did into equity. Here we’re at 86% bonds, 14% equities in December of 2021. Fast forward, if we look at March of 2022 it’s 91% bonds, the rest cash. Here we are in May- oh, the date is unavailable, because the month is not over. If I go to April. Okay, it’s still 82% bonds, 18% equity. Volatility control, when volatility spikes, the index automatically transitions out of stocks into another asset class that’s more conservative. Now, here’s the important part, not all volatility-controlled indexes follow the same set of pre-designed rules, they have different methodologies.

Some of these index designers are very transparent with their design, and some are not. We’re going to get into the ratings and the transparency and the methodology to an extent to help you understand how these products actually work. Then you’ll have a decent understanding of which strategies give you the best opportunity for growth. Now we have a decent understanding of the indices that are available, or at least the types of indices that are available. It’s time to transition into the other part of the equation, the rates being offered by the insurance company. Let me make a distinction.

Indices are created by third-party asset management companies, rates are offered by the actual insurance company that is offering the product. The indices themselves are inside the product and the carriers that offer the rates offer the product. When we look at 100% equity index, you’re going to have a lower participation rate, because that index can perform much, much better. If we’re going to track the S&P 500, a good participation rate is somewhere between 40% to 50%. If you have an uncapped index we want- whether it’s a volatility controlled or an equity index, we want them to be uncapped, we don’t like caps, we don’t want caps on our products.

In some situations, a cap could be good if it’s high enough, let’s say 9%, 10%, 11%, but currently, the market doesn’t offer that. It’s getting closer with interest rates rising but not available in fixed indexed annuities currently. What is available is a 40% to 50% participation rate with an uncapped strategy. If the market does 50%, and you have a 50% participation rate, you’ll make 25% in a 100% safe instrument. If it’s an annual reset, which typically it will be, then those games are locked in. You put in 100,000, it’s now worth 125. It’ll never be worth less than that unless you take money out.

Volatility, conversely, though I should say if the market goes down 30%, you don’t participate in that downward movement, you just make a zero. Then when the market starts to rebound, that following year, you’ll participate 40% to 50%, whatever your rate is in that rebound from that 12 month period, if that’s your reset timeframe. We have this chart that we did a few years ago and put onto the website that shows how an uncapped FIA would work with a 50% participation rate. We go back to 2007. We just show the annual S&P 500 index return.
The blue is negative, obviously. We see if we participate in half of it with an annual reset, so these gains lock in, what type of interest you would earn with 100% safety of principal. Pretty self explanatory. If you go down a little bit further, we actually show what a $500,000 investment inside with these parameters, 50% participation rate uncapped, the S&P 500 did this. This is what our FIA earned. Its corresponding interest rate annually earned. This is the value of the accounts. Most importantly, we see when the market dips with the investment account, we lose a significant amount of money if we’re all in the market.

The FIA does not go down. We see that throughout here. Again, it’s important to point out that FIAs are not replacements for stocks. All of us still need a quality equity portfolio, but when we’re talking about comparing to CDs and bonds, which is what FIAs are designed to compete with, and should be considered, in my opinion, a replacement for inside your portfolio. It’s important to understand how these can work in the real world for a portion of the money to provide some safety of mind, some principal protection, and a reasonable opportunity for growth.

They’re not designed to compete with the stock market. They’re not a replacement for stocks and they are not designed to outperform the stock market. They are designed to provide 100% safety, principal protection, options for lifetime income, and reasonable growth potential. Now, volatility-controlled indices typically have much higher participation rates. The reason for this is it’s cheaper for the insurance company to provide higher participation in this index. It’s a math formula. I’ll do a video on this towards the end of the series, but for this video today, it’s a little bit too complex to get into what the insurance companies are actually doing.

It is the insurance companies by the way that are providing you 100% principal protection because the money is not inside the market itself. That’s why the first videos in this series where we talked about the statutory accounting system, the dollar for dollar legal reserve, what insurance companies are doing with the money, for long term investing purposes, that’s why this series, it’s important to watch in its entirety if you’re really, truly looking at adding something like this to your retirement portfolio.

Volatility controlled indexes typically are going to have much higher participation rates, but again, they’re not designed to hit home runs, so if the index has a 200% participation rate and it averages around 3.5% or 4% per year, well, you can average 200% of that. Now, it’s not going to be 4% every year, and if it’s a 200% par, you’re not going to make 8% every year, one year might be two, one year might be zero, one year might be nine, one year might be seven, but the participation rate is multiplied by the actual return on that index to determine how much interest you earn during that reset period.

No matter which index type we have, whether it’s an 100% equity or volatility controlled index, one of the most important things is that it’s uncapped, that the strategy is uncapped, there’s no limit on the amount of upside that you can earn. We’re going to hit more home runs with this type of strategy, more singles and doubles with this type of strategy. Well, being uncapped is extremely important, and the index and everything else we’re going to cover is very important as well, but the most important thing, as is a constant theme throughout all of my videos, is how are we using these strategies, these tools inside a plan that answers the big questions.

Are you going to run out of money, how do you prevent that, if something happens to you, will your spouse be okay? If you’re concerned about not having enough income to last as long as you do, these types of tools and strategies can provide some solution. Now, we’re talking just about the safe growth functionality of these tools today. We’re going to get into the income planning, the lifetime income features in subsequent videos, but understand that whatever you’re doing with these tools, they need to be part of a broader plan that’s answering those big questions that you have about retirement.

Can you retire, are you going to be able to stay retired? Those are the big questions. These are just tools to help answer those questions inside a plan. Sometimes I’ll get a question that says, “Troy, which company should I use?” Well, I want to repose that question to you. Do you think that the carrier that you choose is most important, the product that you choose is most important, or the index that you choose to track is most important? A trick question because in this video we’re talking about safe growth, so for safe growth purposes, the most important thing that we can identify is the quality of the index.

So which products have the most high-quality index that offer the best rates that have the best real-world performance and many other factors we’re about to get into. When we’re looking at a plan, fixed indexed annuities have specific purposes they are designed to accomplish. Some of them may not grow the best, maybe 3 or 4%, but you take that and then it gets multiplied by some factor over to help provide a much larger lifetime income and you could generate otherwise. We’re going to get into all this, but when planning, we have to understand the marketplace, which products are available, and those specific design purposes that they’re created for in order to help achieve or get over some gap of income or achieve safe growth, whatever they’re designed to do.

So kind of a trick question but when we’re just talking about safe growth, we really need to understand how transparent these indices are, what is their methodology, what is the real world performance. We also need to understand some of the tricks that insurance companies can play when it comes to back-testing and illustrating past performance, and that’s where we’re going to get into. Some of the factors that we scrutinize heavily when it comes to identifying the best indices for growth inside these products is, again, for growth purposes, safe growth purposes, what is the quality of that index, meaning what is the methodology, how transparent is the index designer with that methodology, how is it performed in the real world compared to its back-testing.

If it’s a volatility-controlled index, what mechanisms are inside of it that trigger it to move from stocks into bonds? These are all things that we have to understand in order to identify which indices give our clients the best opportunity for growth. One of the tools that we use to identify the transparency, the methodology of the various indices that are in the marketplace is a company that is run by a gentleman named Laurence Black. Mr. Black worked with professor Robert Shiller for many years in designing indexes that went into FIA products. He decided to break off and start his own company.

Then when I was speaking to him he said, “Troy, I was going to start my own index but the thought dawned on me that what this world really doesn’t need is another index because there are hundreds of them out there. What this world really needs is someone to help advisors and institutions discern which indices in the marketplace offer clients the best opportunity for growth or income or whatever that particular need is.” They have a very deep methodology. We’re going to get Mr. Black on the YouTube channel for an interview over the next few weeks hopefully.

I’ve spoken to him about it, he has agreed to do it. We’re going to go through in depth what some of these reports mean, and most importantly how does that help you become a better decision-maker in retirement. The rating system goes from platinum to gold to silver to copper to what they call watch. This is just a tool. It helps us to understand a bit deeper how the particular indices in the marketplace work, but that’s all it is. It’s a tool that we use internally to help make better recommendations for our clients based on their overall plan and what they’re looking to accomplish. This is the one we looked at earlier, the PIMCO.

Now, even though it’s a gold index we’re currently not recommending that this index be used because the product that it’s inside doesn’t offer the best rates right now. There are better opportunities out there. Now with that said, the product design itself that carries this particular index is designed more for lifetime income. It’s not designed for safe growth. There are better safe growth strategies out there. The index is solid but the rates aren’t the most competitive right now. That’s the other factor of this equation we’re going to get into. I just want to point out some of the tools that we use to help identify the quality of the particular indices that are inside these products on the marketplace.
I talked about the Zebra Edge Index in the last video. This is the Zebra Edge right here. Also a gold index. As we go down here, and this report has a lot of information for us to use internally to help us again identify the quality of the index, the transparency, the methodology. This all helps us make better decisions in regard to what we’re recommending to help accomplish client goals. This is a tool. This is one part. Now, the second part is performance. Real-world performance versus back-testing. In order to understand that, we have to understand the live date. When did the index go live, a live date. Now, what does that mean?

This is a sheet that has all of the indices that are available out there in the various FIA products in the marketplace. We see over here on this side, we have the live date. This is when the index was created and went live with its methodology. Insurance companies, they’ll provide an illustration with their annuity products. Those illustrations are usually back-tested over the past 10 or 20 years. Sometimes insurance companies even cherry-pick dates. Now they’ll all tell you they don’t but some of them absolutely do, at least that’s my belief from my experience working with these companies and seeing these illustrations over many years.

Some are very transparent, some are very solid with their back-testing, but still past performance is not indicative of future results. We’ve heard that a thousand times in our lives. One of the tools that we have to look at when we’ve determined the quality of an index, we’ve determined its transparency in the methodology, how much of its real live performance can we actually view to see how has it performed since it’s been live. We want to know the live date. Something here that- for example created in 2014 or 2013. These have much more real-world experience and real-world results that we can see how did they do compared to something that was created maybe last year or two years ago.

Now let me show you one down here. I’m trying to give you insight essentially into what we look at and how we think about this. When we see here, I wanted to point out the SG Entelligent Agile Index. This is the year today column, -2.96. Well, the market is down, it’s a volatility-controlled index and the market is down 20 to 30%. Last year it earned 8.09%. It was only live in 2020. This 5 year data in 5 year and 10 year, that’s all back-tested. The 8.09 is real world. The negative 2.96 is real world. It’s not a complete picture, but what this tells me is that this index in 2021, where the market had a good year, it performed quite well.

It earned 8%. Remember it’s a volatility controlled index. It’s not for home runs, it’s for singles and doubles. Then a year like this where the market’s down big time, did it suffer or has it suffered significant losses? No, it has not. So far in its young history of two years, it’s doing exactly what it should be doing. Now, would I like it if it had 10 years of real world performance? Yes, I would, but all of this is just a piece of the pie, the decision-making process. Now that we’re starting to understand how we look at quality of the indices that are available and the transparency, the methodology, the real world performance, when they went live, now we understand the good indices from the bad ones.
Which ones do we completely want to avoid? No matter what company they’re from, what product they’re in, they just don’t have a solid track record where we would have confidence in recommending to them because either the quality of the transparency, the methodology, these things are poor. Once we have this information determined, then we want to look at the rates, which products are these indices in, and then what are the rates being offered by the insurance company? If we have a good index and we get 60 or 70% participation, when we look at the real world performance, what does that mean for our clients?

Or if we have a volatility controlled index that has been around for some time and we have a 100 or 150, or even 200% participation, how does that translate for our clients? Again, most importantly, how does that fit into the broader plan of what we’re trying to accomplish? If it’s just safe growth, we just want to put some money into something that’s going to be secure and earn a reasonable rate of return without the volatility of bonds, the potential for loss that bonds bring and also the low rates that CDs offer. For safe growth, we just want to maximize growth. We may want to diversify products.

We may want to diversify indices, but we’re just trying to identify the indices within the products that give us the best opportunity with current rates and past performance as a piece of information to identify, does it give us the best opportunity for growth or a really good opportunity for growth. The back-testing, as I said, a lot of these insurance companies will back-test. Some of them will cherry-pick dates inside of an illustration so the illustration itself looks much better. Not to mention that the past 10 years or the past 15 years, completely different economic cycle than we’re going to experience over the next 10 to 15 years.

Really back-testing is extremely irrelevant when it comes to these particular products. We need to understand the quality and everything I’ve talked about so far and then we need to start to look at the forecasting. Forecasting is an inexact science. We do not do forecasting ourselves. Even though we do have an opinion, we just simply don’t believe in forecasting over a 10 year period. Now, something to know, when experts okay with the big investment banks, when they do forecasting, typically they’re very accurate when it comes to fixed income.

They have a very strong record of forecasting, price appreciation, interest rates, to an extent when it comes to the bond market. When it comes to the equity markets, they’re all over the place and most of them are not that accurate. What we’ll use is- from the same company I mentioned before, that helps us to identify the methodology and the quality of the index, they provide what’s called a consensus of the experts when it comes to forecasting the particular indice. This takes a very deep knowledge, not just of asset classes, but of how the products actually work. If it’s a volatility controlled index, what’s triggering us to move from stocks to bonds.

How transparent is that methodology? Looking at all that information and then building models out to then take a consensus of how stocks and bonds and various asset classes are going to perform from the experts out there, again, air quotes, I believe it’s the top 10 either investment banks or investment mind consultants out there. I believe it was investment banks. Either way, it’s a consensus of opinion within the Wall Street world to identify the expected forecast of those asset classes. Then all of that is tied into how the actual index works and the design and the mechanisms that transfer money from stocks to bonds to come up with these numbers.

We’re going to have Laurence on the channel. He can explain this in a much more depth. I hope I did a good job. If not, I’ll make a correction video, but long story short we have a strong forecast. We have a conservative and we have a moderate. So now instead of using the insurance companies provided back-tested results that may or may not be that transparent, what we’re doing is we’re trying to, once we determine the quality of an index, we look at the current rates being offered. We’re using that strategy inside an overall plan that’s designed for your retirement income, your safe growth needs, whatever it may be. Now we’re looking forward. Take all that information.

Based on how that index actually works, what is a reasonable expectation here? Some of these we’ll see wide spreads between the conservative and the strong, some of them more narrow, kind of like this. Then again, even though we have a good moderate case scenario, the rate for this particular product that tracks this index, it’s not that attractive. Now, if the rates change, it’ll go into the mix and we’ll be recommending it for clients. I just wanted to point this out because when we’re looking to give you the best opportunity for growth, there’s a lot that goes into it.

The last piece of information here we look at to help us identify which FIAs and indices give you the best opportunity for growth is what we call renewal rate integrity of the insurance companies. Different insurance companies have reputations. We’ve worked with dozens of these companies over the years, we understand their track record when it comes to renewal rates. What is a renewal rate? Let’s say you have a one year reset. When your contract was issued you had a certain participation rate. Now, if interest rates are much lower come, the reset period, your participation rate could go down.

If interest rates are much higher, your participation rate could go up. Most insurance companies keep those rates fairly close to where they were at issue. You might see a little deviation. Some insurance companies have a little bit less than stellar of a track record though, when it comes to renewal rate integrity. This is something that can only be learned by experience, but we want, once we identify quality indexes with good current rates inside a product that fits into an overall plan that pushes you closer towards accomplishing your goals, then we want to look at the forecasting and the renewal rate integrity of that company.

Now we feel pretty confident, making a recommendation that that tool, that FIA is going to be much more likely to achieve its outcome when it comes to safe growth. Again, the target is we want to average 4 to 6%. If we average seven, that’s great. If we average three, I’m going to be disappointed, but that is possible. Most importantly, though, any money inside there we’ll never lose. It’ll never go down in value. I wrote research versus planning up here, and that’s very, very important because many people do tons of research and they identify which annuity they want to use, but they don’t have a broader plan.

What’s a plan? A plan is how much risk are we taking? How is the investment portfolio allocated? How much income are we going to take out? Where is that income coming from? What are we doing from a tax standpoint? Are we doing Roth conversions? How much are we withdrawing from the IRA? How much are we withdrawing from the non-IRA? If we like the annuity concept, how much are we allocating to that with respect to the bond and equity portion of our investment portfolio? If we don’t have a plan, we’re just buying a tool. It’s like buying a drill and keeping in the garage and not using it.

We’re doing all this research on which boat or RV to own, but then you never hit the road or get out on the lake. We need a plan, and everything I went through today is to help you become a better, more educated consumer when it comes to deciphering the various annuity products in the marketplace. Most importantly, these decisions need to be made inside a bigger, broader plan. In summary, when trying to identify the best growth opportunity for your retirement, when it comes to safe growth tools like fixed indexed annuities, first and foremost, we need to understand what it is we’re trying to accomplish and how that tool fits into a broader plan.

Number two, we have to have some level of understanding of the various products that are in the marketplace. Three, we need to understand the various indices that are inside those products that are in the marketplace and the quality of those indices, the real-world performance versus the back testing, the transparency, the methodology. Are we going to go with volatility controlled or are we going to go equity indexed? Or are we going to go with combination and diversify the portfolio? We need to understand not just the products that are available from the carriers, but the quality of the indices inside those products. Number four, we need to understand the current rates being offered.

Number five, we need to understand the renewal rate history of those products being offered. Number six, we need to understand the forecasting component versus the back-testing component. Very, very important distinction there, and last but not least because it is that important. I’m going to reiterate, we need to have a plan that these tools, FIA’s, fixed indexed annuities can fit inside to really maximize the potential output. If we have all that figured out, then we’re going to position ourselves to have a much greater probability of success than otherwise.

This was a deep dive into the safe growth mechanism of fixed indexed annuities. We’re going to have a list right here on the end screen. That’s going to show you all the other videos in this series that we’ve put out that I encourage you to watch. Next video, we’re going to dive into income riders and income planning with fixed indexed annuities. Then we’re going to have a whole strategy session where we’re going to dive into different planning strategies. Continue to watch this series, share the video with a friend or family member, and I look forward to seeing you again soon.

Choosing the Right Annuity For Safe Growth in Retirement
Choosing the Right Annuity For Safe Growth in Retirement

Understanding retirement planning and how fixed indexed annuities grow and whether or not to choose one is a very important part of putting together your financial plan for retirement.