As retirement nears, preserving your hard-earned savings while still capturing growth can feel like walking a tightrope. For Utah’s 55-plus investors, fixed and fixed indexed annuities, or FIAs, offer a compelling solution: the safety of guaranteed principal combined with the potential for market-linked gains. In this article, we’ll explore how these products work, why they’ve surged in popularity and how you can tailor them to fit your retirement income goals.

1. Guaranteed principal protection

At their core, both fixed annuities and FIAs promise you’ll never lose the money you allocate. Your principal is insulated from market downturns. With a fixed annuity, you lock in a predetermined interest rate for a set term, often ranging from one to 10 years. FIAs build on this concept by tying a portion of your return to the performance of a stock index — most commonly the S&P 500 — while still guaranteeing your initial investment.

• Peace of mind: Unlike stocks or bond funds, annuities protect against sequence-of-return risk. In a severe market drop, your contract value remains intact.
• Surrender-charge periods: While early withdrawals may incur modest fees (typically declining over five to eight years), this feature discourages impulse redemptions and reinforces disciplined saving.

2. Competitive, tax-deferred growth

Annuities grow on a tax-deferred basis — meaning you don’t pay taxes on interest or index credits until you take distributions. This compounding boost can accelerate asset growth, especially for high-bracket taxpayers seeking efficient accumulation.

• Fixed annuity rates: In today’s higher-rate environment, some carriers offer multiyear rates north of 4%. That compares favorably to many bank CDs or money-market accounts.
• Index crediting methods: FIAs employ several crediting strategies — such as annual point-to-point, monthly sum or volatility-control overlays — allowing you to choose the balance of upside potential and smoothing you prefer.

3. Lifetime income options

Converting a lump sum into a dependable paycheck is a hallmark benefit of annuities. Both fixed and fixed indexed products can be structured to deliver lifetime income through a rider or by annuitizing directly.

• Lifetime income riders: For a small additional charge (often 0.5%-1.0% of premium), you can add a Guaranteed Lifetime Withdrawal Benefit, or GLWB, rider. It establishes a “benefit base” that rolls up — say, 8% per year — during accumulation. When you begin withdrawals, you receive a fixed percentage (commonly 5%-6%) of that base for life, even if your account value dips to zero.
• Immediate annuities: You can also elect a single-premium immediate annuity, or SPIA, which starts paying within a month. If longevity is a concern, a life-only SPIA offers the highest possible payout; period-certain options guarantee payments for a minimum number of years for beneficiaries.

4. Inflation mitigation

One common critique of fixed payouts is their static nature. FIAs and many fixed annuities now offer optional inflation riders that step up income by a set percentage — typically 2% annually. While these riders incur an extra fee (around 0.10%-0.20%), they help ensure that rising costs for health care, housing and daily essentials don’t erode your purchasing power over decades.

5. Customizable crediting strategies

FIAs stand out for their flexibility. You aren’t locked into a single indexing method:

• Annual point-to-point: Credits based on the full-year percentage change in an index, subject to a cap (e.g., 6%).
• Monthly sum: Tracks each month’s gain (capped or with participation rates) and sums them, smoothing out volatility.
• Volatility-control: Applies a risk-management overlay to limit sharp swings, potentially delivering steadier gains over time.

By allocating premium among multiple strategies within the same contract, you can craft a tailored risk/reward profile — more aggressive in some buckets, more conservative in others.

6. Estate planning benefits

Annuities can also serve as legacy vehicles:

• Death benefits: Should you pass away before lifetime income begins, most FIA contracts guarantee at least the return of your premium (minus withdrawals), often with interest credits.
• Joint-life options: For those wanting to protect a spouse, you can elect joint-survivor income, which continues a percentage of the payout — commonly 50%-75% — after one partner’s death.

7. Elimination of sequence-of-return risk

Sequence-of-return risk — the danger of withdrawing funds early in a market downturn — can devastate traditional portfolios. By earmarking a portion of your retirement assets into fixed or FIA products, you create a stable anchor. Short-term cash needs can come from your annuity’s guaranteed withdrawals, while the rest of your portfolio remains invested for growth.

8. Choosing the right carrier and contract

Not all annuities are created equal. Key considerations include:

• Carrier strength: Look for insurers with high ratings from AM Best, S&P and Moody’s to ensure claim-paying ability.
• Rider fees: Compare the cost of income or inflation riders, as even a 0.10% difference can impact long-term returns.
• Surrender periods: Shorter surrender schedules offer greater flexibility; longer periods can secure higher rates.
• Crediting caps versus participation rates: A 6% cap may outperform a 70% participation rate in a 10% market gain but flips in slower markets.

At Boss Financial, we analyze dozens of carriers’ offerings for each person we talk with — ensuring you get the most competitive rate on a contract that aligns with your safety, growth and legacy priorities.

Next steps for Utah’s 55-plus investors

Fixed and fixed indexed annuities aren’t just “insurance products” — they’re strategic building blocks for a resilient retirement income plan. By allocating a portion of your nest egg to these vehicles, you lock in guaranteed growth, protect principal and secure lifelong income that keeps pace with your life expectancy.

If you’re curious whether a fixed annuity or FIA belongs in your portfolio, schedule a complimentary review with Lyle Boss and the team at Boss Financial. We’ll walk you through tailored illustrations, compare multiple crediting strategies and map out how guaranteed income can work alongside your Social Security, savings and investment accounts.

Your retirement income should be as rock-solid as the Wasatch Mountains — no guessing, no sleepless nights, just certainty. Fixed and fixed indexed annuities can help you build that foundation. Let’s explore how to make them work for you.

Lyle Boss, The REAL BOSS Financial, endorsed by Glenn Beck as the premier retirement advisor for Utah and the Mountain West states. Boss Financial, 955 Chambers St., Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.