When Roger Ibbotson recently published a new report on fixed indexed annuities and their place in an optimized retirement portfolio, everyone took notice. Few economists and financial researchers garner the attention and level of respect that he does.
He is Professor Emeritus at Yale School of Management, former chairperson of research firm Ibbotson Associates, and chairman as well as chief investment officer at Zebra Capital Management. Ibbotson is also a prolific author, having conducted financial research on many topics including investment returns, mutual funds, international markets, portfolio management, and valuation.
In past studies, his analysis has been groundbreaking and his principles adopted by financial markets at large. So, it’s not surprising why his research on fixed index annuities has gained such wide attention.
In his latest study, Fixed Indexed Annuities: Consider the Alternative, Ibbotson expands his view of the use of a fixed index annuity (FIA). Here, he defines a fixed index annuity as a tax-deferred retirement savings vehicle that “eliminates downside risk while allowing for the opportunity to participate in upside market returns.”
As baseline benefits, he believes that fixed index annuities, if properly structured, can help control financial market risk and mitigate longevity risk. Read More
In previous blog posts, we’ve discussed topics such as the growing appeal of fixed index annuities. Changes in the American retirement landscape, such as the shrinking availability of defined-benefit pensions, is prompting many workers and retirees to investigate alternative retirement income vehicles. As a result, total fixed index annuity sales in 2014 shot up 104.3% from total sales figures in 2004, according to Beacon Research ($47 billion in 2014 versus $23 billion in 2004).
But what, then, about CDs? How do fixed index annuities stack up against them? To get a comparative overview of both financial solutions, let’s cover some history as well as key differences. Read More
Are you considering a purchase of a fixed index annuity? It’s important to evaluate your unique financial needs and determine if it’ll be a suitable fit. Many Americans have found fixed index annuities to be an effective vehicle for achieving retirement income security.
Consider the following data:
- Since 1995, Americans have purchased almost $400 billion in fixed index annuities (From Advantage Compendium Ltd)
- 99.994% of indexed annuity owners have no complaints about their indexed annuity purchase (Advantage Compendium Ltd)
- Only 0.006% of indexed annuity owners have registered complaints about their annuity product purchase (Advantage Compendium Ltd)
- In a 2012 study, 83% of indexed annuity buyers and 86% of traditional fixed index annuity buyers reported satisfaction with their annuity purchase (LIMRA)
- At the close of 2014, fixed index annuity sales were $47 billion, a 104.3% increase from sales in 2004 ($23 billion in sales that year) (Beacon Research)
Fixed index annuities were originally created as a financial alternative to CDs and their meager potential for retirement income. The catastrophic effects of the 2008-2009 financial crisis and the changing dynamics within the American workplace landscape also have had an impact. Now many Americans are exploring fixed index annuities as an alternative retirement vehicle. Read More
Many investors have opted for fixed index annuities as a source of retirement security. But what exactly is a fixed index annuity? And for that matter, how does it stack up against other financial options?
Comparatively, financial products such as CDs offer low return potential. They also don’t offer a guaranteed lifetime income option. And for seniors looking to bolster their retirement income, the ups-and-downs of the stock market puts retirement dollars at risk. After all, the market moves through cycles. Historical data shows it can take years for the market to recover. Read More
