Indexing Strategies to Eliminate Stock Market Risk
Robert Klein, CPA from the Retirement Income Center reviews Fixed Income Annuities (FIA's).
Key Takeaways
- FIAs eliminate losses during down market years (the 'power of zero') but cap gains at rates typically between 3-4%, making them defensive portfolio tools rather than growth vehicles
- Early retirement sequence-of-returns risk is where FIAs shine: a $1M portfolio declining 18%, -12%, -3% in the first 3 years maintained $850K with an FIA versus $574K with direct S&P 500 investment
- Most FIAs include 10% free annual withdrawals during the first 7 years and 5-10 year declining surrender charges, so understand these terms before purchasing
- Combine FIAs with income riders to activate lifetime income benefits, or use standalone for downside protection—either way, verify the insurance carrier has high financial ratings (A.M. Best, Moody's, etc.)
- Consider blending FIAs with reverse mortgages as complementary defensive strategies for retirees, both protecting against market downside while providing liquidity and income options
Indexing Strategies to Eliminate Stock Market Risk: Robert Klein, CPA from the Retirement Income Center reviews Fixed Income Annuities (FIA's). For more finStream videos featuring Robert Klein, please click on this link: https://www.finstream.tv/featured/robert-klein/
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