Delaware Life Retirement Stages Select Fixed Indexed Annuity – Growth with Principal Protection

A conventional fixed indexed annuity applies the same crediting structure — cap rates, participation rates, index options — throughout the entire surrender period, with the buyer selecting among available strategies at each annual renewal. The evolution of the contract’s accumulation approach over time is entirely buyer-driven: if a buyer wants to shift from a growth-oriented crediting strategy in early years to a more conservative approach in later years, they must make that decision proactively at each renewal. In practice, many buyers either forget to make the shift, make it reactively in response to emotion rather than plan, or simply leave the default strategy unchanged throughout the contract. A multi-stage FIA like Retirement Stages Select addresses this by contractually programming a phase shift into the product design itself. Rather than requiring the buyer to decide when to transition from growth orientation to stability orientation, the contract’s design builds that transition in as part of the structure. Early contract phases are calibrated for accumulation potential; later phases shift the weighting toward more conservative crediting mechanics, reducing exposure to cap-rate-dependent index performance and increasing the role of more stable elements as the income activation date approaches. The practical benefit of this design is behavioral: it enforces the risk-reduction discipline that many investors intend to apply but often fail to execute in practice. Understanding how FIA mechanics work at the product category level — including how the insurance company’s options budget determines the crediting parameters available in each phase — provides the foundation for evaluating what a multi-stage design actually accomplishes versus a standard single-strategy contract over the same holding period.

The distinction between a multi-phase FIA like Retirement Stages Select and a RILA (Registered Index-Linked Annuity) is one of the most important comparisons in the current annuity marketplace for pre-retirees who want growth with downside management. Retirement Stages Select provides a 0% floor — the account value cannot decline due to index performance under any market conditions. In exchange for this unconditional protection, the crediting parameters (caps and participation rates) are lower than what a RILA can offer. A RILA with a 10% buffer absorbs the first 10% of index losses, with any decline beyond 10% passed through to the account value. In exchange for accepting that partial downside risk, the RILA offers meaningfully higher caps or participation rates — sometimes 2 to 3 times the level of an equivalent FIA. The key question: can a pre-retiree accept a defined, limited loss scenario (e.g., -10% in the worst-case buffer-exceeded year) in exchange for significantly higher upside participation in bull markets? For buyers who truly cannot afford any principal loss under any market conditions — including those within 5 years of retirement — the FIA’s unconditional floor is worth the crediting limitation. For buyers with a longer horizon who can tolerate a buffered partial loss scenario in exchange for higher long-term accumulation potential, the RILA merits evaluation. The multi-stage design of Retirement Stages Select may further narrow this comparison during the contract’s later phases, when the shift toward conservative crediting mechanics reduces the growth differential between the FIA and RILA approaches.

The annuity laddering strategy — distributing the conservative allocation across multiple contracts with staggered maturities — applies naturally to Retirement Stages Select as one component of a broader conservative sleeve. For a pre-retiree with $600,000 in conservative assets, rather than allocating the full amount to a single Retirement Stages Select contract, a laddered approach might allocate $200,000 to Retirement Stages Select (capturing the multi-phase crediting structure for a medium-term horizon), $200,000 to a shorter-term 5-year MYGA from a highly rated carrier (providing declared-rate certainty and near-term maturity flexibility), and $200,000 to a longer-term FIA with a higher initial cap (maximizing index participation potential for the longest accumulation window). This three-rung structure achieves several things simultaneously: different maturity dates create rolling liquidity windows every few years; different crediting mechanisms provide diversification across crediting strategy types; and the total conservative allocation remains fully principal-protected without the concentrated carrier and crediting strategy risk of a single large allocation. Retirement Stages Select’s multi-phase design makes it particularly complementary in a ladder — its built-in phase shift reduces the need for the buyer to actively manage the crediting approach over the medium-term holding period, while shorter and longer adjacent rungs provide the supplementary flexibility and maximum-rate accumulation components. Understanding how compounding interacts with each rung’s crediting structure — specifically how credited interest in early years becomes the principal base for later-year crediting — clarifies why ladder design decisions matter for projected maturity values.

Understanding how annuity distributions are taxed across the accumulation and distribution phases of Retirement Stages Select is essential for accurate income projection. During accumulation, all credited interest defers without annual taxation — no 1099 is issued on indexed or fixed account credits until a withdrawal is taken. This allows the full credited rate to compound each year without the tax drag that reduces the effective return on taxable alternatives earning the same nominal rate. For a non-qualified contract funded with after-tax dollars: partial withdrawals are subject to LIFO treatment (gains come out first, taxed as ordinary income), and distributions before age 59½ may be subject to a 10% IRS early distribution penalty in addition to ordinary income tax on the gain. For a qualified contract (IRA or 401(k) funded): all distributions are taxable as ordinary income, RMDs apply beginning at the required beginning date, and the tax deferral advantage is less meaningful since the qualified wrapper already defers — but the principal protection, phased crediting, and optional income rider features still apply. The strategic tax planning opportunity inside Retirement Stages Select for non-qualified contracts is timing control: unlike a CD or bond that forces annual tax recognition, the annuity allows the owner to choose when to recognize the gain — coordinating distribution timing with lower income years, Roth conversion windows, or Social Security activation timing to minimize the effective tax rate on the accumulated gain. Understanding whether an annuity income structure that includes lifetime income payments improves the tax efficiency of the distribution phase — through the exclusion ratio that applies to annuitized payments — is part of the full income planning analysis before committing to a specific distribution strategy.

Delaware Life’s AM Best A- (Excellent) with Positive Outlook — revised in October 2025 — places it in a specific carrier strength position within the FIA marketplace: above the B++ tier that requires a disclosure box recommendation, solidly in the A- category that represents the majority of competitively-priced FIA carriers, and with a Positive Outlook indicating AM Best’s forward-looking assessment that the rating may improve to A in the near term if the current trajectory continues. The Positive Outlook is a meaningful distinction from a Stable Outlook at the same A- level: it signals that AM Best’s evaluation of Delaware Life’s strong risk-adjusted capitalization, improving business profile, and consistent execution of its FIA-focused strategy has produced a trajectory that merits forward-looking recognition. In practical terms for an annuity buyer: the A- rating with Positive Outlook means the contractual guarantees in Retirement Stages Select — the 0% floor, the phase-shift crediting structure, any optional income rider obligations — are backed by a carrier that AM Best currently assesses as having Excellent financial stability with an improving trajectory. Fitch rates Delaware Life A- (Strong), which is consistent with the AM Best position. S&P rates Delaware Life BBB+ (Satisfactory), which is one notch below the investment-grade A- tier and represents a less favorable assessment from that agency specifically. For buyers who evaluate carrier strength using a multi-agency approach, the split between AM Best/Fitch (A-) and S&P (BBB+) warrants explicit acknowledgment — the AM Best rating is the most widely cited in the annuity industry, but buyers who also weight S&P’s assessment should note the BBB+ position. Our resource on structuring pension alternatives using annuities covers how to weigh carrier financial strength in the context of large lump sum rollovers — where the concentration of a significant retirement asset with a single carrier makes the rating evaluation particularly consequential.