Fixed Indexed Annuities in Retirement: The Hidden Gem of Financial Planning
It usually starts with the same question we hear every day: “How do I make sure my money lasts as long as I do?” For most people entering retirement, that isn’t a question about chasing returns—it’s a question about building certainty. After decades of saving, the last thing anyone wants is to spend their “golden years” watching headlines, hoping markets cooperate, and wondering whether a down year will force a change in lifestyle.
That’s where Fixed Indexed Annuities (FIAs) quietly shine. They’re designed to solve a very specific retirement problem: how to participate in potential market-linked growth without taking direct market loss risk. FIAs offer a level of stability that market-based accounts can’t guarantee, while still giving you a structured way to pursue growth through an index-based crediting strategy.
At Diversified Insurance Brokers, we’ve spent more than four decades helping families protect retirement savings through steady, no-guesswork strategies. A fixed indexed annuity can provide principal protection, tax-deferred growth, and (when designed correctly) a path to income you can’t outlive.
Jason Stolz CLTC, CRPC
What Is a Fixed Indexed Annuity?
A fixed indexed annuity is a contract with an insurance company that protects your principal from market losses while giving you the opportunity to earn interest based on the performance of a market index (like the S&P 500). You are not investing directly in the market, and your account value typically does not decline due to index drops. Instead, the insurer credits interest using a defined method—commonly caps, participation rates, and/or spreads—depending on the strategy you select.
Most FIAs are used for one (or more) of three retirement goals: (1) protecting a portion of savings from market loss, (2) seeking tax-deferred accumulation with a rules-based growth approach, and (3) building a future guaranteed lifetime income stream through optional riders.
If you want a deeper primer on how index crediting works, start here: How Does a Fixed Indexed Annuity Work?
The Hidden Gem: Growth Potential Without Market Loss Risk
Retirees are often forced into a frustrating tradeoff: take market risk for growth or accept low yields for safety. A fixed indexed annuity is built to reduce that tradeoff. While it won’t capture every bit of upside in strong bull markets (because of caps/participation/spreads), it can provide meaningful growth potential in many market environments without exposing your principal to direct market declines.
In practical terms, this is why many retirees like FIAs as a “safety bucket” that still has the potential to grow—especially when paired with other retirement assets such as pensions, IRAs, 401(k)s, and Social Security. The goal isn’t to replace everything you own. The goal is to create a retirement plan where essential income isn’t dependent on perfect market timing.
Fixed Indexed Annuities vs. Market-Based Investments
Market-based portfolios depend on volatility management, timing, and emotional discipline. Stocks and bonds can be excellent long-term tools, but retirement is not just about long-term averages—it’s about sequence. A downturn early in retirement can permanently damage a withdrawal plan, even if markets recover later. That’s one reason many retirees look for a “protected” portion of assets that won’t be forced to sell during a bad year.
A fixed indexed annuity removes direct market loss risk from the contract value while still tying potential interest crediting to an index. There is no daily trading, no fear-based selling, and no need to guess when the next correction will come. The rules are set upfront—how interest is credited, how long surrender charges last, how liquidity works, and what income options are available.
Before reallocating assets, we encourage an objective look at your current risk exposure—because many people are taking more market risk than they realize. That’s why we offer a complimentary analysis:
Use our complimentary Investment Risk Analysis to see how your current portfolio may perform across different market environments—and whether adding a fixed indexed annuity could reduce overall retirement risk.
Start Your Investment Risk Analysis
How FIA Growth Works (In Plain English)
With a fixed indexed annuity, you choose how your contract credits interest. Some strategies may be annual point-to-point, monthly sum, or other crediting methods depending on the carrier. What matters most is understanding the “levers” that control potential interest:
Cap rate: the maximum interest that can be credited in a term (for example, “up to X%”).
Participation rate: the percentage of the index gain credited to you (for example, “Y% participation”).
Spread: a deduction taken from the index gain before interest is credited.
Different strategies can make sense for different goals. Some retirees prefer simpler designs focused on steady accumulation; others prioritize riders that build future income. The key is matching the contract design to the outcome you actually want—not just chasing a headline rate.
The Power of Guaranteed Lifetime Income
One of the most valuable features available through many fixed indexed annuities is the ability to create guaranteed lifetime income. This is typically done through a Guaranteed Lifetime Withdrawal Benefit (GLWB) rider. The rider is not the same as your cash value. Think of it as an income framework that can provide a predictable retirement paycheck even if you live far longer than expected.
When structured properly, a lifetime income rider can help cover essential expenses—right alongside Social Security—so that your monthly lifestyle is not dependent on market performance. Learn more here: What is a GLWB?
For many retirees, the emotional benefit is just as important as the financial one. It’s difficult to enjoy retirement when you feel like your future depends on the next market cycle. A guaranteed income stream can replace that fear with freedom.
The Story of John and Mary
When John (68) and Mary (66) sold their small business, they were proud—but nervous. They had worked their entire lives to build $300,000 in savings. The problem wasn’t that they lacked discipline. The problem was that they didn’t want to gamble with their future. After living through multiple market drops, they wanted a plan that felt stable.
They came to Diversified Insurance Brokers looking for peace of mind, not another risk. Their advisor helped them re-allocate part of their savings into an annuity strategy designed to protect principal while building a predictable path toward retirement income. Over time, their contract grew steadily, without the stress of market-driven account swings.
When they were ready, they activated lifetime income—creating a monthly paycheck that aligned with their real-world budget and ensured their essentials were covered. Their Social Security checks still mattered, but the annuity income created the “foundation” that made retirement feel secure.
Note: Rates, caps, participation rates, spreads, bonuses, and rider terms vary by carrier and change over time. Results depend on the specific product design and timing at the time of application.
Another Story: Ellen and the Freedom of Predictability
Ellen is a 72-year-old widow who came to us with one simple wish: “I just want to know the money will last as long as I do.” She wasn’t trying to beat the market. She wasn’t chasing maximum upside. She wanted a reliable plan that wouldn’t require constant monitoring.
Between her Social Security and a small pension, Ellen covered the basics. But she wanted dependable income that could support her lifestyle without stress. Her advisor recommended allocating part of her savings into an annuity strategy that provided protected growth and a guaranteed income option.
Now, each month, Ellen receives a consistent deposit into her checking account—an income stream designed to keep paying as long as she lives. She summed it up simply: “I don’t check my accounts every day anymore. I just live my life.”
Why Fixed Indexed Annuities Stand Out
Fixed indexed annuities aren’t perfect for every person or every dollar. But for many retirees, they can be a powerful “middle ground” between pure market risk and low-yield cash accounts. They stand out because they combine three retirement priorities in one contract: (1) principal protection from direct market losses, (2) tax-deferred growth potential tied to an index, and (3) optional lifetime income features.
For many households, blending annuity income with Social Security or pension benefits creates a rock-solid financial foundation—a plan that pays the bills no matter what markets do. If you’re exploring that type of foundation, it can also help to understand how Social Security and annuities work together.
Fixed Indexed Annuities vs. Bonus Annuities
Some fixed indexed annuities include premium bonuses (or bonus riders) designed to increase either accumulation value or the income base used for future lifetime withdrawals. Bonuses can be helpful in the right situation, but they are never “free”—they typically come with tradeoffs like longer surrender schedules, different caps/spreads, or rider costs.
To compare bonus-oriented designs side by side, visit our current bonus annuity rates page. For conservative accumulation comparisons, you can also review current fixed annuity rates to see how different fixed-rate solutions stack up.
Why Families Trust Diversified Insurance Brokers
We’re proud to be one of America’s most trusted independent insurance agencies—family-owned and operated since 1980. For more than four decades, Diversified Insurance Brokers has helped families make retirement decisions with a focus on stability, transparency, and long-term confidence.
With over 100,000 clients nationwide and a reputation built on 5-star client experiences, families choose our team because we explain complex strategies in clear terms and help clients make decisions without pressure. We believe the best retirement plan is the one you understand—and the one you can stick with—regardless of what markets do next.
As an independent agency licensed in all 50 states, we offer access to one of the largest selections of annuity carriers and product designs in the country. That independence matters. It allows our advisors to compare options across companies—looking at crediting strategies, surrender schedules, income rider structures, and long-term guarantees—so clients can find the right balance of safety, income, and growth.
We also help clients evaluate key contract features that can make or break an annuity decision, including annuity surrender charges and how income rider fees impact the long-term outcome. The goal is not to sell a product—it’s to build a plan that works.
If Not You… Then Who?
Maybe you’ve already planned ahead. But think about someone close to you—a friend, family member, or colleague—who’s still unsure how to make their savings last.
If not you, then who might need this message? Share it with them. You might be the reason they retire with more confidence and less fear.
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Talk to an Advisor or Request Your Annuity Quote
Ready to explore this annuity in more detail—or compare it with other carriers to see if even higher rates are available? With guaranteed income, principal protection, and long-term growth potential on the line, making the right choice is essential. The experienced advisors at Diversified Insurance Brokers will guide you through the options and design a strategy tailored to your retirement goals.
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Frequently Asked Questions About Fixed Annuities
Are fixed annuities safe?
Yes. Fixed annuities provide principal protection and guaranteed interest backed by the claims-paying ability of the issuing insurance company.
Can I lose money in a fixed annuity?
No. Your account value does not decline due to market losses. Interest is credited at a guaranteed rate.
Do fixed annuities offer lifetime income?
Many do. You can annuitize or add an income rider to create guaranteed lifetime income.
How are fixed annuities taxed?
Growth is tax-deferred. Taxes are due only when withdrawals are taken.
What happens at the end of the term?
You can renew, withdraw, transfer, or convert the annuity into income depending on your needs.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
