How to Survive and Thrive Market Losses from COVID-19

As retirees, this can become very overwhelming when we wonder how to protect our hard-earned retirement funds.

Do the following fears keep you awake at night?

1. Retirees are living longer with advances in medicine and technology; it is not uncommon to live well into your nineties.
2. Fear of running out of money as we live longer.
3. Taxes are also a big deal as our country is now roughly $28 trillion in deficit and who will foot that bill, probably the middle class.

4. Long-term care is another concern, with more than 70% of retirees needing some form of long-term care in their golden years.
5. Retirees are spending at least as much post-retirement as pre-retirement and health care spending is skyrocketing.

Is there any hope? Is there any alternative to protect our director? Guarantee income for life? Well, the good news… there is! It is called a Fixed Index Annuity. Note that I didn’t say a variable annuity because they have a bad rap because they are still in the market, taking that horrible roller coaster ride.
How Indexed Annuities Work

Indexed annuities offer a guaranteed interest rate plus potentially additional interest credits, based on a percentage of the earnings of a specific stock index, such as the S&P 500® or other financial market indices. Indexed annuities give you the ability to credit additional interest without risk due to market declines. One of the most attractive benefits of indexed annuities is that there is no principal loss due to stock market declines.

No matter how far the stock market may fall, the insurance company’s clients are not affected, because their annuity premiums do not participate directly in the stock market. This downside loss protection is a feature that sets indexed annuities apart.
of variable annuities. With variable annuities, your funds buy investments, called “subaccounts.” For this reason, a variable annuity may have the opportunity to increase in value when the market rises. However, if the market goes down, your portfolio goes down too.

Indexed annuities have a zero floor so your invested money can never drop below zero if there are zero rates on the policy. In other words, you can never lose your principal. Indexed annuities also allow you to share in some of the market advantages, which in layman’s terms we call a ceiling. For example, depending on the insurance company, it may be a percentage of say the S&P 500 or some other index in the market. However, once again, you do not risk a market loss, only the advantage detailed in the contract, and you never return any profit.

In these unprecedented times with the health care crisis and market volatility, many retirees are scared to death of a repeat of the tech bubble collapse of the early 2000s or the housing crisis of 2008. I would at least propose consider talking to a financial professional who understands fixed indexed annuities, which can show you guaranteed income, modest gains, and ZERO principal losses.
When designed properly, a fixed index annuity can provide you and your loved one with real peace of mind.