No. of Recommendations: 0
DOC1604, you asked:

<< I have been offered an annunity, indexed to the S&P500. If the S&P500 rises, my return is 3% less then the incerase. If the S&P500 falls, my money stays the same, no loss. The S&P500 average used as a baseline is reestablished once each year. What do the Fools think? Is this a good way to protect my retirement funds, while having the opportunity for market growth. I am 66 and semi-retired. Comments are appreciated. Doc. >>

Aside from the usual "annuity" argument issues, what Index Annuities ("Equity Index Annuities") offer is an opportunity for a conservative investment to earn more than what a Fixed Annuity would provide without the market risk that Variable Annuities present. An Index Annuity tied to the S&P500 are NOT designed to give one the same return as one might get if actually invested in a S&P500 account (like one can do in a Variable Annuity). In the Equity Index Annuity, one will ALWAYS get less than what the index actually returns. Hopefully one will do better even though there may be a guaranteed minimum rate of return of 3.5% or so is less that what a Fixed Annuity might produce. As long as this is a LONG TERM position, a conservative investor can do better than a Fixed Annuity . . . but there is still no guarantee that you will do better than a Fixed Annuity - and, you won't have to worry about loosing any principle.
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement