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= Fixed Index Annuity (FIA): Secure Growth with Lifetime Income =

== What Is a Fixed Index Annuity? ==
A '''Fixed Index Annuity (FIA)''' is a retirement savings vehicle offered by insurance companies. It provides **principal protection** from market loss and allows your money to grow based on the performance of a stock market index (like the S&P 500), without being directly invested in the market.

== Key Features ==
* Market-linked growth with a cap
* 0% floor – no market loss
* Tax-deferred accumulation
* Optional lifetime income
* Death benefit for heirs
* Long-term care riders (optional)

== How It Works ==
* You fund the annuity with a lump sum (e.g., from a 401(k) rollover).
* Your account earns interest based on an index.
* You can choose to receive guaranteed income later in life.
* Your principal is protected — even during market downturns.

== Example Scenario ==
'''Sarah, age 58, rolls over $250,000 from her 401(k) into a Fixed Index Annuity.'''
* Year 1: The S&P 500 grows 8%. Her annuity credits 6% due to a cap.
* Year 2: The S&P 500 drops -12%. Her account earns 0%, but suffers no loss.
* Year 10: She activates a lifetime income rider and receives $1,800/month for life—even if her account runs out.

== Real-Life Example: O.J. Simpson ==
Despite owing millions after a civil lawsuit, O.J. Simpson's **annuity income was protected**. His retirement income, partially funded by annuities, could not be touched by creditors. This shows how annuities can offer **legal protection and stable retirement income**.

== FIA vs. 401(k) ==
{| class="wikitable"
|+ Comparison Table
! Feature !! 401(k) !! Fixed Index Annuity
|-
| Market Risk || Yes || No
|-
| Employer Match || Sometimes || No
|-
| Tax-Deferred Growth || Yes || Yes
|-
| Lifetime Income Option || No || Yes
|-
| Principal Protection || No || Yes
|-
| Lawsuit Protection || Limited || Strong (varies by state)
|-
| Probate Avoidance || No || Yes (with beneficiary)
|}

== Pros and Cons ==

=== Pros ===
* Guaranteed principal – no market loss
* Tax-deferred compound growth
* Optional lifetime income
* May include long-term care benefits
* Avoids probate with named beneficiaries
* Potential asset protection

=== Cons ===
* Caps limit market gains
* Surrender charges for early withdrawal
* Limited liquidity
* Complex for first-time buyers

== Common Riders ==
* '''Lifetime Income Rider''' – guarantees income for life
* '''Death Benefit Rider''' – ensures heirs receive a payout
* '''Long-Term Care Rider''' – increases income if care is needed

== Key Terms ==
{| class="wikitable"
! Term !! Description
|-
| Cap Rate || Maximum annual return credited (e.g., 6%)
|-
| Participation Rate || Percentage of index gain credited (e.g., 80%)
|-
| Floor || Minimum credited return (often 0%)
|-
| Surrender Period || Time during which early withdrawals incur penalties
|-
| Annuitization || Converting the annuity into periodic income
|}

== Frequently Asked Questions ==

'''Is my money locked up forever?'''  
No. Most contracts allow 10% annual penalty-free withdrawals after the first year.

'''Are annuities taxed?'''  
Yes. Withdrawals are taxed as ordinary income.

'''Can I lose money?'''  
No. Your worst-case return is 0% in a down market.

'''What happens to the money when I die?'''  
With a named beneficiary, the remaining value goes directly to them—bypassing probate.

== Who Should Consider a Fixed Index Annuity? ==
* Pre-retirees and retirees (ages 50–75)
* Individuals rolling over a 401(k), IRA, or TSP
* Risk-averse investors
* Business owners or professionals seeking asset protection
* People without pensions who want guaranteed lifetime income

== Final Thoughts ==
Fixed Index Annuities offer a safe and strategic option for retirement planning. They blend the **growth potential** of market indexes with the **security of insurance guarantees**—ideal for those who want income they can’t outlive, without worrying about market crashes.

Before purchasing an FIA, consult a licensed insurance professional to compare options and ensure it fits your financial goals.

== Related Pages ==
* [[Annuities Explained]]
* [[401(k) Rollover Strategies]]
* [[Lifetime Income Planning]]
* [[Long-Term Care Insurance]]

== Category ==
[[Category:Annuities]]
[[Category:Fixed Index Annuities]]
[[Category:Retirement Planning]]
[[Category:Insurance Training]]
[[Category:WikiProducers]]