Here at the IALC, we know that your finances are important to you and having a strong plan for the future can help ensure your peace of mind. That’s why we’re dedicated to providing complete and factual information about indexed annuities.

As you may have noticed we’ve changed things up a bit. To help guide you through planning for your financial future, we’ve added more resources and retirement information to our site.

  • Check out our new retirement calculators to see if you’re on track or how inflation will affect your plan.

Is there something that you would like to see on Indexed Annuity Insights? Send us a note on Twitter @IALCouncil.

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Indexed annuities offer a unique and attractive blend of safety, growth potential, tax advantages, lifetime income and liquidity. But, it’s important to understand the terms of your individual contract. Here are some questions you can ask your insurance agent before signing on the dotted line.

1) How long is the term?
Review the term of the contract, and make sure it fits with your lifestyle needs. Will you be able to start receiving money upon your retirement? Will the amount you can receive penalty-free meet your needs? If you can wait several years into retirement to begin receiving payments, by how much will that increase the amounts you can receive? Understand the long-term nature of an annuity purchase, and make sure you plan to keep the annuity long enough that any early withdrawal penalties, usually called “surrender charges,” don’t take a significant portion of your contribution. Typically, terms are around 7-10 years, but vary from contract to contract. Your insurance agent should work with you to determine whether or not an indexed annuity is suitable for you.

2) What penalties will I incur if I remove my money early?
All withdrawals made prior to age 59 ½ are considered a premature distribution and may be subject to a 10% tax penalty in addition to ordinary income tax.

Additionally, similar to fees associated with other financial products, insurance companies will often charge a surrender fee if the contract is ended before term. However, surrender or withdrawal charges are often waived if you (1) die; (2) become confined to a hospital or nursing home for a specified period; or (3) you choose to take a guaranteed income stream. In addition, most indexed annuities allow you take up to 10% of your contract value each year without incurring a surrender or withdrawal charge. See if these apply to the agreements you’re researching.

3) Which indexing method is used?
The indexing method means the approach used to measure the amount of change in the index. Annual reset, high-water mark and point-to-point are common methods. The method will determine when interest is added to your annuity, as well as how the interest is calculated.

4) What is an interest rate cap?
Indexed annuities aren’t designed to replicate stock market returns; they’re designed to protect your money. In a negative stock market year, fixed indexed annuities eliminate the effect of the loss and provide immediate, total protection of your account value. That’s incredibly valuable protection, and it’s expensive for the carrier to provide, which is why most indexed annuities have caps on your return. A cap places an upper limit on the amount of any index gain that will be credited to your contract. Ask your insurance agent what the cap is and think about how much of your retirement funds you want to keep protected in an annuity. It is the cost of the protection provided in a down year that prevents your insurance provider from being able to give you all of the index increase in an up year.

5) What is the participation rate?
A participation rate is similar to an interest rate cap in that it limits the amount of any index gain which is credited to your contract. Some contracts have either a participation rate or a cap, and others have both. The participation rate determines how much of the increase in the index will be used to calculate index-linked interest. This method credits a percentage or proportion of the index value change percentage as interest. For example, an 80% participation rate applied to an index value change percentage of 10% will yield a credit of 8%.



3 Ways to Bridge the Gender Savings Gap

This post originally appeared on the National Life Group Main Street blog on 3/9. By Maria McLendon.

When it comes to savings, the gender savings gap is huge. A recent study[1] indicated that women have 50% lower savings than their male counterparts. There are a number of reasons that this disparity exists, among these are that, on average, women earn lower salaries than their male counterparts and will spend fewer years in the workforce. However, there are actions that women can take right now, that will help improve their savings and provide a bridge to end the gender savings gap.

1) Start Now

The very first step to eliminating the Gender Savings gap is for women of all ages to start saving now. If you are a parent of a young daughter, start saving on her behalf—even if it is coins in a piggy bank. If you are a young woman just starting your career, start saving now—even if it is just a few dollars a week. By the time you are in your 30s, you should be saving 10-15% of your income and the sooner you start, the more quickly you can get to that rate of savings.

2) Make Consistent, Incremental Increases

Commit to increasing your rate of savings every year. Increasing the amount you save by just $25/month every year could mean that you will have $5,000 more in retirement savings, and an increase of $150/month[2] every year could mean more than $34,000 in savings when you get to retirement.

Check out this image for more ways that incremental increases can make a positive impact on your long-term savings balance.

3) Keep Things Balanced

Make sure that at least a portion of your savings is in lower-risk products that are not subject to loss from economic or stock market volatility. Fixed Annuities and Fixed Indexed Annuities are insurance products that offer guaranteed[3] rates of interest, protect your principle and interest from loss due to market downturns (assuming you don’t make any early withdrawals), and can offer the advantages of tax-deferred savings when part of a retirement plan.

The surest way to make change is to take action. Do something today to help close the gender savings gap for tomorrow.

[1] Women versus men in DC Plans, Vanguard white paper, October 2015.

[2] Assumes a 3% rate of return for 15 years before taxes are assessed. This is a hypothetical example for illustrative purposes only – not representative of any particular investment or insurance product.

[3] Guarantees are dependent on the claims paying ability of the issuing Company. Because they are meant for long-term accumulation, most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. In addition, withdrawals prior to age 59 ½ may be subject to a 10% Federal Tax Penalty. All withdrawals made from annuities with pre-tax contributions are taxed as ordinary income. All withdrawals from an annuity purchased with non-qualified monies are taxable as ordinary income only to the extent there is a gain in the policy. Indexed annuities do not directly participate in any stock or equity investments. This is not a solicitation of any specific annuity contract.

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New Study: Americans Retirement IQ is Low

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A startling number of baby boomers don’t know how much money they need to live comfortably during retirement, and without a target in mind, have ended up saving very little. In fact, 1 in 4 baby boomers have less than $5k saved for retirement.

But the good news for boomers struggling to plan for their golden years is it’s easy to raise your retirement IQ. Start with the basics of estimating costs, get a balanced portfolio in place, and research financial products that offer a guaranteed stream of income no matter how long you live.

Although many Americans think they are financially savvy, new data shows how the group closest to retirement, baby boomers, struggles with retirement fundamentals and is not saving enough for their golden years. New data released by the Indexed Annuity Leadership Council shows that many baby boomers aren’t financially prepared for retirement – they have little saved, are consumed about lifetime income options, and don’t know how much money they need to live comfortably.

  • 60% of baby boomers think they need less than $1 million in retirement, when in reality at least a quarter of a million will be needed for health care costs alone
  • 1 in 4 boomers have less than $5,000 saved for retirement
  • Nearly half of boomers don’t know that there are financial products that deliver lifetime income
  • 2 out of 5 boomers think they will get more money from Social Security than the average monthly payment

Many baby boomers are banking on Social Security as a main stream of money for retirement. Yet, more than half of boomers cannot correctly guess the average monthly Social Security payment. In fact, many think the average monthly payment is $500 more than it actually is – a budget miscalculation that will leave them almost a quarter of a million dollars short over a 30-year retirement.

Social Security isn’t the only consistent paycheck available in retirement; Fixed Indexed Annuities (FIAs) can provide a steady, guaranteed lifetime income stream with minimum guaranteed interest credits. FIAs can serve as part of a balanced financial plan because they do not directly participate in any stock or equity investments and protect your principal from fluctuations in the market.

Budgeting troubles continue when boomers are asked what they would do with a large cash gift as retirement doesn’t come to mind for many.

  • 40% of boomers prioritize lifestyle purchases over retirement savings
  • 52% of boomers have debt to pay down before saving for retirement

“Struggling to estimate how much money will be needed during retirement or sifting through different financial products can feel like a big hurdle, especially for those close to retirement,” says Jim Poolman, executive director of the IALC. “The good news is it’s fairly easy to increase your retirement IQ.  Start with the basics of estimating retirement costs and getting a balanced portfolio in place.”

Ensuring your savings can fulfill your retirement expectations starts with calculating how much you’ll need for the entire length of retirement. You’ll need to take into account your lifestyle budget, Social Security benefits available to you and any lifetime income streams. Once you know how much you’ll need, you can evaluate your current savings plan and how the products in your portfolio are helping you achieve your retirement goals.

How will you pay for retirement? Find out how much you will need with IALC’s retirement calculators.

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Data trends were compiled from the GfK’s KnowledgePanel, a nationally representative sample of 6,490 Americans between April and May of 2016 and Toluna’s online panel in August 2016, among n=510 adults (ages 18 and over).  Figures for age, sex and region income were weighted where necessary to bring them into line with their actual proportions in the census population

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Employee Appreciation Day & Your 401(k)

Today, marks National Employee Appreciation Day—an opportunity for managers and bosses to take a moment, appreciate their employees and thank them for their hard work. But this likely isn’t the only time you could enjoy a perk from your company.

Many employers offer 401(k) programs as part of their benefits package, allowing you to begin setting aside a portion of your income for those golden years. The best part? Many employers even offer a matching program, which means they will match a certain percentage of your contributions. Not participating in this program is like leaving money on the table. It’s just one little way your employer can show you they care each and every day.

Maxed out your 401(k)? Consider adding a Fixed Indexed Annuity to your portfolio—there’s no cap on how much you can contribute and adding an FIA can help bring much-needed balance to your mix of retirement savings products.

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Don’t Take the Journey Through Retirement Savings Alone

We live in a high-tech world where information about all topics under the sun is available at our fingertips. We are moving toward self-service and automatic access to everything. You can look at your checking account balance on your phone; you can make dinner reservations with a couple of clicks, and you can confirm a dentist appointment with a one-letter text message response, all within a matter of minutes.

While high-tech solutions offer tremendous convenience, some things are still much better when they are high-touch. One of these things is retirement planning and creating a financial plan for the future.

There are many options and components available when you are building your retirement plan, and professional guidance on how these components can work together can make a significant impact on what your future values will be.

401(k), 403(b), 457 and other qualified retirement plans are tax-advantaged plans established by the IRS, to help Americans save for their retirement years. Many organizations that offer these plans provide their employees with self-service options to access the savings and investment components within these plans.

While this is indeed convenient, it can be very confusing to know which options to select. Working with a professional to clarify the choices that are available to you, and the impact that those selections can have on your savings and retirement income potential can prove to be invaluable advice for the future.

Additionally, financial professionals can help make suggestions on what your portfolio may be missing. For example, a sit down meeting with an industry professional may show you that your portfolio is in need of balance that could be added by incorporating a fixed indexed annuity. Seeking guidance on your options for retirement savings could mean all the difference into your golden years.

This blog was adapted from this original article, which appeared in the National Life Group Blog on February 15, 2017.



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Celebrating the 22nd Anniversary of Fixed Indexed Annuities

Move aside, Valentine’s Day… there’s another reason to celebrate! This week, we’re commemorating the 22nd anniversary of Fixed Indexed Annuities (FIAs). While we can’t guarantee flowers or heart-eyed emojis, this anniversary marks the continuous advancement of a retirement product that can offer guaranteed lifetime income. Fixed Indexed Annuities (FIAs) are great for your conservative investing dollars and a great way to diversify your retirement savings.

FIAs were first introduced to consumers on February 15th, 1995. FIAs can be a smart option for most ages and savers at any level. Join the growing movement by taking advantage of the benefits of FIAs to help create a sustainable retirement future.

  • The retirement landscape is evolving – people are living longer and Social Security is becoming less secure. Coupled with market volatility, the future is uncertain. Adding an FIA to your retirement portfolio can help generate steady, lifetime income.
  • Other retirement products have limits that hinder flexibility and savings growth. An IRA or 401(k) might control how much you’re able to contribute, but FIAs do not have annual contribution caps.
  • Balancing your portfolio can help your retirement dreams come to life. Diversifying your account through using both employer offered programs and products like an FIA can create opportunities for traveling, spending time with friends, or investing in your grandchildren’s future.

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Finding your soulmate and saving for retirement actually have a lot in common. Both can be intimidating, require careful planning and lead to some nerve-wracking decisions. However, making informed steps in both scenarios can leave you feeling happy and secure.

Fall in love with your retirement savings plan with these helpful tips:  

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Bringing Balance to Your Retirement Portfolio

In our hectic lives, balance is something many of us strive to achieve. From work-life balance to finding balance in your yoga class, we’re all looking for a little more of it.

In terms of planning for the future, have you thought about ways to balance your retirement portfolio? These 3 practical tips will make sure you’re not putting all your financial eggs in one basket:



Take advantage of employer offered programs. Many employers not only offer retirement savings programs like 401(k)s, but many will match a certain percentage of your contributions. Not participating in this program is like leaving money on the table. It’s important to balance more risky decisions with reliable ones like a retirement savings program.



Not relying only on Social Security. It’s no secret that Americans are questioning the future of Social Security. The problem, however, is that 2 out of 5 boomers think they will get more money from Social Security than the average monthly payment, according to a recent study conducted by the IALC.  Social Security might not be enough to get you through retirement comfortably, so it’s crucial to remember to supplement with other retirement products.




Look into other balancing options. As you balance the risk in your retirement portfolio, consider a fixed indexed annuity. These products offer low risk, guaranteed income and protection for market ups and downs.



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Retirement Savings Resolutions for the New Year

While getting your health into shape tops many Americans’ New Year’s resolution list, getting your finances in shape should be another goal you make in the New Year.  Why is this so important? A recent study  showed that nearly 40 percent of Americans don’t have any retirement savings.  That’s a big deal. This year, consider making a Retirement Resolution.

Here are a few simple tips for helping you stay on track:

  1. Set short term goals. Instead of thinking of a total amount you’ll need saved by the time you retire, start small.  For example, set aside $30 a week rather than $30,000.00 in a year. While it might not seem like a lot, a little can add up fast.
  2. Change your date night. Instead of going out to eat every Friday night, try making dinner at home twice a month instead. The money you save on going out to restaurants can be put directly into your retirement account.
  3. Set up Automatic Payments. It’s easy to say you’re going to diet, but following through with a diet is harder. It can be the same with savings. Here’s an easy tip: set up automatic transfers each month so you won’t be tempted to spend that savings on something else.
  4. Add to your retirement portfolio. While investing in a 401(k) is a great start to a retirement portfolio, don’t put all your eggs into one basket. This New Year’s think about adding other options like a Fixed Indexed Annuity to balance your portfolio.

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