High Water Mark: What It Is and How to Achieve It

Shawn Plummer

CEO, The Annuity Expert

What is a high water mark in annuities? A high water mark (HWM) is the highest point that an investment has reached. It’s important to be aware of your HWM, because once you reach it, you can no longer earn any additional profits on that investment. In this guide, we will discuss what a high water mark is and how to achieve it!

High Water Mark

The look-back approach to calculating the high water mark index interest strategy is one of several indexed annuity look-back strategies. This method of calculating the unadjusted index interest rate begins with the index’s closing level at the start of the index term, but it looks back after the index term has ended to determine its end.

Even if the highest anniversary index level during the index term period is the first anniversary, and the index term is five years or more, in the high water method, each anniversary’s index level is recorded, and the highest anniversary index level during the five-year duration becomes the ending point—regardless of whether it’s the first anniversary.

Once the start and finish points have been established, the calculation is identical to other unadjusted index interest rate calculations. The percentage rise, for example, is determined, and this is the unadjusted index interest rate.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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