Which Type of Annuity is Best for Older People at Age 66: Fixed Indexed Annuities or MYGA?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Fixed Indexed Annuities

Features:

  • Returns: Linked to a stock market index but with a cap on returns.
  • Risk: Lower risk as they offer a guaranteed minimum return.
  • Flexibility: Offers potential for higher returns compared to fixed annuities, depending on market performance.

Pros:

  1. Protection from Market Downturns: Ensures that the principal is not lost due to market declines.
  2. Potential for Higher Returns: Offers better returns than traditional fixed annuities if the market performs well.
  3. Guaranteed Income Stream: Provides a steady income, beneficial for budgeting in retirement.

Cons:

  1. Capped Gains: Limits the potential for higher returns.
  2. Complexity: Can be more complex to understand due to its link to stock market indices.

Multi-Year Guarantee Annuities (MYGA)

Features:

  • Returns: Offers a fixed interest rate for a specified term.
  • Risk: Very low risk, as the rate of return is guaranteed.
  • Simplicity: Straightforward product, easy to understand.

Pros:

  1. Guaranteed Interest Rate: Provides a fixed rate of return, which is beneficial during times of market volatility.
  2. Safety of Principal: Ensures the safety of the invested capital.
  3. Predictable Income: Offers predictable, stable returns, ideal for strict budget planning in retirement.

Cons:

  1. Limited Growth Potential: Lower potential for growth compared to market-linked products.
  2. Interest Rate Sensitivity: Future renewals may be at lower rates if interest rates decline.

Comparison Table

FeatureFixed Indexed AnnuitiesMulti-Year Guarantee Annuities (MYGA)
RiskLower riskVery low risk
ReturnsMarket-linked, cappedFixed interest rate
SuitabilityBetter for those seeking a balance between safety and growthIdeal for those prioritizing safety and predictability
ComplexityMore complexSimple and straightforward

Conclusion

For older individuals at age 66, the choice between a Fixed Indexed Annuity and a MYGA depends on their risk tolerance, income needs, and understanding of financial products. Fixed-indexed annuities offer a balance between risk and potential for growth, suitable for those who are comfortable with some market exposure. MYGA is ideal for those seeking guaranteed returns and simplicity. It is essential to consult with a financial advisor to determine the best fit based on individual circumstances and financial goals. Contact us today for a free quote.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

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

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