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Annuities have been around for centuries, actually since the Roman Empire. They have been used as a savings vehicle, and primarily as a way to provide a lifetime guaranteed income. About 20 years ago the first indexed annuities came on the market and they have become, by far, the most popular form of annuity. The primary attraction is the potential for a higher rate of return than the traditional fixed annuity.
The graph below shows the difference between two different investments - the stock market (S&P 500) and an indexed annuity. As you can see from the graph, the green line, which is the indexed annuity, has performed extremely well. The fact that the indexed annuity has never had a negative year, but has been able to participate in a portion of the market gains, has made it, over the long term, an attractive investment option.
Click HERE for a larger version of this graph.
Clearly, the most attractive benefits of indexed annuities is that there is no loss of principal because of stock market declines.
Indexed annuities offer a low, guaranteed, interest rate plus the potential for additional interest credits based on a percentage of the gains of a specified stock market index – the S&P 500® or other, sometimes less traditional, indexes. No matter how much the stock market declines, the annuity owner’s accounts are not affected, because annuity premiums do not directly participate in the stock market by purchasing individual stocks or mutual funds.
An Introduction to Annuities & Growing Your Retirement Income
LS Financial Group Co-Founder and CEO Len Strickler has co-authored 2 books “The Power of Leadership: Leading for Results” and “Safe Money” as well as the host of Safe Money Radio, airing on 4 stations in South Florida.
Len recently authored two articles: one on reducing risk in uncertain markets (Click HERE) and another about the advantage of annuities in bear markets (Click HERE) to read his articles and learn more. You can also hear Len discuss protecting retirement assets with the right investment strategy HERE.
Recently, Len formed an alliance and is a contributing author with retirement specialist, Economist and Author, Mr. Tom Hegna, in Tom’s recent book “Pay Checks and Play Checks.” Tom has also written 4 other books and has hosted a PBS series “Retire Happy.” Below is a video from Tom’s Special PBS Show on the number one risk retirees face.
You MUST Remove This Risk in Retirement!
This protection from downside losses is a primary feature distinguishing indexed annuities from variable annuities. In variable annuities, your funds purchase investments in “sub-accounts.” For this reason, a variable annuity has the opportunity to increase in value when the market rises, but can also decrease in value in a declining market.
Art Athanas, LS Financial Group Co-founder and President, recently authored an article on the compelling advantages of fixed index annuities. Learn how “Zero is Your Hero” HERE.
There is a huge amount of information about annuities on the internet and general media, both pro and con. In our experience the negative information about annuities stems from one major factor, inexperienced insurace agents providing an annuity to a client that does not perfectly match the client’s needs.
There are many different kinds of anuities and a very wide variety of riders available and if the agent has not properly determined the precise needs and desires of the client it can lead to the client purchasing an annuity that does not provide what the client truly requires. Our staff of experienced agents has had many decades of combined experience making sure that our clients receive the proper annuity based on their needs and desires.
Click HERE for a Q & A about annuities.
Click HERE for additional, more detailed, information about annuities.
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