Equity Index Annuities Pros and Cons

Equity index annuities can be the best annuities for retirement, but only if you choose the right one. Most people who invest in annuities are looking for a safe money investment that will provide a stream of guaranteed income for the rest of their lives. While generating the most monthly income from your investment may be your primary goal, don’t confuse income with annuity returns.

Get Going After Retirement

Annuity returns are based on the total payout, not the monthly payout. Life expectancy is a key metric used to determine how much your monthly payout will be. If you live longer than the actuarial tables say you should live, you will continue to receive regular payments and your return on your original investment will be higher than if you die earlier than expected.

Equity index annuities add another component that affects both annual and lifetime annuity returns. In addition to being guaranteed a fixed interest rate each year, you can earn extra interest (returns) if the equity index (usually the S&P 500) goes up in a one-year period.

While many think that these are the best annuities for retirement, there are those who might think otherwise. It helps to do a short annuity review of equity index annuities and weigh the pros and cons before investing.

Equity indexed annuity pros

  • Guaranteed to receive a minimum rate of interest every year
  • Will receive an additional amount of interest when the equity index goes up
  • Will not lose any money in a year when the index goes down

Equity indexed annuity cons

  • Guaranteed interest rate may be lower than other types of annuities
  • A participation rate and a cap may limit your gains when the index is up big

Equity indexed annuities can offer greater annuity returns than annuities that have a fixed interest rate. See how you may benefit from the best annuity plans by clicking on the orange button and getting a free annuity quote.

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