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Fixed indexed annuities (FIAs) can play an important role in your clients' retirement plans by offering growth potential, protection from loss due to market downturns, and the option for guaranteed lifetime income. Yet many clients are less familiar with annuities in general — and FIAs in particular — than with financial products such as mutual funds. What's more, because FIAs have features of insurance and growth potential, they can seem more complicated than they really are.

In this article, we answer five questions clients commonly ask about FIAs, so you can help them make more informed decisions about adding annuities to their retirement plans.

1. How can a FIA help my retirement savings grow?
   The opportunity to build retirement savings is a feature of FIAs that many clients find appealing. You can describe how some FIAs offer the potential for interest credits that are tied to the performance of a stock market index — without having to invest directly in the market. If the index rises, they will receive a portion of that increase in the form of interest credits. If it declines, they may receive zero percent interest credits — but they'll never receive less than zero.
   
   What's more, the buildup within an FIA is not taxed until it's withdrawn, similar to retirement savings vehicles such as 401(k)s and non-Roth IRAs.
   
   
2. Why won't I benefit from all of the index gain?
   This is a trade off: Clients may be willing to accept some limits on their upside potential in exchange for protection from loss due to market downturns.
   
   
3. What happens if the markets go down?
   Savings in an FIA won't lose money in a market downturn because they are not invested directly in the markets. What's more, FIAs lock in previous interest gains, so that growth is also protected.
   
   
4. How do I use an FIA to help pay retirement expenses?
   As annuities, FIAs can provide a guaranteed stream of income. Adding annuities to a retirement income plan can help build a larger retirement "paycheck" that won't fluctuate — unlike withdrawals from investments whose value rises and falls with the market.
   
   
5. Where does an FIA fit in my overall retirement plan?
   FIAs can help meet a number of your clients' needs, depending on their current mix of financial products, goals and primary concerns. Consider touching on these major benefits:
   
   
   • Accelerating retirement savings: Unlike 401(k)s and IRAs, FIAs have no contribution limits for non-qualified premium. This feature may be appealing to older clients looking to boost retirement savings, or to those who have maxed out annual 401(k) and IRA contributions.
   • Protection against longevity risk: Depending on the annuity, clients may include an income rider for an additional fee. The rider can be used to provide a source of guaranteed income that can last a lifetime.
   • Tax management: Unlike withdrawals from 401(k)s and IRAs, which are fully taxable (except Roth IRAs), clients only pay taxes on the interest earned in their FIA for non-qualified premium. Because the income from an FIA is typically made up of a combination of interest and the return of the client's original premium, only a portion of it is taxable. This feature can help clients use FIA income in conjunction with fully taxable withdrawals from other sources to lower their overall tax burden in retirement.

This information is brought to you by Athene — where innovative annuity solutions and unique interest crediting strategies are powered by unconventional thinking.