As a Certified Financial Planner™ and retirement strategist, one thing I’ve learned over the years is that retirement planning is all about striking a balance among growth, security, and reliable income. Finding the right tools to achieve that balance can feel overwhelming, especially when it comes to annuities.
One option that often comes up is the Indexed Annuity with a Bonus. While this tool can be powerful, it’s also frequently sold without context, rather than thoughtfully integrated into a personalized plan. That’s where I come in.
My role isn’t to sell products—it’s to educate and guide you towards what aligns with your goals, timeline, and legacy.
What Is an Indexed Annuity with a Bonus
An Indexed Annuity offers growth potential based on a market index (like the S&P 500) but protects your principal from market losses. The “bonus”—typically 5% to 15%—is either added upfront to your account value or applied to the income base used to calculate guaranteed lifetime income.
Why I Sometimes Recommend This Strategy
Here’s when and why this might be the right fit for someone nearing or in retirement:
- Upfront Value Boost: The bonus provides a jumpstart, which can significantly enhance your long-term income, especially if you’re planning to retire within the next 5 to 10 years.
- Market Protection: I often tell clients, “It’s not what you earn—it’s what you keep.” An indexed annuity shields your money during market downturns, providing you with peace of mind when markets are volatile.
- Tax-Deferred Growth: Optional income riders can provide a lifetime paycheck, reducing the risk of outliving your money—something I believe should be central to every retirement strategy.
- Legacy Planning: Indexed annuities can pass directly to your heirs, avoiding probate and streamlining your estate plan. As I always say, “It’s not just your money—it’s your legacy.“
What I Help Clients Watch Out For
These annuities are not perfect, and they’re certainly not for everyone. Here’s where I guide clients with clarity:
- Long Commitments and Surrender Charges: Most contracts have a surrender period of 10-15 years. I ensure that you understand the liquidity limitations and that these align with your broader income and emergency strategy.
- Bonus Confusion: Some bonuses apply only to your income base, not your actual cash value. I will walk you through exactly how this works, so there are no surprises.
- Capped Growth: While you benefit from market performance, returns are limited by caps or spreads. You trade some upside for predictability—often the right trade-off in the preservation phase of life.
- Complex Contract Terms: Insurance language can be hard to decode. I take pride in breaking it down in plain English, so you understand what you’re signing and how it supports your bigger goals.
Is an Indexed Annuity with a Bonus Right for You?
This strategy may be a fit if you:
- Are between the ages of 55 and 70 and approaching retirement
- Want to roll over an IRA or 401(k) safely
- Need a reliable, lifetime income
- Want some growth without market risk
- Intend to leave assets to heirs without the headaches of probate
It’s probably not right if you:
- Need access to all your money soon
- Prefer full market exposure and can stomach volatility
- Are early in your career with decades to go
- Want a simple, no-frills retirement vehicle
How I Help
I’m not just a financial planner, I’m a Certified Financial Planner™ with a deep understanding of how income, taxes, and estate planning intersect. Working from my office in Marion, North Carolina, I assist individuals and couples across the region in creating personalized, flexible, and long-lasting retirement strategies.
If you’re considering an indexed annuity—or want to see how it could fit into your plan—I’m here to walk you through it clearly, honestly, and without pressure.
Ready to see if an Indexed Annuity with a Bonus fits your retirement plan? Let’s schedule a no-obligation strategy session.