Annuities are the much maligned investment in the financial world. They encompass a wide array of products, and the bad rap they receive is due to misinformation and a lack of education of the product. Triathlon Partners is dedicated to financial education. This episode identifies the key attributes of annuities, and why they are appropriate investments. Finally the Registered Indexed Linked Annuity, RILA is introduced and discussion ensues why its an appropriate investment for soon to be retirees.
RILA s are investment annuities that allows for equity like returns in appreciating markets and provides protection in down markets. The standard investment choice in a RILA protects an investment against the first 10% loss in exchange for a cap on the maximum gain. Every year this investment resets, which minimizes both the number of and size of negative performing years. This product minimizes the risk of sequential returns.
RILA s are particularly well suited for soon to be retirees. The downside protection offers confidence that the account value will be preserved, as well that the caps offer sufficient growth opportunities. Exposure to equities is important, as historically they are proven as the best hedge against inflation. However the risk associated with equities can deter soon to be retirees, which in the long run has not been to there advantage. The RILA product bridges the gap, making the equity investments more sensible.
Annuities can serve many purposes, most notably investing and providing income. The common attribute across all annuities is tax-deferred growth. The latest episode of Triathlon TV discusses the definition of an annuity, its universal attribute of tax-deferred growth, and the details and benefits of a specific product, the RILA.
Additional resources
Triathlon TV: Retirement Annuity
Triathlon University: Minimizing Volatility When Planning for Retirement, Registered Index Linked Annuity
Everyone Deserves Their HUG
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