Stocks Are Too Risky For Retirees

Experts recommend seniors to put their money in something safe, with minimum guarantees. For example, Certificates of Deposit’s, annuities or bonds.  Now, there are select groups who can afford to play the game of risk that the market entails, but for most retirees living on a restrictive budget, playing the risk game should be avoided. 

Investing in stock has its place in the financial arena. The main reason retirees invest in stock is to hopefully, get a huge return on their money and to outpace inflation.

Retirees have a valid concern when comes to inflation. However, there are ways to outpace inflation, without taking chances in the stock market.

This is where the Indexed Annuity comes in. Indexed Annuities are one of the few investment vehicles that can hedge inflation. Unlike CD’s, bonds and money markets, Indexed Annuities have the potential for stock market type returns without the market risk. Retirees need safety, and all investing must be done prudently and cautiously.

Indexed Annuities Are a Great Option For Seniors

Many retirees are concerned about how inflation may reduce the value of their savings, giving them less buying power long term.  By investing into an Index annuity, they have the potential of outpacing inflation, thus keeping the buying power intact. Plus, there are 2 other benefits for using an indexed Annuity, rather than investing in risky stocks:

No-Loss Provision – The first and possibly most-attractive provision of equity index annuities is the no-loss provision. This means that once a premium payment has been made or interest has been credited to the account, the account value will never decrease below that amount. This provides safety against the volatility of the market.

Interest Guarantees – The second benefit that appeals to many people is the interest guarantees. Most policies have a cap (maximum interest rate that can be credited to a policy in a specific period) and a base (the minimum interest rate that can be credited in a policy year). The cap rate can vary from no cap to a fixed percentage, but the base is generally zero. This allows the policyholder to benefit from potentially high returns and be guaranteed at the same time, that no money will be lost.

For most retirees, stocks are just too risky and may lead to a significant loss of principal, and now with options available such as the Index Annuity, dabbling in the market is just too risky, it’s also unnecessary.

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