People in retirement or approaching retirement are quite naturally concerned with making sure they never outlive their money. Our current era of interest rates and a volatile and unpredictable stock market and world situation makes this dilemma even more perplexing.

Having offered complementary individual retirement planning meetings for those in, or close to, retirement for 33 years now, I have seen the fear of making the wrong decisions with their money and the erosion of their buying power due to taxes and inflation, low interest rates and possible stock losses wreck havoc in too many financial lives.

What can we do to assure the safety of our money, and at the same time give us a fighting chance to make our money grow and provide life long income? A potential solution for some of a retiree’s money might be a strategy that offers the following:

1. Guarantees the safety of your principal and all interest earned;

2. Provides guaranteed minimum interest as a floor;

3. Helps protect your principal from market risk and downturns;

4. Lets your interest grow without taxation as it accumulates;

5. Interest is linked to stock indexes;

6. Can provide a guaranteed income for life; and

7. Avoids the costs, delays and publicity of the probate process.

I have just offered a summary of a financial vehicle called a Fixed Index Annuity.

Think of it . . . if you didn’t own stocks during the great bull market of the 1990s, when prices skyrocketed, you probably wished you did. If you did own stocks during the fairly recent bear market, when prices plummeted, you probably wish you didn’t!

Fixed Index Annuities offer parts of both worlds . . . interest gains when the stock market index goes up, and a guarantee of no loss when the index drops once your interest has been credited. It is a financial vehicle that offers stock market index linked interest with protection against loss of principal.

How do these work? They are contracts with insurance companies for a specific period of time, which tracks a particular stock market index such as the Standard and Poor’s 500. Your interest will usually be a percentage of the increase in that index in the corresponding index year, up to a maximum of a given percent. There is also a guarantee against loss, which could make it a secure place for some of your money in retirement.

If someone did NOT want to take any risks but still wanted to have a taste of the stock market, a good index annuity might be worth checking out. These typically come with surrender charges of different durations, and are issued by many insurance companies. It is important the individual does their research and deals with a financial professional proficient in this area and, of course, comparison shopping is always a good idea!

A fixed index annuity is one safe financial tool that could help retirees fight those concerns of inflation, taxes and outliving their money.

As with any financial decision, I advise not putting money into these without a full and complete discussion of one’s objectives, time horizon, income needs and other goals, and obtaining a full understanding of how these popular plans coordinate with your overall financial planning. Be sure these financial vehicles are suitable for your individual needs and situation.

Gregory Strong, ChFC, CLU, offers complementary one hour appointments to people with financial and retirement concerns in Lewiston, Yarmouth and Naples. He is a well known public speaker. He can be reached at 846-0734.

Greg has been helping fellow Mainers since 1975. Securities offered through Mutual Service Corporation and LPL Financial are affiliated companies and are members of FINRA / SIPC.