Neeraja Narayanan
Oct 2, 2025
Why Indexed Annuities Can Be a Smart Choice for Retiree’s
When people retire, their biggest concerns are safety and steady income. After years of saving, no one wants to see their money disappear because of risky investments. That’s why experts often suggest seniors place their money in safe vehicles with guarantees, such as Certificates of Deposit (CDs), annuities, or bonds.
Some wealthier people can afford to take risks in the stock market. But for most seniors living on a fixed budget, gambling with savings is dangerous. If the market drops, rebuilding those losses in retirement is nearly impossible.
Why Retirees Still Look at Stocks
Stocks can deliver high returns, which is why many retirees consider them. The main reason is inflation. Inflation means the cost of goods and services goes up over time. A dollar today won’t buy the same amount in 10 or 20 years. Seniors worry about this because it reduces their buying power.
While stocks might outpace inflation, they also come with the chance of large losses. One bad market cycle can erase years of gains. That’s why safer alternatives, like indexed annuities, have become popular.
What Is an Indexed Annuity?
An indexed annuity is designed to offer growth tied to a market index, such as the S&P 500, without the risk of losing your principal. If the market goes up, your annuity can earn interest. If the market goes down, your account value stays the same. This gives you a way to fight inflation while keeping your money safe.
Two Major Benefits of Indexed Annuities
No-Loss Provision Once your money is in the annuity and interest is credited, your account value won’t drop below that level. Even if the stock market falls, your savings stay protected. This feature gives retirees confidence that their hard-earned money won’t vanish.
Interest Guarantees Indexed annuities come with caps and bases. The cap is the maximum amount of interest you can earn in a set period. The base is the minimum you’re guaranteed. While caps vary, the base is usually zero. That means you can benefit from market growth, but you’ll never lose money in a downturn.
Why Stocks May Not Be the Best Fit for Seniors
For younger investors, stocks can make sense because they have time to recover from losses. Seniors don’t have that luxury. Protecting principal becomes more important than chasing high returns. Indexed annuities offer a balance of safety and growth, helping retirees keep pace with inflation without taking on unnecessary risks.
Retirement is about peace of mind. Seniors want to know their savings will last and provide steady income. Indexed annuities give them a way to grow their money, guard against inflation, and protect what they’ve worked a lifetime to build. If you’re worried about inflation or market losses, it may be time to look at indexed annuities as part of your retirement strategy.