Displaying items by tag: retirement

Monday, 05 May 2025 05:05

Three Fixed Annuities for this Month

Annuities offer retirees a steady income stream, with fixed annuities providing guaranteed interest rates during the accumulation phase and predictable payouts in retirement. 

 

April 2025’s top fixed annuities include: Gainbridge’s SteadyPace at 5.80% over five years, Reliance Standard’s 5.00% option, and higher-premium offerings like MassMutual’s Premier Voyage 5, which reaches up to 4.90% for $1M+ investments. 

 

Rates generally vary by premium size and contract length, with most products requiring $10,000–$100,000 minimums and terms of three to five years. Fixed annuities also offer tax-deferred growth and can be customized with features like survivor or death benefits. However, higher returns often require larger upfront investments, and early withdrawals can trigger penalties. 


Despite their complexity, fixed annuities remain a useful tool for generating reliable retirement income, particularly for those seeking stability, tax deferral, and no contribution limits.

Published in Wealth Management
Wednesday, 30 April 2025 10:23

The Ins and Outs of Target Date Funds

Target-date funds are designed for investors with a specific retirement date in mind, automatically adjusting their investment mix to become more conservative as that date approaches. 

 

These funds typically hold a variety of mutual funds rather than individual stocks or bonds, making them a diversified “fund of funds” that simplifies asset allocation. Early in an investor’s career, target-date funds emphasize growth by leaning heavily on equities, then gradually shift toward bonds to preserve capital as retirement nears. 

 

Each fund follows a predetermined glide path, which guides the transition from aggressive to conservative investments over time. Investors benefit from a hands-off approach, as the fund handles rebalancing and risk adjustments without the need for active management. 


Finsum: Overall, target-date funds offer a convenient, age-based solution that combines diversification, risk control, and simplicity in a single investment vehicle.

Published in Wealth Management

While overall annuity sales have cooled slightly from their post-pandemic highs, persistent economic unease may be fueling renewed demand. In Q1 2025, total annuity sales reached $105.4 billion—just 1% below the all-time high recorded in the same quarter last year, according to LIMRA. 

 

The organization attributes this strength to rising consumer anxiety, which in March drove sales to their second-highest monthly total on record. Registered index-linked annuities (RILAs) continued to shine, with sales up 21% year over year, bolstered by product innovation and growing interest from both insurers and investors. 

 

Meanwhile, fixed indexed annuities saw a 7% decline but still posted the fifth-highest quarterly sales ever at $26.7 billion. 


Finsum: For those looking for security with some upside in their retirement portfolios annuities products could provide an outlet. 

Published in Wealth Management

After years of prioritizing safety, retirement savers are once again embracing market risk, as sales of variable annuities tied to investment fund performance surged in late 2024. According to Wink’s latest data, traditional variable annuity sales climbed 53% year over year to $18 billion, outpacing every other annuity category tracked. 

 

Interest also rose in registered index-linked annuities, which mirror stock index performance, with sales growing 38% to $35 billion, while fixed indexed annuities grew by 22% to $32 billion. In contrast, demand dropped sharply for multi-year guaranteed annuities — down 45% to $29 billion — as fewer consumers sought fixed returns. 

 

This rebound in market-linked products reflects renewed investor optimism but also hints at insurer caution, with some reallocating capital toward products that require less financial backing. 


Finsum: Expiring surrender periods on older annuities may be freeing up funds for reinvestment, fueling the uptick in new variable annuity contracts.

Published in Bonds: Total Market

Lawsuits against retirement plan sponsors have increasingly focused on excessive fees and the failure to select lower-cost investment vehicles, like Collective Investment Trusts (CITs), which many sponsors are surprised to learn have existed longer than mutual funds. 

 

CITs, which will reach their centennial in 2027, operate much like mutual funds in structure and oversight, but typically offer lower fees and greater flexibility in pricing. Larger retirement plans have rapidly adopted CITs, with plans over $500 million in assets now allocating about 41% to them, up significantly from just a few years ago. Despite their benefits, some plan sponsors hesitate to adopt CITs due to their lack of publicly searchable tickers and unfamiliar regulation by the OCC rather than the SEC. 

 

However, CITs offer key advantages, including fiduciary governance and the potential for customized pricing through asset aggregation or specialized share classes. 


With education and communication, sponsors and participants can overcome initial concerns and access the cost-efficiency and fiduciary alignment CITs provide.

Published in Wealth Management
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