Understanding the Roles of Fixed Registered and Deferred Annuities

When planning for retirement, understanding registered deferred annuities is crucial to ensure that your investment strategy aligns with your long-term goals. A fixed premium registered deferred annuity is a popular choice. But one common question is: who bears all the investment risk in a fixed annuity? This question is important as it impacts the security and potential returns you can expect. Let’s dive into this and find the answers, so you can make an informed decision about which annuity best suits your retirement needs.

What is a Fixed Annuity, and Who Bears All the Investment Risk?

A fixed annuity provides a guaranteed return on your investment. With this type of annuity, you agree to pay a lump sum to an insurance company. In exchange, the insurer guarantees you regular payments starting at a specified time, often in retirement. This fixed amount is determined at the time of purchase, and you are assured of receiving it for a set period or for the rest of your life. There is no risk to the person purchasing the annuity. The deferred payments are determined up front and are guaranteed.

So, who bears all the investment risk in a fixed annuity? The insurance company is responsible for assuming the risk. You, as the policyholder, are not exposed to market fluctuations. The insurer guarantees the return based on their financial strength, making it a stable and low-risk investment for you. This provides peace of mind for individuals who are risk-averse or nearing retirement, as it ensures predictable income.

Benefits of a Fixed Annuity

Fixed annuities are often sought after for their stability and security. They are ideal for individuals who want a reliable income in retirement without worrying about the ups and downs of the financial markets. This makes them particularly appealing to conservative investors, as they eliminate the uncertainties that come with stocks, bonds, and other more volatile investment options.

This can be an attractive feature for people who want to avoid the possibility of their retirement savings being depleted by market volatility.

Choosing the Right Annuity for Your Retirement

It’s a good idea to speak with an annuity broker who can provide personalized advice and help craft an annuity plan that aligns with your needs. At Beaton Annuity Services, we specialize in offering tailored guidance for our clients, ensuring that you can make an informed decision without hidden costs. And the best part? There are no broker fees for any guaranteed annuities sold in Canada. Call us at 1-800-667-8818 and let us guide you towards making a confident decision for your future.