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The Case for Indexed Annuities

Illustration by Chris Gash One of the many drawbacks of record-low interest rates is that they have made creating an income stream in retirement significantly more complicated. Retirees and near-retirees can no longer rely on certificates of deposit and U.S. Treasuries to provide reliable, risk-free income. Interest rates are so low that these investments no longer keep up with inflation, which means investors effectively lose money over time. Likewise, the traditional 60-40 portfolio 60% stocks and mutual funds and 40% government bonds has fallen out of favor with some analysts because of the abysmal returns from the bond portion. That creates a conundrum for older investors who are reluctant to increase their exposure to an uncertain and volatile stock market. But the financial services industry specifically, the insurance industry has an antidote: annuities that provide higher returns than you’ll earn from CDs or government bonds, with limits on how much you can lose in a mark

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