In today’s low interest rate environment, a Power Series Index Annuity may provide more interest than some fixed income instruments, while safeguarding principal against loss. In fact, a recent study by AllianceBernstein (AB), a leading asset management firm, showed that a portfolio enhanced with a fixed index annuity outperformed a traditional 60/40 stock and bond portfolio between 72%-92% of the time, depending on the interest rate environment.
Adding a fixed index annuity (FIA) can improve savings outcomes
Based on AB research of hypothetical scenarios.
Current forecasts do not guarantee future results.
The 60/40 Portfolio represents a blend of the total returns of 60% S&P 500 and 40% Bloomberg Barclays US Aggregate Bond Index. Price returns would be lower. The FIA Enhanced Portfolio represents 60% S&P 500 total return, 20% Bloomberg Barclays US Aggregate Bond Index total return and 20% fixed index annuity return based on the S&P 500 price return. Taxes are omitted, as assets are asummed to be held within qualified retirement vehicles. Based on distributions from 5,000 simulations of future returns provided by JourneyGuide retirement-planning software over a 10-year period starting December 31, 2020. Source: Bloomberg Barclays, JourneyGuide, S&P and AB.
Index annuities are not a direct investment in the stock market. They are long-term insurance products with guarantees backed by the claims-paying ability of the issuing insurance company. They provide the potential for interest to be credited based in part on the performance of the specified index, without the risk of loss of premium due to market downturns or fluctuations. Index annuities may not be appropriate for all individuals.
Withdrawals may be subject to federal and/or state income taxes. An additional 10% federal tax may apply if clients make withdrawals or surrender their annuity before age 59½. Clients should consult their tax advisor regarding their specific situation.
Fixed income instruments like bonds have different objectives, risk tolerance levels and time horizons than index annuities. For example, bonds offer the potential for capital appreciation and income, but they are subject to risks, including the possible loss of principal. Gains or income from bonds are subject to capital gains or ordinary income tax. U.S. government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. Interest from Treasury bills and U.S. government bonds is exempt from state and local income taxes, but may be subject to federal income tax. Earnings for bonds are taxable annually, while earnings from an annuity are not taxed until withdrawn. Clients should consult their financial professional or agent regarding their individual situation when comparing these various instruments to index annuities.
The Power Series of Index Annuities are issued by American General Life Insurance Company (AGL), Houston, Texas or The Variable Annuity Life Insurance Company (VALIC), Houston, Texas. AGL and VALIC are member companies of American International Group, Inc. (AIG). The underwriting risks, financial and contractual obligations and support functions associated with the annuities issued by AGL or VALIC are its responsibility. Guarantees are backed by the claims-paying ability of the issuing insurance company. AGL does not issue products in the state of New York. Annuities and riders may vary by state and are not available in all states.
May Lose Value • No Bank or Credit Union Guarantee • Not a Deposit • Not Insured by Any Federal Government Agency
AIG Life & Retirement consists of four operating segments: Individual Retirement, Group Retirement, Life Insurance and Institutional Markets. It includes the following major U.S. life insurance companies: American General Life Insurance Company; The Variable Annuity Life Insurance Company; and The United States Life Insurance Company in the City of New York.
Life insurance and annuities issued by American General Life Insurance Company (AGL), Houston, TX except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life). Certain annuities are issued by The Variable Annuity Life Insurance Company (VALIC), Houston, TX. Issuing companies AGL, US Life and VALIC are responsible for financial obligations of insurance products. AGL does not solicit, issue or deliver policies or contracts in the state of New York. VALIC, AGL and USL, its employees, representatives do not provide tax or legal advice. Products and services may not be available in all states and product features may vary by state.
Securities products are distributed by AIG Capital Services, Inc. (ACS). Member FINRA, 21650 Oxnard Street, Suite 750, Woodland Hills, CA 91367-4997.
AIG Retirement Services represents The Variable Annuity Life Insurance Company (VALIC), Houston, TX and its subsidiaries, VALIC Financial Advisors, Inc. (VFA) and VALIC Retirement Services Company (VRSCO). Securities and investment advisory services offered through VALIC Financial Advisors, Inc. (VFA), member FINRA, SIPC and an SEC-registered investment adviser, 2919 Allen Pkwy, Houston, TX 77019-2158.
All companies are members of American International Group, Inc. (AIG).
This material is general in nature, was developed for educational use only, and is not intended to provide financial, legal, fiduciary, accounting or tax advice, nor is it intended to make any recommendations. Applicable laws and regulations are complex and subject to change. Please consult with your financial professional regarding your situation. For legal, accounting or tax advice consult the appropriate professional.