Best Fixed Indexed Annuities for Retirement Income

As you approach retirement, the need for stable, reliable income becomes more critical than ever. Fixed indexed annuities (FIAs) have emerged as a powerful financial tool for retirees seeking both growth and security. But with dozens of options on the market, how do you find the best fixed indexed annuities for retirement income?

In this guide, we’ll break down how fixed indexed annuities work, why they’re valuable for retirement, and which features make certain products stand out in 2025.

Best Fixed Indexed Annuities for Retirement Income

What Is a Fixed Indexed Annuity?

A fixed indexed annuity is a long-term contract between you and a life insurance company. In exchange for a lump-sum payment or a series of contributions, the issuing insurer promises to provide an income stream—either immediately or at a future date—designed to support your retirement goals.

The “indexed” portion refers to how your contract earns interest. Instead of traditional fixed rates, your growth is tied to a market index—most commonly an index such as the S&P 500. You participate in a portion of the upside when the market performs well, but your principal is never at risk during downturns. This blend of upside potential and principal protection makes fixed indexed annuities a compelling choice for conservative investors seeking balance between security and performance.

FIAs use crediting options to determine how much interest your account earns. These options may include cap rates, participation rates, or spreads, which define how much of the index’s gains you receive. Even when the market underperforms, your account will never earn less than 0%, thanks to guaranteed minimum return provisions embedded in many contracts. This allows retirees to benefit from equity-like growth without the stress of market volatility.

Unlike variable annuities or direct market investments, this annuity product ensures that your initial investment remains safe—no matter what the market does. This is especially important as you transition into retirement and need to protect your nest egg from interest rate changes, economic shocks, or sequence-of-return risk.

Most annuities offered today also include valuable optional features like a guaranteed income rider. This rider transforms your contract into a lifetime income stream, allowing you to receive predictable payments even if your account value drops to zero. These payments can also be structured for joint lives if you're planning retirement with a spouse.

Additionally, many FIAs provide a built-in death benefit, ensuring that your beneficiaries receive any remaining contract value upon your passing—sometimes avoiding probate in the process. This legacy feature can be a powerful tool in estate planning.

It’s important to note that surrender charges typically apply if you withdraw more than the allowable amount (often 10% annually) or cancel the annuity early. Withdrawals prior to age 59½ may also incur IRS penalties in addition to regular income tax. That’s why it’s essential to view fixed indexed annuities as part of a long-term retirement strategy rather than a short-term savings vehicle.

Because these products can be complex, it's wise to work with a qualified professional or financial professional who understands the nuances of FIAs. They can help you assess whether the annuity offered aligns with your income goals, time horizon, and overall financial plan.

In summary, fixed indexed annuities deliver a unique mix of principal protection, guaranteed income, market-linked growth through a market index, and tax-deferred accumulation. With customizable crediting options and flexible annuity product structures, they can play a key role in any retirement income strategy.

Why Use a Fixed Indexed Annuity for Retirement Income?

Retirement planning is about balancing risk and reward. You want growth, but you also need predictability. Here’s where fixed indexed annuities excel:

1. Income Stability

FIAs can provide guaranteed income for life through optional income riders. This is especially valuable in retirement when paycheck replacements are necessary.

2. Protection from Market Volatility

Market drops won’t eat into your principal. While mutual funds and stocks carry risk, FIAs offer peace of mind in turbulent markets.

3. Outpacing Inflation

With growth linked to an index, your account may outperform traditional fixed annuities. Some products include inflation-adjusted income riders to maintain purchasing power.

4. Legacy Planning

FIAs can also be structured to pass remaining assets to your heirs, sometimes even avoiding probate.

How Fixed Indexed Annuities Work

When you invest in an FIA, your money earns interest based on the performance of a market index. However, your return is limited by certain levers the insurance company uses to manage risk:

Cap rate: Maximum return you can earn in a crediting period (e.g., 8% annually).Participation rate: Percentage of the index gain you’ll receive (e.g., 70% of S&P 500 return).Spread: A deduction from the index’s return before it’s credited (e.g., index return minus 1.5%).

Even with these limits, the principal is protected—if the index loses value, your account earns 0%, not a loss.

Income Riders: The Retirement Game Changer

Many retirees choose to add a guaranteed lifetime income rider to their FIA. These riders allow you to:

Lock in income payments for life (regardless of account value).Continue receiving income even after the contract’s value drops to zero.Choose between single or joint life coverage for couples.

Some income riders offer roll-up rates, which are guaranteed growth rates on your income base (not cash value) during the deferral period—often between 5% and 8%.

What to Look for in the Best Fixed Indexed Annuities

Not all FIAs are created equal. When evaluating the best options for retirement income, consider the following criteria:

1. Strong Income Riders

Look for guaranteed income growth, flexible withdrawal options, and joint payout options if you’re married.

2. High Participation Rates or Caps

Higher participation means greater upside potential. Some of the best annuities in 2025 offer uncapped strategies with good spreads instead.

3. Low Fees

Some riders come with annual charges. Make sure the value they provide justifies the cost—typically 0.95% to 1.25% annually.

4. Issuer Financial Strength

Stick with carriers that have A or better ratings from AM Best, S&P, or Moody’s. You want your money in safe hands.

5. Liquidity Features

Many annuities allow 10% penalty-free withdrawals per year. This is useful if you need cash for emergencies.

Top Fixed Indexed Annuities for Retirement Income in 2025

While products may vary by state and advisor, here are some of the most highly rated FIAs currently on the market (based on available data):

1. Athene Ascent Pro 10

Highlights: Offers strong income growth via an 8% simple roll-up income rider.Index Options: S&P 500, AI-Powered IndexesFees: ~1.00% for riderWhy it’s great: Offers solid caps and participation rates with competitive income guarantees.

2. Allianz 222 Annuity

Highlights: Loyalty bonus and two-tiered interest credits make it a long-term standout.Index Options: Bloomberg US Dynamic Balance Index II, PIMCO Tactical Balanced IndexFees: No annual fee; rider includedWhy it’s great: Built-in income benefit rider and strong performance history.

3. Nationwide New Heights Select

Highlights: High growth potential with strong uncapped indexes.Index Options: J.P. Morgan Mozaic II, SG Macro Compass IndexFees: Optional income rider ~0.95%Why it’s great: Flexible access, strong growth opportunity, and joint payout options.

4. American Equity AssetShield 10

Highlights: Strong participation rates and zero fees on the base contract.Index Options: Goldman Sachs Dynamo, Credit Suisse RavenPack AIFees: Optional rider availableWhy it’s great: A good mix of growth and downside protection for conservative retirees.

5. Pacific Life Pacific Index Foundation

Highlights: Simple, transparent growth structure with top-rated financial backing.Index Options: S&P 500, MSCI EAFEFees: No base fee, rider optionalWhy it’s great: Great choice for those wanting peace of mind and financial strength.

How to Compare Fixed Indexed Annuities

Here’s a side-by-side checklist to compare options:

FeatureWhy It MattersRoll-Up Rate (Income Base)Determines future income potentialParticipation RateImpacts how much index gain you keepIndex OptionsMore options = better diversificationLiquidity RulesFlexibility to access fundsSurrender ChargesTime frame you’re locked inCarrier RatingConfidence in insurance company

Ask your advisor for an illustration based on your age, retirement date, and income goals.

Common Myths About Fixed Indexed Annuities

“They’re too expensive.”

Not necessarily. Base contracts are often fee-free. Optional riders cost extra but can offer lifetime value.

“They’re too complicated.”

They are technical—but with guidance, they can be simplified. Don’t let complexity keep you from exploring a solid strategy.

“You lose access to your money.”

Most FIAs offer 10% penalty-free withdrawals and many offer liquidity enhancements for long-term care or terminal illness.

Who Should Consider an FIA for Retirement Income?

Pre-retirees in their 50s or 60s looking to secure future incomeConservative investors who want principal protection but better growth than CDs or bondsCouples wanting joint income for lifeSavers without pensions, seeking a private income streamClients with rollover IRAs or 401(k)s, converting assets to guaranteed income

Is a Fixed Indexed Annuity Right for You?

An FIA is not for everyone. If you need 100% liquidity, are highly risk-tolerant, or want short-term gains, you may want to explore alternatives. However, if your top goals are preserving capital, ensuring predictable retirement income, and participating in some market upside, fixed indexed annuities can be a smart pillar in your strategy.

Fixed Indexed Annuities: Protection, Growth, and Lifetime Income

The best fixed indexed annuities combine safety, growth potential, and predictable income—helping you enjoy retirement without worrying about market downturns.

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