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How to supplement your retirement income with a RILA

Annuities can play an important role in helping you meet your financial needs in retirement. If you鈥檙e comfortable with risk, a registered index-linked annuity, or RILA, may be worth looking into. 

RILAs are designed for savers who want to pursue additional growth opportunities while maintaining some downside protection from market loss. If you鈥檙e willing to accept some market risk for greater growth potential, a RILA may be a more suitable option than more conservative products, such as a fixed annuity.

Let鈥檚 take a look at how annuities might fit your retirement savings and retirement income plans and the unique characteristics of a RILA.

Can a RILA help supplement your retirement income?

RILAs can help supplement your income in retirement, but it鈥檚 important to understand how they work. RILAs can be ideal for those who are:

• In retirement or five to seven years out from retirement
• Looking for growth potential
• Can handle some market risk

Because RILAs鈥� returns are based in part on the performance of a market index, those returns can fluctuate. This is why individuals typically use RILAs for accumulation. That said, regular, automated withdrawals using the annuity鈥檚 free withdrawal provisions can provide a stream of income as part of your overall retirement income strategy. 

RILAs also offer the potential to earn additional interest credits based in part on the performance of a benchmark index. When an index is performing well during a term, for example, your annuity may earn interest credits that can boost your returns in subsequent years.

These returns, however, typically are 鈥渃apped.鈥� RILA growth limits, or caps, provide the buffer annuity providers need to provide that income. 

How to choose a RILA annuity for you

When it comes to generating income in retirement, speak to your financial professional about the potential benefits of a RILA. 

From a downside risk standpoint, it may help to think of a RILA as falling somewhere on the spectrum between a fixed indexed annuity (FIA) and a variable annuity (VA). A RILA does not directly participate in any stock or equity investments, though its performance is based in part on the performance of the stock market index. 

RILAs are sometimes referred to as buffered annuities because they can provide downside protection and limit exposure to a percentage of market loss. Keep in mind that the higher the level of protection downside risk in your RILA, the lower the cap is on the upside potential (and vice versa). 

Know your goals before purchasing an annuity

Annuities come in all shapes and sizes, with varying levels of risk and opportunity, as well as timelines. For example, an income annuity may begin making payments immediately or may defer payments several years or more.

Before making a purchase, it鈥檚 important to speak with a financial professional about what your goals are. Annuities come in different types to help meet different needs. For example, one of the ways they vary is by the amount of potential risk and return. Considering these options can help ensure the annuity aligns with your risk tolerance, helps address any income gap for retirement, and allows you to pursue the growth opportunities that interest you.

It鈥檚 also critical to understand the terms of the annuity contract and the consequences of not adhering to them. For example, if you choose to surrender your annuity, you may lose your retirement income payments, pay a penalty, or potentially incur additional tax liability.

Achieve more with 狼窝导航 

A RILA can play a key role in your retirement income plan, particularly if you have the ability to assume additional market risk in exchange for more growth potential. As you continue reviewing different types of annuities, keep in mind the primary characteristics of a buffer annuity like a RILA, such as performance cap rates with downside protection.

Learn more about RILAs and 狼窝导航 as an annuity provider here  

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Registered index-linked annuities have a risk of substantial loss of principal and related earnings. They are designed to be a long-term investment product used to help provide income for retirement and are not suitable as a short-term investment.

Registered index-linked annuities can only be marketed and sold by securities licensed financial professionals. Any discussion of this product must be preceded or accompanied by the product brochure and prospectus which provides more detailed product information, including all charges or limitations as well as definitions of capitalized terms.