Fixed Index Annuities: A Story of Improving Retirement Success

Joe Simon
May 1
3 min read

Fixed Index Annuities (FIAs) give retirees a powerful way to increase stability, protect principal, and improve long-term retirement success. As shown in the case study below, adding an FIA to a retirement plan can significantly boost the probability of success by offering market-linked growth, downside protection, and greater flexibility. In a world of increasing longevity and market uncertainty, FIAs provide retirees with confidence and a more predictable financial future.

Why FIAs Matter Today

Roughly 11,000 Americans turn 65 every day, and this pace is expected to continue through 2029. As retirees enter their next chapter, financial stability becomes a top priority. Volatile markets, rising costs, and longer lifespans all create challenges for sustaining income and protecting assets.

One solution that has consistently improved retirement outcomes is the Fixed Index Annuity. FIAs help balance growth and protection at a time when reliability matters most.

Understanding Fixed Index Annuities

A Fixed Index Annuity (FIA) offers growth potential linked to a market index—such as the S&P 500—while ensuring that your principal is protected from loss. Key features include:

Market Participation with Safety: Upside potential with current caps around ~10%, while eliminating downside losses.
Annual Gain Lock-In: Once gains are credited, they’re locked in and can’t be lost in future market declines.
Tax-Deferred Growth: Helps maximize compounding and long-term growth.
Lifetime Income Options: Guarantees income you cannot outlive, reducing longevity risk.

Case Study: How an FIA Increased Retirement Success

To highlight the impact of integrating an FIA, we analyzed a hypothetical couple using a Monte Carlo simulation to measure their probability of financial success.

Client Profile

Ages: Husband and wife, 65, retiring at 66
Income: $150,000 household income
Total Investment Portfolio: $900,000
- $100,000 taxable (husband)
- $600,000 401(k) (husband)
- $200,000 401(k) (spouse)
Current Allocation: 50% equities / 50% bonds
Home Value: $800,000 | Mortgage: $125,000 | $2,997/mo payment
Other Expenses:
- Property tax/maintenance/insurance: $9,000 annually
- Planned retirement spending: $4,000/mo
- Health costs: $6,092 annually
- Vacation budget: $5,000 annually
Other Assets/Debts:
- Checking & savings: $60,000
- Credit card debt: $10,000
Legacy Goals: $150,000 to charity | $200,000 to children
Social Security: Starts at retirement (age 66)

Monte Carlo Results

Current Portfolio (50/50 Balanced)

Probability of Retirement Success: 77%

With a Fixed Index Annuity

Allocate $300,000 of the husband’s 401(k) to an FIA
Adjust remaining assets to 80% equities / 20% bonds
New Probability of Retirement Success: 91%
Increase in Median Assets Left at End of Life: +$474,307

Why the FIA Improved Success

Downside Protection + Market Growth
The FIA shields part of the portfolio from market declines while still capturing a portion of market gains.
Higher Risk Capacity for Remaining Assets
With $300,000 protected, the couple can safely increase equity exposure elsewhere—improving long-term growth potential.
Consistent, Stable Returns
Annual gain lock-ins prevent loss of previously credited growth, smoothing performance through volatility.
Longevity Protection
FIAs can provide guaranteed lifetime income, addressing the growing fear of outliving retirement assets.

What Does This Mean for You?

Does this change how you view annuities? Is this a “silver bullet” solution for all your assets? Of course not—but strategically incorporating an FIA can dramatically improve outcomes for many retirees.

With 66% of Americans fearing they’ll outlive their retirement income, now is the time to explore tools that reduce uncertainty and strengthen long-term security. For some, the guaranteed payout options found in annuities can be a meaningful answer.

If you’d like to explore whether an FIA fits into your retirement strategy:

📩 Contact: js@joesimon.solutions