Risk is unavoidable. How you choose to react to it can make all the difference.
The current combination of sudden, geopolitical upheaval and ongoing effects of the COVID crisis are only adding complexity to today’s "perfect storm" of changing interest rates, record inflation – at a 40-year high1 and ongoing market uncertainty. Together, these factors are presenting significant difficulties for investors attempting to allocate the fixed-income portion of their retirement strategy.
Are bond values currently on thin ice?
This short video helps you understand the relationship between interest rates — which are currently rising — and bond values. What’s riskier? Ice skating in spring or ignoring this relationship between bond values and interest rates? Watch this video to find out!
Can you afford to ignore inflation?
This short, animated video helps illustrate the effects of inflation on the things you can’t live without in retirement—like grocery shopping. What’s riskier? Swimming with sharks or ignoring the effects of inflation on your retirement planning? Watch this video to find out!
Are you risk ready for retirement?
This handy brochure leads you through today’s interest rate, inflation and bond value risks in an easy-to-understand way.
Read more about how unavoidable risks could wreak havoc with your retirement plans and savings…
Inflation in action
Inflation means your dollar loses purchasing power over time as the cost of goods/services goes up. Inflation can affect your standard of living in retirement since you’ll no longer have a regular source of income. See how much the cost of an average cup of coffee has changed over time...
Take steps to incorporate a potentially rising stream of guaranteed income into your strategy.
Effects of Interest Rates
Interest rate changes are the primary cause of price volatility in bond markets. If you’ve reached retirement and are withdrawing money from your savings on a regular basis, withdrawal risk (the possibility that you will run out of money), comes into play. When interest rates are low and inflation is rising, withdrawal risk may increase for some people and end in a wipeout.
Fixed index annuities (FIAs) offer custom growth potential but without any stock market losses.1
1 Early withdrawal charges and MVA may apply. Withdrawals may reduce any optional guaranteed amounts in an amount more than the amount of the withdrawal.
The bond rate “teeter totter”
Because bonds pay a set interest rate, many people rely on them as part of their fixed income strategy. But rising interest rates raise a separate risk in relation to bonds. This teeter totter illustrates how fluctuating interest rates can affect the value of a $100,000 bond.
Market timing, or moving your investment out of the stock market at a specific time to maximize returns is a tricky bet. No one has a crystal ball to guide their actions.
The graph below illustrates the point. Maggie retired during an up (bull) market and still had a considerable amount of money 20 years later. But Max retired during a down (bear) market and, as a result, has significantly less left in his portfolio in just around 20 years.
Past S&P 500 index performance is no guarantee of future results. The S&P 500 index is not available for direct investment. This hypothetical chart is for illustrative purposes only and not indicative of any particular investment product. The chart reflects reinvestment of dividends but does not reflect any product charges, fees or the impact of any taxes over the time periods shown, all of which if shown would lower performance. The annual total returns of the S&P 500 are shown from 1/1/95 through 12/31/19, with each year beginning on 1/1 and ending 12/31 for each calendar year shown.
Help reset some risk.
Interest‐rate uncertainty, rising inflation, and decreases in bond values as well as market uncertainty all present challenges in growing assets or generating fixed income in retirement. This short video helps you understand the risks and presents some ways in which annuities might work as part of your fixed income strategy.
This material is intended to provide educational information and is intended for use with the general public. It should not be considered, and does not constitute, personalized investment advice. The issuing insurance company is not an investment adviser nor registered as such with the SEC or any state securities regulatory authority. It’s not acting in any fiduciary capacity with respect to any contract and/or investment.
A fixed index annuity is intended for retirement or other long-term needs. It is intended for a person who has sufficient cash or other liquid assets for living expenses and other unexpected emergencies, such as medical expenses. A fixed index annuity is not a registered security or stock market investment and does not directly participate in any stock or equity investments or index.
Guarantees are based on the claims-paying ability of Forethought Life Insurance Company and assume compliance with the product’s benefit rules, as applicable.
The “S&P 500® Index” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by Forethought Life Insurance Company. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicenses for certain purposes by Forethought Life Insurance Company. Forethought Life Insurance Company’s products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index.
Annuities are issued by Forethought Life Insurance Company, 10 West Market Street, Suite 2300, Indianapolis, Indiana.
Global Atlantic Financial Group (Global Atlantic) is the marketing name for The Global Atlantic Financial Group LLC and its subsidiaries, including Accordia Life and Annuity Company, Commonwealth Annuity and Life Insurance Company, Forethought Life Insurance Company and Global Atlantic Re Limited. Each subsidiary is responsible for its own financial and contractual obligations. These subsidiaries are not authorized to do business in New York.