Natural State Advisors: Addressing Anxiety of Rising and Falling Stock Market

Over the past 12 months, I have visited with numerous people concerned about the retirement money they’ve put aside over the course of their working career. Years of investing a portion of your income was done with a goal in mind —“What would I like to do when my working career is over?” 

The recent volatility of the stock market has them wondering if another sudden and steep downturn would affect their quality of life as they enter their retirement years. 

The answer to that is, it sure could! 

Andy Hawkins

In the past 12 months, the Dow Jones Industrial Average has ticked down 15% from April 20, 2022, (35,160.79) to June 17, 2022 (29,888.78). From August 16, 2022, (34,152.01) to September 30, 2022, (28,725.51) it declined 16% and most recently in a one-week stretch from March 6 (33,431.08) to March 13 (31,819.14) there was a 5% decline. 

For those of you who have already retired — or are about to — declines in the stock market can affect your daily outlook on life. Some of you watch stocks throughout the day and moods fluctuate wildly according to the markets. 

One way to address the anxiety of rising and falling stock market values is with annuities. For those who appreciate the potential upside in the stock market but value protecting their money in a down market, an indexed annuity might be worth discussing. 

An indexed annuity is a financial contract between you and an insurance company. Indexed annuities offer upside potential gains tied to a broad stock market index such as the S&P 500 or the Dow Jones Industrial Average. This unique hybrid, first introduced in the 1990s, offers protection against stock market losses. However, it does limit your gains even in strong market years. The gains are usually a percentage of the market index you choose and gains are usually posted and reset one time per year. 

That’s why these contracts are considered less risky than investing directly in the stock market, but also offer smaller potential gains. If the stock market has a good year, you participate in a portion of that upside. Declines in the market are ignored with most indexed annuities. 

Another reason you might choose an indexed annuity is the variety of benefits and features annuities provide. Long-term care riders, death benefit riders, and guaranteed income are advantages that make indexed annuities very beneficial for retirement age adults. 

For those looking for a guaranteed rate of return there is a fixed annuity. This is a contract with an insurance company that credits interest to your account, after your investment, of a specified fixed rate of return on a specific date according to the contract. Usually that interest is credited one time per year. 

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