Posted on November 25, 2025

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For years, you may have relied on less volatile products to be a foundational part of retirement portfolios, offering income and a sense of stability. But today’s economic environment is shifting. With market uncertainty and longer life expectancies, traditional thinking may not provide the same level of confidence it once did.

That’s why more people are exploring indexed annuities as an alternative. But what is an indexed annuity? They offer growth potential tied to market performance, protection from loss and the option for guaranteed lifetime income. For many, they’re becoming a valuable part of a well-rounded retirement strategy.

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What is an Indexed Annuity?

An indexed annuity is a contract between you and an insurance company. It’s designed to help you grow and protect your retirement savings, with two key phases:

• Accumulation phase: Your money earns interest based on the performance of a market index, like the S&P 500. While returns are subject to caps and participation rates, your principal is protected from market losses.
• Income phase: You can turn your annuity into a stream of income, often guaranteed for life.

Unlike direct investments in the market, indexed annuities shield your savings from downturns. If the market rises, you earn interest up to a limit. If it falls, you don’t lose money. That balance of growth and protection is what makes indexed annuities so appealing.

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How Indexed Annuities Can Help

Protection for your principal
With an indexed annuity, your original investment is protected no matter how the market performs. That kind of downside protection can help offer stability, especially during volatile times.

Growth potential without market risk
Indexed annuities let you benefit from market gains without the risk of losses. For example, if the S&P 500 rises 10% and your annuity has a 6% cap, you’ll earn 6%. If the market drops, you earn 0%, but your principal stays intact.

Income you can’t outlive
One of the biggest concerns in retirement is outliving your money. Indexed annuities can be converted into guaranteed lifetime income, helping you plan with confidence no matter how long retirement lasts.

A hypothetical diversification scenario

Research suggests that incorporating indexed annuities into a broader investment strategy may improve portfolio efficiency. A recent Ameritas case study, based on simulations from the EY Holistic Planning: Integrating Insurance Products for Better Outcomes in Retirement study, examined how indexed annuities can enhance retirement outcomes when used in conjunction with traditional investments.

In this hypothetical example, a couple with $1 million in assets adopted a diversified portfolio strategy: 60% stocks, 10% fixed income, and 30% allocated to the Ameritas Accumulation 7 Index Annuity.

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Simulated Results Showed:

• Success rate (likelihood of sustaining income for life): 85%
• Median portfolio value: $3.82M
• Legacy value: increased by 29.6%
• Retirement income: increased by 5.5%

These results are illustrative only and based on a Monte Carlo analysis that generated 1,000 scenarios, each containing a time series of interest rates, inflation rates, equity returns and bond returns over the planning horizon. They highlight how indexed annuities can contribute to a resilient retirement strategy when used as part of a diversified plan.

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The Bottom Line

In today’s evolving retirement landscape, indexed annuities can be a compelling option. They provide protection, growth potential and income security.

If you’re looking for a way to balance stability and opportunity in retirement, indexed annuities may be worth exploring.