Annuity Guide
Fixed Indexed Annuities: A Guide to Protected Retirement Income
Fixed Indexed Annuities can provide a source of protected, predictable retirement income that complements your Medicare and Social Security planning. Here's how they work and what to consider, with Kayla Price, licensed across 10 states.
Last reviewed: July 2026
What Is a Fixed Indexed Annuity?
A Fixed Indexed Annuity (FIA) is a contract with an insurance company that credits interest based in part on the performance of a market index, such as the S&P 500, while generally protecting your principal from losses tied to that index. In exchange for principal protection, FIAs typically cap or limit how much upside interest you can earn in strong market years.
Important: Fixed indexed annuities are insurance products, not securities. Guarantees are backed by the financial strength of the issuing insurance company.
How an FIA Fits Into Retirement & Medicare Planning
Many people approaching or already in retirement look for ways to protect a portion of their savings from market downturns while still having growth potential. A Fixed Indexed Annuity can be one piece of that picture — providing a predictable stream of income that can help cover recurring costs like Medicare premiums, Part B and Part D costs, or everyday expenses, without exposing that money directly to market risk.
An FIA is not a replacement for Medicare or health coverage — it's a retirement income and savings tool that some people use alongside their Medicare plan as part of a broader financial strategy.
What to Consider Before Purchasing
- Surrender charge periods and free withdrawal limits
- How interest crediting methods and caps work for the specific product
- The financial strength rating of the issuing insurance company
- How the annuity fits with your overall liquidity needs and other retirement income sources
Related Reading
- How Fixed Indexed Annuities Complement Medicare
- Fixed Indexed Annuities and Year-End Planning
- Medicare and Retirement Income: How Your Coverage Fits Into Your Financial Plan
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Frequently Asked Questions
What is a Fixed Indexed Annuity?
A Fixed Indexed Annuity (FIA) is an insurance contract that credits interest based partly on the performance of a market index, while protecting your principal from market losses — it is not a direct market investment.
Is a Fixed Indexed Annuity a security?
No. Fixed indexed annuities are insurance products, not securities. Guarantees are backed by the financial strength of the issuing insurance company, not by any government agency or FDIC-style insurance.
How does an FIA protect against market loss?
Your principal is generally protected from index losses — if the index the annuity is tied to declines, your account value typically doesn't lose value from that decline, though you may not earn interest that year.
How does a Fixed Indexed Annuity complement Medicare planning?
FIAs can provide predictable, protected retirement income to help cover Medicare premiums, out-of-pocket costs, or long-term expenses without exposing that portion of your savings to market risk.
Are there fees or surrender charges with FIAs?
Most FIAs include a surrender charge period, during which withdrawing more than the allowed free amount can trigger a charge — it's important to understand the surrender schedule before purchasing.
Can I lose money in a Fixed Indexed Annuity?
Your principal is generally protected from index losses, but withdrawing early or exceeding free withdrawal limits during the surrender period can result in a loss relative to what you put in.
How is an FIA different from a variable annuity?
A variable annuity invests directly in market subaccounts and can lose principal value; a fixed indexed annuity credits interest based on index performance but protects principal from direct index losses.
Who might consider a Fixed Indexed Annuity?
People nearing or in retirement who want a portion of their savings to have principal protection and the potential for growth linked to market performance, without being fully exposed to market downturns, often explore FIAs as part of a broader plan.
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