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For many retirees, the term “fixed hybrid annuities” is not yet a household term. Hybrid annuities have received more mentions in the press lately, but touching on what they are — and what they can do — is still largely a mystery for potential investors.

Hybrid annuities are a retirement pension plan like option that allows buyers to earmark funds to fixed and variable annuity units. Most of these hybrid annuities give the investor the ability to choose the amount of allocation funds to the more conservative, fixed return investments, and how much to allocate towards higher risk annuity investments. This offers a lower but assured rate of return, and the potential for for higher returns.

According to Investopedia, “[…] Hybrid annuities can be useful for those who have longer time horizons and wish to participate in the stock and bond markets.”

In the last few years, especially since the mid to late 2000s (The Great Recession), retirement portfolios had shown lagging returns, so the prospect of a different approach has become more popular in the following years. Goldstone Financial Group has been one of the vanguards leading the charge in trying different ways to improve positive cash flow into the hands of the investor in this low risk and immediate annuity class. The latter is an annuity built on the premise that there is a need to create lifetime income that still allows access to the initial investment or principle. This allows for freedom that is attractive for most investors wanting the freedom of having access to their income stream.  

Before the 2008 economic downturn, many financial investments in the market were showing stagnation, low returns and little movement. For 60 years up to this point, the fixed hybrid annuities were untried, but since then, investors are more open to trying to break the same old, tried and over-tried methods. In an earlier post, we reported that it is the fear of losing that have caused financial advisors to stay the course — which stopped working:

The concept of being “well diversified” in today’s market is completely different than it was back then.  Being exposed to uncorrelated and low correlated asset classes is a great start, but at Goldstone Financial Group we have learned that you have to position clients to be even more prepared. Then it becomes a matter not of living in fear of an economic downturn, but rather of being prepared for one.

With 78 million baby boomers heading into retirement, a lot of people are wondering how they will comfortably retire in a volatile market. At Goldstone Financial, principals and co-owners Michael and Anthony Pellegrino approach this through a combination of strategies that many investment advisors either don’t have the experience to employ, or don’t feel their clients will respond well to.

Fixed hybrid annuities’ popularity has become the fastest growing annuity in the past few years with its income stream, minimal risk and growth being a no brainer for today’s market. Though a financial article on fixed hybrid annuities will not answer all your questions, making investors aware of their benefits should be enough for you to ask your financial advisor: What are fixed hybrid annuities? It will be soon enough before they become a household term.