Fixed-indexed annuities draw billions from retirees, criticism of returns

by Dennis Wagner

Each year, Americans pour billions of dollars into a curious financial product that, as it’s sometimes advertised, seems too good to be true.

Some companies tout returns of up to 50 percent over five years, with the claim that consumers won’t lose their original investment even if the stock market crashes.

The products, known as “fixed-indexed annuities” or FIAs, function like life insurance in reverse: The purchaser sets aside a safe nest egg, accruing interest, and after a waiting period collects regular payments until death.

It’s a pitch that appeals to retirees.

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