How much of my retirement savings should be in safe money products?

There is no universal answer — it depends on your age, income needs, risk tolerance, and other assets. A common guideline is that money you will need within the next 5–10 years, or money that covers essential living expenses, should be protected from market risk. AG Insurance can help you evaluate the right allocation for your situation.

Can I still grow my money with a safe money strategy?

Yes. Fixed annuities provide guaranteed growth at a set rate. Fixed indexed annuities provide growth potential linked to a market index with a floor of zero. While safe money products typically do not match the highest stock market returns in bull markets, they provide consistent, tax-deferred growth without the risk of loss.

Are safe money strategies only for people close to retirement?

Safe money strategies are most commonly used by people within 10–15 years of retirement, but they can be appropriate at any age for money that needs to be protected. They are particularly important for people who have already accumulated significant savings and cannot afford a major setback.

What is the difference between a safe money strategy and just keeping money in the bank?

Bank savings accounts and CDs offer safety but typically provide lower interest rates and no tax deferral. Fixed annuities and MYGAs generally offer higher rates and tax-deferred growth, making them more effective for medium-to-long-term retirement savings. They also offer income options that bank products do not provide.

AG Insurance Guide

Safe Money Retirement Strategies

Safe money retirement strategies are approaches to retirement planning that prioritize protecting your principal from market losses while still providing growth potential and income options. For people approaching or already in retirement, protecting what you have accumulated is often more important than chasing higher returns.

What Is a Safe Money Strategy?

A safe money strategy is a retirement planning approach that uses insurance-based financial products — primarily fixed annuities and fixed indexed annuities — to protect a portion of retirement savings from stock market risk. The core principle is that money you cannot afford to lose should not be exposed to market volatility. This is especially important for people within 5–10 years of retirement, when a major market decline can permanently damage retirement security.

The Sequence of Returns Risk

One of the most significant risks in retirement is the sequence of returns risk — the danger that poor investment returns early in retirement can permanently deplete a portfolio, even if long-term average returns are acceptable. A 30% market decline in the first two years of retirement, combined with regular withdrawals, can reduce a portfolio's longevity by 10 or more years. Safe money strategies address this risk by moving a portion of savings into products that cannot lose value due to market performance.

Fixed Annuities as Safe Money Tools

Fixed annuities are the simplest safe money tool. Your principal is guaranteed, your interest rate is guaranteed for the contract term, and growth is tax-deferred. There is no market risk, no annual fees, and no complexity. For money you want to protect and grow predictably, a fixed annuity provides certainty that no market-linked product can offer.

Fixed Indexed Annuities: Protected Growth

Fixed indexed annuities offer a middle ground between the guaranteed-but-limited returns of fixed annuities and the higher-but-risky returns of stock market investments. Your principal is protected from market losses, but your growth is linked to a market index. In years when the index rises, you receive a portion of the gain. In years when the index falls, you receive zero — not a loss. Over time, this combination of protection and participation can produce competitive returns without the anxiety of market exposure.

The Bucket Strategy

Many financial advisors recommend a bucket strategy for retirement: dividing savings into short-term (1–3 years), medium-term (4–10 years), and long-term (10+ years) buckets. Safe money products like fixed annuities and MYGAs are ideal for the medium-term bucket, providing predictable growth and income without market risk. The long-term bucket can remain invested for growth. This approach provides both security and growth potential.

Working with a Local Independent Agent

AG Insurance & Financial Solutions helps clients in Huntington WV, Charleston WV, Chesapeake OH, Ironton OH, Ashland KY, and throughout the Tri-State region evaluate safe money strategies. As an independent agency, we compare products from multiple insurance companies to find the best combination of protection, growth, and income for your specific situation. All consultations are free and there is no obligation.

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