This article is for informational purposes only and does not constitute investment advice. Investing involves risk and readers should conduct their own research and due diligence before making any investment decisions.

As you approach retirement, it’s wise to reallocate a significant portion of your savings from stocks to capital-guaranteed products like bank certificates of deposit and annuities. In the event of a significant market downturn, your pension plan will remain intact.

“You won’t be forced to sell stocks or mutual funds when the market is down,” says Ken Nuss, retirement income expert, CEO of retirement benefitan online bond market.

Capital guaranteed products include bank certificates of deposit, fixed rate annuities and income annuities.

Fixed rate annuities often outperform CDs

Bank CDs pay a fixed rate of interest for a fixed term and are backed by federal insurance. They’re perfectly safe, but retirees and early retirees should consider an attractive alternative, the fixed-rate deferred annuity, he says.

This product, technically a Multi-Year Guaranteed Annuity (MYGA), is sometimes referred to as a CD-type annuity. It also pays a guaranteed interest rate for a set term. However, it additionally offers tax deferral until you earn income from it, and you can defer those payments indefinitely. Free of federal and state taxes, your money can grow faster until you need it.

Interest rates have risen significantly in recent months and today some fixed rate annuities are paying well over 5.00%. See this current database MYGA pension rates.

Annuities issued by insurance companies are not government-insured like CDs, but life insurers have a solid track record of meeting their obligations, and government guarantee associations offer additional protection. Check the issuing insurer’s AM Best Rating before purchasing.

Create a private pension plan with a lifetime pension

An income annuity offers a different approach. you turn around