Fidelity Investments recently introduced the Fixed Deferred Retirement Annuity, its first new product in 15 years. Discover how this product stands out among its peers and could offer stability for your retirement savings. Its benefits include a low initial premium and an A+ financial rating.
Fixed-rate investments are a hot commodity.
Economic factors such as a rapid increase in interest rates and a constant stream of retirees have turbocharged interest in safe, reliable investments, including fixed deferred annuities. Sales data reported by LIMRA shows that fixed deferred annuities generated a record $124 billion in sales through the third quarter of 2024, a 17% year-over-year increase.
Fidelity Investments Life Insurance Co., a subsidiary of the $5.8 trillion asset manager and financial services company, recently entered the fixed deferred annuity marketplace. Annuity.org spoke with Stefne Lynch, vice president of annuity product management and client engagement at Fidelity Investments, to learn more about this new product, Fidelity’s first in 15 years.
About Fidelity Investments
Established in 1946 by Edward C. Johnson II, Fidelity Investments is a leading multinational financial services corporation headquartered in Boston. It is a privately held and family-controlled business.
As of September 2024, the company has $5.8 trillion in assets under management and $15 trillion in assets under administration, positioning it among the world’s largest asset managers. Fidelity employs over 74,000 associates worldwide and offers a comprehensive range of financial products and services, including retirement administration, wealth management, life insurance and brokerage.
Fidelity Investments Life Insurance Co. is a subsidiary of FMR LLC, Fidelity Investments’ parent company, and was founded in 1987. Boasting a strong financial strength rating of A+ from AM Best and Standard and Poor’s, Fidelity Investments Life Insurance Co. has approximately 162,000 contracts and $46 billion in AUM.
Why Stability Matters in Retirement
Following the volatility of the early 2020s, the growing cohort of U.S. retirees favors stability over growth. The years directly preceding and following retirement can be the most important for maintaining a strong foundation for success. Protection from market volatility can be essential to preserve retirement readiness and minimize stress over leaving the workforce.
Fixed deferred annuities can play a crucial role in establishing proper retirement protection during this vital transition period. “The number of baby boomers retiring continues to grow, and many are searching for a safe, tax-advantaged investment that offers a competitive rate of return,” Lynch told Annuity.org.
Fidelity Fixed Deferred Retirement Annuity (FDRA)
The Fidelity Fixed Deferred Retirement Annuity is a multi-year guaranteed annuity (MYGA), meaning it provides a guaranteed interest rate for the entire contract term. The available terms are three and five years. The FDRA is meant to complement the other annuities available through the Fidelity Insurance Network, a curated product selection that Fidelity believes helps clients “simplify comparing prices, products and companies using our group of reputable insurance providers.”
Lynch stressed the importance of Fidelity’s market research and receptiveness to consumer interest. Its goal, she said, is to offer relevant products and services that are “simple, transparent and competitive.”
FDRA Product Facts
| Minimum / Maximum Premium | $10,000 / Fidelity discretion |
| Maximum Age | 85 |
| Terms and Rates | Three years: 4.15%1 Five years: 4.45%1 |
| Surrender Charges | Three years: 7%, 7%, 7%Five years: 7%, 7%, 7%, 6%, 5% |
| Liquidity Options | 1st year: 10% of premium Two+ years: 10% of prior anniversary contract value |
| Market Value Adjustment | Yes |
| Other Features | Terminal illness waiverNursing home waiverJumbo rates Systematic withdrawal program |
Who Benefits Most From FDRA?
Investors of any age can benefit from a predictable savings vehicle, but the primary audience for fixed annuities, including the FDRA, are retirees and soon-to-be retirees. The multi-year guarantee allows investors to add protection to their retirement portfolio during the precarious time directly before and after retirement. These years are when market volatility can be most damaging to a retirement plan and offer the most beneficial opportunity for investors to shield part of their nest egg from negative performance.
Lynch offered the following perspective on how the FDRA and annuities, in general, can play a role in a robust retirement income plan.
Certain types of annuities can offer a boost to retirement savings, whereas others can offer a dependable income stream for people who are approaching or already in retirement. FDRA is a fixed deferred annuity designed to protect a portion of a client’s portfolio with a fixed rate of return that is guaranteed for a set period of time, providing more predictable outcomes for those clients who have a lower tolerance for risk.
What Makes FDRA Different?
Fidelity’s FDRA was built to “align its features to those in the current fixed deferred annuity offering through the [Fidelity Insurance Network],” Lynch said. Financial stability and low barriers to investment are among the hallmarks of the Fidelity experience.
One of the biggest differentiators is the $10,000 premium required to open a new annuity contract. It is one of the lowest premiums available within the Fidelity Insurance Network. It’s also in line with the lowest premiums among Annuity.org’s picks for the best fixed annuities.
Fidelity’s FDRA may be most attractive to investors who seek strong financial ratings and consolidation of their assets with a single custodian. The jumbo rates ($100,000-plus premiums) offer roughly comparable interest rate guarantees to the other insurers within the Fidelity Insurance Network but fall below the highest rates offered by other A+ or better insurers at the time of writing.
For more information about the Fidelity Fixed Deferred Retirement Annuity, visit Fidelity.com or connect with a Fidelity representative.