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If you find market volatility too stressful, buying annuities that provide stability and protect your principal could help you rest easier. Here's what to consider.
By
Zachariah Hammel
published
14 February 2026
in Features
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For many people, investing in the stock market feels like the default path to building long-term wealth.
The potential upside is real. History shows that stocks have rewarded patient investors who can weather volatility and stay invested through downturns.
But not everyone wants to ride out those swings, and not everyone should.
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Sign upThere are moments in life when protecting what you have matters more than chasing what you hope to gain. This is where insurance-based options, such as fixed annuities or fixed indexed annuities, can play a meaningful role.
These products do not replace investing and are not meant to. Instead, they offer an alternative for people who value stability, predictable income or principal protection during uncertain times.
Knowing when to participate in the market and when to step aside is one of the most important decisions in retirement strategy. The right choice depends on your goals, your time horizon and your tolerance for loss.
About Adviser Intel
The author of this article is a participant in Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
The appeal of investing
The stock market offers the potential for long-term growth that outpaces inflation. For people with decades before retirement, regular contributions and time in the market can create meaningful opportunities.
Even for retirees, a portion of assets in equities may help portfolios grow enough to support longer lifespans and rising expenses.
The challenge comes with volatility. Markets move quickly. News cycles accelerate emotions. Economic shifts can create sudden declines that take years to recover from. Growth potential works in your favor over the long run, but only if you can stay invested through periods of discomfort.
That is a big "if." Many people discover that they are less comfortable with risk than they expected once the market drops and the headlines turn negative. Selling during a downturn can lock in losses that are difficult, if not impossible, to make up later.
The need for safety
As people approach retirement or transition into more income-focused stages of life, the tolerance for market swings tends to shrink. A major downturn early in retirement can threaten the sustainability of a portfolio, especially if withdrawals occur at the same time.
This is where safe-return options can provide structure. Products like multi-year guaranteed annuities (MYGAs) or fixed indexed annuities (FIAs) are built for people who want protection rather than participation. These options:
- Protect principal from market loss
- Offer predictable interest or index-linked earnings
- Provide opportunities for lifetime income
- Reduce emotional decision-making during market volatility
They are not designed to beat the market. Their purpose is to create a stable foundation so you are not overly dependent on investments for every part of your retirement strategy.
When it makes sense to consider stepping aside
You do not need to avoid the market entirely to benefit from safe returns. The question is not "stocks or safety," but rather "how much risk makes sense for your situation?"
Here are times when insurance-based fixed or indexed options may be a better fit.
You are within five to 10 years of retirement. Market losses late in your working years can derail retirement timing. If you cannot afford a major setback, shifting a portion of assets to principal-protected options can help secure the foundation you are building.
You need predictable income. If you want part of your retirement income guaranteed, annuities can help create a stable cash flow without relying on market performance. This gives you the confidence to let other investments pursue growth.
You are risk-averse or feel anxious during market swings. Investing should not feel like a constant emotional battle. If volatility makes you uncomfortable or causes reactive decisions, safety-oriented products can help remove stress from the equation.
You have savings you cannot afford to lose. Some dollars are "must-have" funds. This might include emergency savings, future income needs or legacy assets you want protected. Market-linked products with no downside exposure can help preserve these dollars.
You want diversification beyond traditional investments. Diversification is not only about owning different investments. It is also about combining assets that behave differently. Fixed and indexed annuities do not move with the market, which can bring balance to a portfolio.
Why the balance matters
Safe returns alone rarely generate the long-term growth needed to outpace inflation. Market growth alone may expose you to unnecessary risk at the wrong time. Most people benefit from a blend of the two.
The goal is not to guess what the market will do next. The goal is to match your strategy with your comfort level and your timeline. People who enter retirement with a mix of protected income and growth potential often feel more confident about their ability to handle both opportunities and challenges.
Insurance-based products play a supporting role by offering stability where you need it most. This lets your investment assets work more efficiently, since you are not forced to sell in a downturn or take more risk than you want.
Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel, our free, twice-weekly newsletter.
How to decide what is right for you
If you are unsure whether the market is right for you right now, consider taking the following steps:
Review your time horizon. Shorter timelines call for more protection. Longer timelines offer more room for growth.
Identify the dollars you need to protect. Determine which assets must remain stable and which can pursue higher returns.
Evaluate your emotional tolerance for loss. If volatility disrupts your confidence or decision-making, build a stronger safety net.
Consider your income needs in retirement. Guaranteed income sources can reduce pressure on the rest of your assets.
Talk with a financial professional who understands both sides of the equation. An insurance-licensed professional can help you explore options that protect principal and provide income, while coordinating with your broader strategy.
The market can be a powerful engine for long-term growth, but it is not the only tool available. There are times when stepping aside and relying on safe returns is not just wise but necessary.
When you know your comfort level and your goals, you can build a balanced approach that protects your present while still preparing for your future.
Related Content
- The 4% Rule Doesn't Mean You Won't Go Broke in Retirement
- Risk in Retirement: What's the Right Level for You?
- How Much Income Will an Indexed Annuity Get You? An Annuities Expert Lays Out the Numbers
- Fixed Indexed Annuities Can Be a Potent Diversifying Tool
- This Is How a Balanced Portfolio Builds Confidence Despite Market Storms
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
TOPICS Adviser Intel Get Kiplinger Today newsletter — freeContact me with news and offers from other Future brandsReceive email from us on behalf of our trusted partners or sponsorsBy submitting your information you agree to the Terms & Conditions and Privacy Policy and are aged 16 or over.
Zachariah HammelSocial Links NavigationVice President and Licensed Insurance Representative, Hammel & CompanyZachariah has been in the financial business for 19 years and works hard to help people meet their retirement goals through services such as retirement income strategies and legacy planning. He was taught and mentored by his father, who has been in the industry for 30-plus years. His other mentor is Van Mueller, a longtime adviser with an unrelenting commitment to integrity and excellence. Zachariah uses a straightforward approach to help people take advantage of money-saving opportunities. His philosophy is that there is more opportunity to serve his clients by focusing on avoiding losses rather than simply making money.
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