
Athene AccuMax 5 Fixed Indexed Annuity Review: Everything You Need to Know
If you’re considering the Athene AccuMax 5 Fixed Indexed Annuity to grow and protect your retirement savings, this guide is for you. Fixed indexed annuities like this one are popular among people looking for steady growth without exposing their hard-earned money to the full risk of the stock market. Here’s a complete breakdown of the pros, cons, and why consulting a financial advisor is essential before you invest.
What is the Athene AccuMax 5 Fixed Indexed Annuity?
The Athene AccuMax 5 is a fixed indexed annuity designed to help you grow your savings while protecting them from market downturns. It offers several strategies to earn interest based on the performance of popular market indices like the S&P 500®, AI Powered Multi-Asset Index (AiMAX), and Shiller Barclays CAPE® Allocator 6 Index. This product is backed by Athene, a highly rated insurance company with decades of experience.
Here is a simple table explaining the basics of the Athene AccuMax 5 Annuity
Category | Details |
---|---|
Minimum Premium | $10,000 |
Maximum Premium | $1,000,000 (larger amounts may be accepted with approval) |
Withdrawal Charge Schedule | Contract Year: 1, 2, 3, 4, 5, 6+ |
Free Withdrawal Amount | 10% of accumulated value or 10% of premium annually without penalties |
Indexes Available | - S&P 500® |
Interest Crediting Strategies | - 5-Year Point-to-Point |
Fixed Interest Rate | Low Band: 4.15% |
Participation Rates | 5-Year Point-to-Point: |
Market Value Adjustment (MVA) | Applied to withdrawals exceeding the free amount during the withdrawal charge period (not applicable in CA) |
Waivers | Terminal Illness Waiver: No fees if diagnosed with terminal illness expected to result in death within 1 year (after 1st contract year). |
Tax Treatment | Tax-deferred growth; withdrawals subject to income tax and federal penalties if made before age 59½. |
Key Benefits of the Athene AccuMax 5
- Market Growth Without Full Risk:
- Your money isn’t directly invested in the stock market but earns interest based on index performance.
- A built-in safety feature, called a floor rate, protects your savings from significant losses, even in a down market.
- Multiple Interest Crediting Strategies:
- Options include 1-year and 5-year terms, allowing you to customize your investment to suit your goals.
- You can diversify your money across several strategies for a mix of growth and stability.
- Guaranteed Stability:
- Rates are locked in for the withdrawal charge period (up to 5 years), offering predictability.
- A fixed-rate option is available for those who prioritize consistent returns.
- Penalty-Free Access to Funds:
- Withdraw up to 10% of your annuity value each year without penalties.
- Special waivers for terminal illness or long-term care allow access to your money without additional fees if you qualify.
- Tax-Deferred Growth:
- Earnings grow tax-deferred, meaning you won’t pay taxes until you withdraw your money, helping your savings grow faster.
- Strong Financial Backing:
- Athene has top ratings from major agencies (A+ from S&P, Fitch, and A.M. Best), giving you confidence in their financial stability.
Potential Drawbacks of the Athene AccuMax 5
While the Athene AccuMax 5 has several appealing features, there are important downsides to consider:
- Complexity of the Product:
- The product’s various crediting strategies, participation rates, and caps can be confusing for those unfamiliar with annuities.
- Professional advice is often required to fully understand the product, which adds an extra layer of effort for investors.
- Capped Growth Potential:
- Participation rates and caps on returns limit how much you can earn, even if the market performs exceptionally well.
- For instance, while the S&P 500® may gain 15%, your annuity’s participation rate (e.g., 90%) means you’ll only earn 13.5% of that growth, and if there’s a cap, your return could be even lower.
- Fees and Embedded Costs:
- Some strategies include embedded fees, such as servicing and transaction costs, which can reduce your overall returns.
- Excess return indices used in certain strategies also include a fee structure, further dampening earnings.
- Withdrawal Charges and Liquidity Concerns:
- The product is designed for long-term savings, and early withdrawals beyond the free amount (10% annually) incur steep penalties during the first five years.
- A Market Value Adjustment (MVA) can further reduce your withdrawal amount if market conditions are unfavorable, such as when interest rates rise.
- No Dividends or Direct Market Investment:
- Your annuity does not directly invest in indices, meaning you won’t benefit from dividends paid by the underlying stocks. This limits the total potential return compared to direct stock market investments.
- Limited Flexibility After the Withdrawal Charge Period:
- Once the withdrawal charge period ends, all indexed strategies terminate, and your funds are automatically moved to the fixed strategy. This restricts your ability to continue taking advantage of index-linked growth.
- Tax Considerations on Withdrawals:
- While the product offers tax-deferred growth, any withdrawals are subject to income tax, which could push you into a higher tax bracket if taken in large amounts.
- Withdrawals before age 59½ are subject to an additional 10% federal tax penalty.
- State-Specific Limitations:
- Some features, such as the terminal illness and long-term care waivers, are not available in every state, limiting the product’s appeal for residents in those areas (e.g., California).
- Not Suitable for Short-Term Goals:
- This annuity is best suited for long-term planning. If you’re looking for a product that provides short-term liquidity or higher immediate returns, this may not meet your needs.
Why You Should Consult a Financial Advisor Before Buying
Investing in an annuity like the Athene AccuMax 5 is a big decision, and it’s not something you should do without careful planning. A financial advisor can:
- Explain the Details: This product has many features and options, and a professional can help you understand how they work and which ones might benefit you.
- Personalize Your Plan: Everyone’s financial situation is different. An advisor can assess your goals, risk tolerance, and overall financial picture to create a strategy that aligns with your needs.
- Avoid Costly Mistakes: Early withdrawals, missed tax implications, or choosing the wrong strategy can hurt your savings. A financial advisor can help you navigate these potential pitfalls.
- Compare Alternatives: Annuities aren’t the only retirement tool out there. An advisor can show you how this product stacks up against other options like IRAs, mutual funds, or CDs.
Think of a financial advisor as your partner in planning. They’ll help you feel confident that this product (or an alternative) is the right fit for your retirement goals.
Why the Athene AccuMax 5 May Be Right for You
This annuity is a great fit if:
- You want to grow your retirement savings without exposing them to full market risk.
- You value the predictability of locked-in rates for a set period.
- You’re comfortable with a long-term investment and don’t need frequent access to your money.
Who Should Look Elsewhere?
This product may not be ideal if:
- You’re seeking high returns and are comfortable with stock market risk.
- You need short-term access to your funds.
- You prefer simpler investment options without caps or participation rates.
Conclusion: Is the Athene AccuMax 5 Worth It?
The Athene AccuMax 5 Fixed Indexed Annuity is an excellent option for conservative investors looking to balance growth and safety. It’s designed for long-term retirement savings, with features that protect your principal while offering moderate growth potential. However, its complexity, capped earnings, and early withdrawal penalties make it less suitable for those needing flexibility or pursuing aggressive growth.
Before making any decisions, we encourage you to schedule a meeting with a financial advisor like us. They’ll help you evaluate whether this product fits your needs as part of a more comprehensive analysis or even financial plan.
Intrepid Wealth Partners, an independent RIA, does not sell the Athene AccuMax 5 annuity so we can provide you with an objective analysis to help you make an informed decision before investing your money. Feel free to contact us here.
Thank you,
Derek Notman & Drew Faloon