Nearly one-third of retirees are considering going back to work because their savings aren’t enough to cover expenses. This alarming statistic highlights why many Americans need to take a closer look at north american annuity rates as an alternative to traditional retirement accounts. While 401(k)s have been the standard retirement vehicle for decades, they leave retirees exposed to market volatility and provide no guarantee that your money will last throughout retirement.
Unlike market-dependent accounts, fixed indexed annuities from North American offer protection against market downturns while still providing growth potential. The High Point 365 Select with Bonus, for example, guarantees growth at an impressive 9.5% compound annual rate for up to 12 years. Additionally, you receive a 30% bonus on your initial purchase payment added to your Minimum Income Benefit Value. This lifetime income rider annuity ensures you’ll never outlive your money, regardless of what happens in the market.
In this guide, we’ll explore why your 401(k) might be at risk, how north american fixed annuity rates provide better protection, and what makes these financial products increasingly attractive for those seeking retirement security in 2025. We’ll also walk through a real-life comparison to help you determine if making the switch could benefit your retirement planning.
Why your 401(k) may not be as safe as you think
Many Americans place their retirement hopes in 401(k) plans without realizing the substantial risks involved. These market-dependent accounts have become the default retirement vehicle, yet they offer no guarantees for your financial future. Let’s examine why your 401(k) might be more vulnerable than you think.
Market volatility and economic uncertainty
Market volatility can devastate retirement savings, especially for those nearing retirement age. When the market experiences sharp downturns, 401(k) balances can rapidly decline in value. This volatility stems from numerous external factors:
- Political events and policy changes
- Economic shifts including inflation and consumer spending
- Industry-specific disruptions
- Performance of large influential companies
The impact of market volatility is particularly pronounced for those approaching retirement. Since they have less time to recover from losses, market downturns can permanently damage their retirement outlook. Recent data shows that during market selloffs, 401(k) holders closer to retirement age saw their savings decline by 10% in just a matter of weeks [1].
Furthermore, economic uncertainty has prompted 39% of workers to reduce their retirement plan contributions due to concerns about inflation and potential recession [2]. This reduction in contributions, combined with market volatility, creates a dangerous situation for long-term retirement security.
The decline of traditional pensions
In decades past, traditional pension plans provided guaranteed retirement income that lasted a lifetime. Consequently, the shift from defined-benefit plans to defined-contribution plans has fundamentally altered the retirement landscape.
Currently, only about 18% of private-sector workers are covered by a traditional pension plan, compared to about 35% in the 1990s [3]. Major corporations including General Electric, IBM, Verizon, Lockheed Martin, and Motorola have frozen their pension plans, leaving employees to fend for themselves [3].
This shift has placed the entire burden of saving and investing for retirement on employees. Without the safety net of a pension, retirees are more exposed to market risk, making their retirement income subject to unpredictable market fluctuations [3]. In contrast, north american fixed annuity rates offer guaranteed growth without the downside risk of market exposure.
Longevity risk and outliving your savings
Perhaps the most overlooked threat to 401(k) plans is longevity risk—the possibility of outliving your savings. Americans are living longer than ever before; more than a third of today’s 65-year-olds are expected to reach age 90 [4]. This extended lifespan puts tremendous pressure on retirement accounts.
The math is sobering: extending retirement by just five years from 30 to 35 years increases the risk of depleting savings by 41% [5]. When factoring in lower projected portfolio returns, that risk jumps by more than 300% [5].
Healthcare costs compound this problem significantly. A 65-year-old couple retiring today can expect to spend approximately $315,000 on healthcare expenses throughout retirement [5]. Without proper planning, these costs can rapidly deplete 401(k) savings.
North American company annuity rates with lifetime income rider annuity options address this longevity risk directly. Unlike 401(k)s, products like the North American Secure Horizon plan provide guaranteed income that cannot be outlived, regardless of market performance or how long you live.
Most Americans underestimate both their life expectancy and the financial demands that longevity brings. Approximately three in four Americans fear they’ll run out of money before they run out of time [5]. This fear is well-founded when relying solely on 401(k) plans that offer no lifetime income guarantees.
What makes North American annuities a safer option
In today’s uncertain financial climate, finding retirement solutions that offer both growth potential and security has become increasingly difficult. North American annuities stand out as a compelling alternative to traditional retirement vehicles, offering multiple layers of protection that 401(k)s simply cannot match.
Principal protection from market downturns
Unlike 401(k)s that leave your retirement savings exposed to market fluctuations, fixed indexed annuities from North American offer something invaluable—principal protection. These annuities are not directly invested in the stock market [6], which means your initial investment remains secure even during severe market downturns.
The most distinctive feature of these products is the “zero-return floor” [7]. This means that if the benchmark index (such as the S&P 500) decreases in value during a given year, your annuity will be credited with zero return—not a negative one [7]. Your principal remains intact regardless of market performance, effectively transferring the risk of market drops to the insurance company [7].
At the same time, North American fixed indexed annuities allow you to benefit from market gains. Through participation rates, you receive a percentage of any stock market increases. For instance, with a 50% participation rate and a 14% increase in the S&P 500, you would receive a 7% credit for that year [7].
Guaranteed lifetime income with rider options
Perhaps the most compelling advantage of North American annuities is their ability to provide guaranteed income that cannot be outlived. The Guaranteed Lifetime Income Rider (GLIR) ensures you’ll receive payments for life, even if your accumulation value decreases to zero [8].
These riders offer various valuable features:
- Income based on benefit calculation bases that build with bonuses plus fixed roll-up rates, providing predictable income [8]
- Options based on accumulation value plus activation bonuses for potential higher income [8]
- Protection against longevity risk—the possibility of outliving your savings [9]
- Shield from market volatility, ensuring your income stream remains stable regardless of market performance [9]
With North American’s Secure Horizon plan, these lifetime income riders typically grow at rates between 4-8% annually during the accumulation phase [9], significantly increasing your future income base before you begin taking withdrawals.
Tax-deferred growth advantages
North American annuities offer impressive tax advantages that help maximize your retirement savings. Under current law, annuities grow tax-deferred [10], meaning you won’t pay taxes on your earnings until you begin taking distributions.
This tax-deferred growth creates a powerful compounding effect. Your premium earns interest, that interest compounds within the contract, and the money you would have paid in taxes earns additional interest [11]. Ultimately, this allows your money to grow faster than it would in taxable investments [11].
Moreover, when you eventually receive income from a non-qualified annuity, a portion of each payment represents a return of premium that isn’t taxable, further reducing your tax liability [11]. This makes North American annuities particularly attractive for investors who expect their marginal income tax rate to decline in retirement [12].
The tax benefits of annuities make them increasingly competitive alternatives to holding bond-like assets in taxable accounts, especially when combined with their principal protection and lifetime income guarantees [12]. Although annuities have withdrawal limitations before age 59½ (including a 10% tax penalty) [13], this reduced short-term liquidity is often outweighed by the potential increase in after-tax spending and retirement security they provide [12].
How North American fixed annuity rates work
Fixed indexed annuities have gained popularity as retirement vehicles that balance growth potential with downside protection. Understanding how North American’s annuity rates work requires exploring their unique structure and interest crediting methods.
Understanding fixed indexed annuities
Fixed indexed annuities (FIAs) represent a hybrid financial product that combines features of both fixed and variable annuities. Primarily, these products protect your principal investment from market losses while offering growth potential tied to market indexes [6].
Unlike direct stock market investments, FIAs guarantee no loss of premium due to market downturns or fluctuations [6]. North American’s most popular annuity type, fixed index annuities earn interest based on changes in market indexes like the S&P 500, without directly exposing your money to stock market risks [1].
Conversely, it’s important to note that interest credits to a fixed index annuity won’t mirror the actual performance of the relevant index [6]. Instead, these products use various methods to calculate returns based on index performance while providing downside protection.
How interest is credited
North American offers several interest crediting methods for their fixed indexed annuities:
- Annual Point-to-Point: Compares the index price at year-end to its beginning value. If increased, your annuity receives interest up to a cap [14].
- Performance-Triggered: Credits a declared fixed rate when triggered by flat or positive index returns [14].
- Participation Rate: Credits a percentage of the total index increase rather than using a cap [14].
- Monthly Point-to-Point: Sums 12 monthly percentage changes, with monthly increases capped but decreases uncapped [14].
- Annual Monthly Averaging: Averages 12 monthly values compared to the initial value [14].
Interest crediting often involves participation rates, which determine what percentage of an index increase you receive. Indeed, higher participation rates mean you’ll receive more of an index’s performance [1]. Cap rates, meanwhile, set maximum gains, essentially limiting your returns during strong market performance [15].
North American company annuity rates in 2025
As of May 29, 2025, North American offers competitive fixed annuity rates across their product lineup [3]. Their NAC VersaChoice 10 fixed index annuity offers a fixed account rate of 3.40% for high band premiums ($75,000+) and 3.15% for low band premiums ($20,000-$74,999) [3].
Participation rates vary by index choice. For example, the S&P 500 annual point-to-point participation rate ranges from 30-35%, while the Morgan Stanley Dynamic Global Index offers substantially higher rates of 140-115% [3].
The North American Charter Plus 10 provides an impressive first-year yield of 15.36% for high band premiums, combining a fixed rate plus premium bonus [3]. Additionally, North American’s Performance Choice 8 offers a fixed account rate of 3.35% with various index options and participation rates [3].
Overall, North American’s 2025 rates demonstrate their commitment to providing competitive returns while maintaining the principal protection that makes fixed indexed annuities an attractive alternative to market-exposed retirement accounts.
Real-life example: How annuities can outperform a 401(k)
Let’s examine how these concepts apply to a real person’s retirement situation. Through a practical comparison, we can see why many financial advisors now recommend annuities as a complement to traditional retirement accounts.
Meet Sarah: A 60-year-old nearing retirement
Sarah, a 60-year-old professional with $100,000 in retirement savings, plans to retire in five years. After researching her options, she’s concerned about market volatility affecting her 401(k) in these crucial pre-retirement years. She’s heard about North American annuities offering guaranteed income and wants to compare her options.
Sarah is particularly worried about outliving her savings—a reasonable concern given that many 65-year-olds today will live well into their 90s. According to research, extending retirement by just five years increases the risk of depleting savings by 41%.
Her 401(k) vs North American Secure Horizon plan
Sarah’s 401(k) offers potential growth but leaves her exposed to market downturns. In fact, data shows that near-retirees experienced 10% account value drops during recent market corrections—precisely when they could least afford losses.
Alternatively, the North American Secure Horizon fixed index annuity offers premium-protected growth with no risk of market losses. This annuity provides:
- Growth potential based on index performance
- Principal protection regardless of market performance
- A lock-in feature that secures interest credits
- Tax-deferred growth, allowing more assets to compound over time
Projected income and risk comparison
Upon examining both options, Sarah discovers that investing $100,000 in the Secure Horizon plan with a 5% annual growth rate would significantly outperform her taxable investments over 30 years [16]. The difference becomes even more pronounced when factoring in the lifetime income rider annuity option.
Notably, the North American fixed annuity rates include guaranteed lifetime income—something her 401(k) cannot provide. Research published by the National Bureau of Economic Research confirms that retirees with guaranteed income sources tend to spend more comfortably in retirement than those relying heavily on investments [17].
Subsequently, Sarah decides to follow a blended approach recommended by many financial experts: maintaining a portion of her retirement funds in her 401(k) while allocating part to the North American Secure Horizon plan for guaranteed income security [17].
What to consider before switching from a 401(k)
Transitioning from a 401(k) to a North American annuity requires careful consideration of several factors. As a retirement specialist, I’ve seen many clients make this shift without fully understanding the implications. Prior to making any decisions, here’s what you should evaluate:
Eligibility and age requirements
First thing to remember, withdrawing from your 401(k) before age 59½ typically triggers a 10% federal tax penalty on the taxable portion [18]. Nevertheless, this penalty can be avoided when transferring to an annuity with “life contingent” payment options [19]. Important to realize, required minimum distributions (RMDs) from traditional retirement accounts must begin by age 73 (previously 72), with a hefty 50% penalty on missed withdrawals [4].
The IRS allows exceptions for:
- Death or disability
- Severance from employment
- Plan termination
- Financial hardship (subject to specific criteria) [18]
Rider charges and withdrawal rules
In light of potential costs, understand that most North American annuities impose surrender charges—typically starting at 7% and decreasing by 1% annually until disappearing after 7-10 years [5]. Coupled with this, annuities come with ongoing fees that can amount to 3-4% yearly, including mortality charges, administrative fees, and fund management costs [4].
Fortunately, many North American fixed annuity contracts allow annual withdrawals (often 10% of accumulated value) without surrender charges [5]. Some contracts also waive surrender charges in cases of terminal illness or injury [20].
Working with a financial advisor
Primarily due to the complexity of these decisions, consulting with a financial advisor is crucial. They can help you understand how North American annuity rates compare to your current 401(k) performance, and whether the security of guaranteed income outweighs potential drawbacks [21].
A qualified professional can assist with:
- Assessing your risk tolerance and retirement timeline
- Explaining tax implications of different options
- Completing paperwork for direct rollovers to avoid tax penalties [22]
- Evaluating if lifetime income rider annuities align with your goals
As a matter of fact, your individual circumstances, retirement goals, and risk tolerance should guide your investment choices [21].
Conclusion
Securing Your Retirement Future
Traditional retirement planning through 401(k)s certainly offers growth potential, though this approach leaves many Americans vulnerable to market fluctuations and the very real possibility of outliving their savings. The evidence clearly demonstrates why North American annuity products deserve serious consideration as part of a comprehensive retirement strategy.
First and foremost, the principal protection feature stands out as perhaps the most compelling advantage. Unlike market-dependent accounts, these fixed indexed annuities shield your hard-earned money from devastating market downturns while still allowing participation in market gains. This protection becomes especially crucial during the years immediately before and after retirement when recovery time from losses diminishes significantly.
Additionally, the guaranteed lifetime income benefits address one of retirement’s most overlooked threats—longevity risk. We can’t predict how long we’ll live, but we can ensure our money lasts as long as we do. The North American Secure Horizon plan exemplifies this security through its lifetime income riders that continue paying regardless of market performance or how long you live.
Tax advantages further enhance the appeal of these products. Because of tax-deferred growth, your money compounds more efficiently over time compared to taxable investments. This advantage, combined with principal protection and income guarantees, creates a powerful retirement planning tool.
Before making any decisions, however, you should carefully evaluate your specific situation. Age requirements, surrender charges, and withdrawal rules must factor into your planning process. Working with a qualified financial advisor will help determine if North American annuity rates align with your retirement goals and risk tolerance.
The retirement landscape has fundamentally changed over recent decades. Pension plans have largely disappeared, leaving Americans responsible for their own retirement security. Fixed indexed annuities from North American offer a compelling solution to this challenge by combining growth potential with guaranteed protection.
Ultimately, many financial experts recommend a balanced approach—maintaining some market exposure through traditional accounts while securing guaranteed income through annuities. This strategy provides both growth opportunity and retirement security, regardless of market performance or longevity concerns. Your retirement deserves this level of protection.
References
[1] – https://www.nationwide.com/lc/resources/investing-and-retirement/articles/what-is-a-fixed-indexed-annuity
[2] – https://www.barrons.com/advisor/articles/cut-401k-contribution-b32cd19d
[3] – https://www.northamericancompany.com/documents/35457/9001800/6745Z – Interest Rates/f1d40fd8-430e-4f87-9d81-5a35f6f930e2
[4] – https://www.annuity.org/retirement/401k-ira-annuity-rollover/
[5] – https://www.thrivent.com/insights/annuities/annuity-withdrawals-what-you-need-to-know
[6] – https://www.northamericancompany.com/explore-annuities
[7] – https://www.athene.com/producer/insights/a-safer-course-in-choppy-markets-annuities-with-principal-protection-from-market-volatility.html
[8] – https://www.nationallife.com/Employers-PlanSponsors/Guaranteed-Lifetime-Income-Rider
[9] – https://smartasset.com/retirement/annuity-income-rider
[10] – https://www.northamericancompany.com/plan-for-tomorrow/different-types-of-annuities
[11] – https://www.northamericancompany.com/documents/35457/1144491/19734Z-TX.pdf/10bd414d-4972-4cb7-814b-4d994e34366d?version=1.0
[12] – https://www.protectedincome.org/research/a-valuable-benefit-of-annuities-tax-deferred-growth/
[13] – https://www.jackson.com/annuities/benefits-of-annuities/growth-potential-from-tax-deferral.html
[14] – https://www.annuities.pacificlife.com/content/dam/paclife/rsd/annuities/public/pdfs/guide/understanding-fixed-indexed-annuity-interest-crediting-methods.pdf
[15] – https://www.finra.org/investors/insights/complicated-risks-and-rewards-indexed-annuities
[16] – https://www.securehorizonannuity.com/secure-horizon/
[17] – https://smartasset.com/retirement/annuity-vs-401k
[18] – https://www.irs.gov/retirement-plans/plan-participant-employee/401k-resource-guide-plan-participants-general-distribution-rules
[19] – https://www.immediateannuities.com/roll-over-ira-or-401k/
[20] – https://www.nationwide.com/lc/resources/investing-and-retirement/articles/what-is-an-annuity-rider
[21] – https://www.alerus.com/exclusive-content/consider-an-annuity-for-your-401k-rollover/
[22] – https://johnstevenson.com/convert-401k-annuity/