What is a RILA?: a Guide to Registered Index Linked Annuities

Planning for retirement isn’t just about growing your savings, it’s about protecting them. Today’s retirees want solutions that offer real balance. Tools that can participate in market growth without leaving everything exposed during downturns.

That’s why RILA annuities, short for Registered Index Linked Annuities, have become a popular option. They offer something unique: structured growth potential paired with a defined level of downside protection.

At National Annuity Educators, we believe clarity creates confidence. In our previous guides, we’ve broken down foundational annuity concepts and how annuities support long-term financial stability. Here, we’ll walk you through what a RILA annuity is, how it works, and how it may contribute to a modern retirement strategy.

What Exactly Is a RILA Annuity?

A Registered Index Linked Annuity is a type of deferred annuity whose growth is tied to a market index, but with guardrails. Instead of exposing your entire account to market ups and downs, a RILA uses a set of rules to shape how much of the index’s performance you receive and how much of a decline you’re protected from.

You may also hear RILAs described as a blend of:

• Index linked growth potential

• Structured protection

• Tax-deferred accumulation

RILAs sit between traditional indexed annuities and market-based investments. They don’t offer full principal protection, but they also don’t leave you fully exposed to market downturns. The goal is balance.

How Registered Index Linked Annuities Work

Just like fixed indexed annuities use participation rates and spreads to determine interest crediting, RILAs use their own set of tools to shape growth and protection.

Here’s the foundation:

1. Growth Tied to a Market Index

Your RILA earns interest based on the performance of an external index, such as the S&P 500. But you’re not investing directly in the market. Instead, the insurer applies a structured crediting method, often involving participation rates, caps, buffers, or floors, to determine how much of that performance is credited to your contract.

This creates an opportunity for higher yields than traditional fixed products

2. Built-In Protection From Losses

This is the defining feature of a registered index linked annuity.

RILAs use either:

Buffers

A buffer absorbs the first portion of a market loss.

Example:If the index falls 12% and the buffer is 10%, the contract absorbs the first 10%, and you experience only the remaining 2%.

Floors

A floor places a limit on how much you can lose.

Example:If the floor is 10%, your maximum loss is capped at 10%, even if the market falls more.

These structures help soften volatility while keeping you connected to market performance.

3. SEC-Registered Product

RILAs are considered securities. That means they:

• Follow SEC regulations

• Require a prospectus

• Must be offered by a securities-licensed professional

This makes them different from traditional indexed annuities, which are regulated as insurance products.

Where RILA Annuities Fit in a Retirement Plan

Retirement today requires more flexibility than ever. Markets don’t move in straight lines, traditional pensions are less common, and longevity is increasing, a combination we’ve highlighted in several of our retirement income guides.

A registered index linked annuity can help provide that flexibility by offering:

• Growth potential tied to the market

• Defined protection against downturns

• Tax-deferred accumulation (for non-qualified funds)

• A middle ground between conservative and growth-oriented strategies

RILAs are typically chosen for their accumulation potential, not for lifetime income guarantees. Many retirees blend RILAs with other annuities or strategies like laddering to create a more balanced long-term approach.

Guidance You Can Trust Your Investments  

RILA annuities can be powerful tools, but like any investment-linked product, they need to be understood clearly. The right structure can support your long-term goals; the wrong one may introduce risk you didn’t intend to take.

That’s why working with a fiduciary advisor is so important, someone legally obligated to put your interests first and help you evaluate whether a registered index linked annuity fits into your retirement plan.

At National Annuity Educators, our network of fiduciary professionals is here to walk you through your options with transparency and confidence.

If you’re ready to explore how a RILA annuity might support your financial future, reach out today. We’re here to help you make decisions with clarity, not confusion.