DFW Annuities - What Do I Need to Know About Annuities

DFW Annuities

What Do I Need to Know About Annuities? Answers from DFW Annuities Professionals:

The goal of Annuity Watch USA is to educate the public on how annuities really work. This site dispels myths, explores nuances in annuity products and explains how annuities add to your retirement portfolio in plain English. We have provided a wealth of information, but every person’s financial situation is unique, so we always encourage those with specific questions to set up an appointment with one of our DFW annuities professionals.

Many people come to us with a variety of questions regarding annuities and their finances. Here are some of the most commonly asked questions we receive, and answers from our annuity professionals. If you have further questions or would like to set up an appointment with one of our DFW annuities professionals, fill out our contact form!

What is an Annuity? 

In its simplest terms, an annuity is a contract between an individual and an insurance company.

Annuities are designed to help you grow your retirement income and provide you with a source of protected lifetime income. Annuities can be an important part of your retirement portfolio because they can ensure that your retirement income is protected, even when there are market downturns. Once you purchase an annuity, any growth in your account may be on a tax-deferred basis while you continue to have control of your money. Today, as we see less people being covered by traditional pension plans, annuities can fill a critical gap in your retirement portfolios by providing a guaranteed monthly check for as long as you live.

What are the Different Types of Annuities?

Immediate Annuity:

Immediate annuities are the simplest type of annuities. You give the insurance company a sum of money, the premium, and they give you a payout each month for the rest of your life. The bad news is there is sometimes no death benefit with an immediate annuity. Without a death benefit, the insurance company stops making payments. In addition, any principal that is not taken as income is kept by the insurance company.

Fixed Annuity:

A Fixed Annuity is a contractual guarantee from an insurance company ensuring that they will pay you a fixed rate of interest for a fixed period of time. A fixed annuity grows tax deferred; you do not pay any taxes on the interest earned until you withdraw it. When buying a fixed annuity, be sure to read the fine print. Some companies offer multi-year contracts with an attractive interest rate, but that rate may only be guaranteed for the first year.

Variable Annuity:

Variable annuities offered a solution to the downside of low contribution limits. They allow you to invest in mutual funds inside a tax-deferred insurance vehicle with no investment limits. Keep in mind, the underlying investments in variable annuities are mutual funds. This means your principal is not guaranteed and will go down in value if the underlying investments go down in value. The insurance company could entice you buy offering a guaranteed a death benefit or an income value. But, variable annuities DO NOT offer principal protection.

Fixed Index Annuity:

A fixed index annuity combines features of the other types of annuities while eliminating some of their drawbacks. With a fixed index annuity, your principal will be protected. If the market goes up, you will get an interest credit. But, if the market goes down, you do not share in that loss. Therefore, you will not have to worry about any market crash affecting your retirement savings.

Are Fixed Index Annuities a Suitable Choice?

There are a few factors to consider when deciding whether a fixed index annuity makes sense for you.

What retirement assets can you absolutely not afford to lose? You may want to consider protecting those funds by using an FIA. FIAs generate a steady income stream once you’ve reached retirement, and they also offer more opportunity for growth than other types of principal protected investments.

Another thing to think about is if you’ll be able to live comfortably without accessing your funds in the short term. Although all FIAs allow you to withdraw a small percentage of your money each year without a penalty (typically 10%), an annuity should be looked at as a long-term asset in your retirement portfolio. If you choose to cash out before the end of the contract term, you could be charged a fee.

FIAs are an option for those who want to earn interest that is based on gains in the stock market index, while also protecting their portfolio against any losses.

See below for a few more resources from our DFW annuities professionals on deciding if annuities are right for you:

Your Guide to Understanding Fixed Index Annuities
How to Choose an Annuity
The Difference Between Variable and Fixed Index Annuities

If annuities seem like a good fit for your retirement goals and you are interested in finding the best DFW annuities, reach out! Schedule a complimentary consultation by filling out this online form or call us at (972) 473-4700.

Learn About Annuities

Exploring Different Life Insurance Policies

When it comes to safeguarding your family’s financial future, understanding the different types of life insurance is crucial. Life insurance isn’t just a policy; it’s a cornerstone of financial planning […]

Read More

What is a Fixed Annuity?

When looking to further secure your financial future and planning for retirement, it’s crucial to understand the various options available. One such option is a Fixed Annuity. Today, we’ll delve […]

Read More

Planning for Taxes in Retirement

Planning for retirement goes beyond merely saving money or planning your next holiday destination. It involves a comprehensive approach that takes into account various elements like healthcare, lifestyle, and taxes. […]

Read More

Best Annuity Rates

Annuities offer a compelling option that can provide a reliable and steady stream of guaranteed income over a specific period or for a lifetime. A key factor that draw many […]

Read More

At What Age Does RMD Stop?

The past few years have been shaky in the retirement savings landscape, but lawmakers have taken great strides to aid seniors in saving a greater amount for retirement and holding […]

Read More

How to Calculate Annuity Payout

By Cathy DeWitt Dunn One of the ways to create a predictable income stream during retirement is by funding an annuity. (Learn more about what an annuity is here.) When […]

Read More

A Comprehensive SECURE Act Summary

The SECURE Act, or the Setting Every Community Up for Retirement Enhancement Act, was a recent bipartisan bill that was written into law December 20, 2019. The goal of this […]

Read More

How do annuities make money?

By Cathy DeWitt Dunn Annuities are popular retirement planning vehicles where a large principal payment is held with an insurance company. In exchange, the insurance company pays regular sums over […]

Read More

Four Types of Annuities

By Cathy DeWitt Dunn If you’re looking for a solution that will help you avoid ever losing money, Dewitt & Dunn is here to help. Retirement portfolios suffered big losses […]

Read More

Annuity Payout Rates

By Cathy DeWitt Dunn In our last article, we talked about growth guarantees that help maximize the income value of Fixed Index Annuities (FIA). With income in mind, let’s shift […]

Read More

Annuity Growth Rate Guarantees

By Cathy DeWitt Dunn So far in our series on retirement annuities, we have discussed many aspects of annuities, especially the fixed index annuity. We have covered the four types […]

Read More

Fixed Index Annuity Myths: Debunked

By Cathy DeWitt Dunn Many Americans worry that retirement will bring not leisure, but financial hardship. Unfortunately, their fears are valid. More than 25 million Americans aged 60+ are economically […]

Read More

Fixed Annuity Sales Soar in 2016

By Cathy DeWitt Dunn Whether it’s on your mind or a far-away concept, retirement is somewhere on the horizon. Even if you plan to work forever or would rather not […]

Read More

What You Need to Know About Annuities

By Cathy DeWitt Dunn With the constant threat of stock market volatility, more and more people are looking for safety when it comes to a retirement income stream. Annuities can […]

Read More

3 Annuity Questions Answered

By Cathy DeWitt Dunn As millions of American move swiftly into their senior years, their focus turns to their financial condition and how to continue to live out their remaining […]

Read More

What’s Wrong with Annuities?

By Cathy DeWitt Dunn Let’s just get it out in the open. Annuities have a reputation for being the bad boys of the investment world. And, not in a good, […]

Read More

Should I buy an income annuity?

By Cathy DeWitt Dunn Investors closing in on retirement and looking to secure future income would do well to explore deferred income annuities. Indeed many are, as sales of these […]

Read More

Taking the Hybrid Annuity Road

By Cathy DeWitt Dunn Security. Flexibility. Growth. In the world of retirement savings, vehicles with these features can be pure gold. Hybrid annuities feature each of these elements, and may […]

Read More

5-Year Fixed Annuity at 3.35 Percent

By Cathy DeWitt Dunn Frustrated by money sitting around earning next to nothing? Thank goodness there’s now a smarter, short term 5-year option that beats the performance rates of money […]

Read More

Real Estate Indexed Annuities

By Cathy DeWitt Dunn A real estate indexed annuity is a unique product that is tied to the Dow Jones Real Estate Index. The Dow Jones U.S. Real Estate Index […]

Read More

Annuities as Income

By Cathy DeWitt Dunn If you are thinking about retirement, about to retire, or you’re retired and are concerned about your future finances, let me ask you a question. Suppose […]

Read More

Understanding Immediate Annuities

By Cathy DeWitt Dunn Immediate annuities are the simplest type of annuities. You give the insurance company a sum of money, the premium, and they give you a payout each […]

Read More

Understanding Fixed Annuities

By Cathy DeWitt Dunn Let’s clear up misconceptions and make understanding fixed annuities easier. A fixed annuity is a contract between you and an insurance company. You pay the insurance […]

Read More

Understanding Annuities

By Cathy DeWitt Dunn Understanding annuities is not difficult once you understand that there are multiple types of annuities. There are essentially four major types of annuities – immediate, fixed, […]

Read More

Safe Money and Annuities

By Cathy DeWitt Dunn In a recent article by Scott Burns titled “Best place for ‘safe money’ may be in CD-like annuities”, a reader had emailed the following question. “My […]

Read More

No to Variable Annuities Says Suze Orman

By Cathy DeWitt Dunn Financial advisor, author, motivational speaker and television host Suze Orman shares her dislike of variable annuities in this short video. At AnnuityWatchUSA.com, we agree. Get the […]

Read More

Should I Buy an Annuity?

By Cathy DeWitt Dunn On our DeWitt & Dunn Financial Services Radio Show, we are often asked “should I buy an annuity?” However, we cannot answer with certainly until we […]

Read More

The Modern Day Annuity

By Cathy DeWitt Dunn The financial world has changed, no question. And, when it comes to annuities, this is a great thing! Insurance companies have listened to what consumers are […]

Read More

Annuity Myths and Facts

By Cathy DeWitt Dunn At Annuity Watch USA, we specialize in helping individuals and families understand various retirement income planning options that can help them create a more secure feature. […]

Read More

Learn About Annuities

By Cathy DeWitt Dunn To discuss whether a fixed income annuity may be an appropriate solution, contact us today. Let us do the work of navigating through the many companies and […]

Read More

Is an Annuity Right for Me?

By Cathy DeWitt Dunn A question that we hear quite often around here is, “Is and annuity right for me?” That’s also a question we talk about in great depth […]

Read More

Focus on cash flow during retirement

By Cathy DeWitt Dunn I recently came across a post on a large national newspaper’s blog talking about how investors should focus on generating cash flow during their retirement years. […]

Read More

Fixed Index Annuities for Retirement

By Cathy DeWitt Dunn The popularity of annuities – especially fixed index annuities – with people planning for retirement is on the rise. Fixed index annuities take the best of what other […]

Read More

Other websites by DeWitt & Dunn Financial Services: