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 long-term 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 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.
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 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 annuitiesare 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:
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
Safely Growing Your Retirement Fund with Guaranteed Lifetime Income
By Cathy DeWitt Dunn Are you preparing for retirement or already in retirement? It is important that you understand all your options and how you can receive guaranteed lifetime income […]
What to do with a 401k after leaving a job or getting laid off due to Coronavirus
The Coronavirus has caused the stock market to plummet, shut down many businesses and prompted many Americans to file for unemployment. The increase in jobless claims and market volatility has many […]
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 […]
Compare Some of the Best Annuity Companies
By Cathy DeWitt Dunn Unfortunately, there is no hard and fast rule to use when choosing between some of the best annuity companies. But there are several factors that you […]
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 […]
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 […]
Annuity vs 401k – Income as the Outcome
Have you started planning for retirement? Learn the crucial differences between an annuity and a 401(k).
Understanding Fixed Index Annuities
Between the four types of annuities, it can get confusing. Learn the key elements of a fixed index annuity, and why we specialize in them.
5 Questions to Ask When Buying an Annuity
With so many different types of annuities, it’s understandable that many people have questions. Here are the answers to the 5 most common questions people ask when buying an annuity.
Beyond Income: Fixed Index Annuities for Wealth Accumulation
Not all Fixed Index Annuity contracts are created equal. Learn how you can choose an FIA for growth to aid your retirement.
The 4% Withdrawal Rule: How Fixed Index Annuities Can Help You Beat Retirement’s Oldest Rule of Thumb
The 4% withdrawal rule is becoming increasingly outdated. Learn why:
Growth and Income Annuities
Are you prepared to live the retirement lifestyle you want? Make sure you are by reading these tips.
What is a fixed index annuity?
We specialize in fixed index annuities because of how it can transform your life during retirement. Learn more about the power of FIAs.
The Evolution & History of Fixed Index Annuities
Fixed Index Annuities recently became popular in the last decade. Learn more about its history and it’s increasing importance to retirees today.
Is Variable or Fixed Index Better?
Do you know what the best retirement path is for you? At DeWitt and Dunn, we can help.
Creating a Market Protection Strategy with Fixed Index Annuities
With the unpredictable ups and downs of the market, your principal needs to be protected. Read on about how to develop a market protection strategy.
Choosing an Annuity – Making the Right Decision
Do you know if you’re making the right decision in purchasing an annuity? Make sure you are with our help.
Buying an Annuity: A How-To Guide
Buying an annuity is not as simple as one thinks. Follow our step-by-step guide to purchasing an annuity correctly.
How Does a 401k Rollover to an Annuity Work
Are you planning on making a 401(k) rollover? Read about your investment options, here.
403b Retirement Plan Options for Teachers
Teachers, are you planning to move your 403b retirement money? Learn about your options for investing.
Let’s Talk: Fixed Index Annuity 101
With these volatile markets, fixed index annuities are your best option. Learn why fixed index annuities are a good fit for you.
Annuity Principal Protection Explained
Get an inside look on how fixed index annuities protect your principal and allow you to lock in market gains.
Bull vs. Bear: Protect Your Retirement
Protect your retirement portfolio from crashing in a bear market with these 3 tips.
What Insurance Company Ratings Actually Mean – Choosing an Annuity Investment
Making a significant investment requires the right research. Read about what you should look for beforehand.
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 […]
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 […]
Inflation-Protected Annuity Q&A with Cathy DeWitt Dunn on U.S. News & World Report
By Cathy DeWitt Dunn With people living longer and spending an average of 18 years in retirement, inflation has the potential to wreak havoc on your retirement plans unless precautions […]
Retirement Annuity Crediting Methods – Monthly Sum
By Cathy DeWitt Dunn In our series on retirement annuities, we have previously covered the four types of annuities, fixed index annuity basics, principal protection, and one of the types […]
Point to Point Annuity Crediting Method
By Cathy DeWitt Dunn A question we hear quite often is, “How does a fixed index annuity make money?” That’s a great question because there are a lot of options […]
The Annuity Basics, Understanding the FIA
By Cathy DeWitt Dunn In a recent blog, we explained the four different types of annuities where one of those four was the fixed index annuity. Now we’ll take a […]
DOL Fiduciary Rule and Annuities – In Your Best Interest
By Cathy DeWitt Dunn It’s Time…You have done your due diligence and you’re ready to choose a Financial Professional to help you purchase an annuity with some or all the […]
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 […]
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 […]
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 […]
J.P. Morgan MOZAIC Index – Fixed Index Annuity
By Cathy DeWitt Dunn Consistent, steady growth in a variety of market environments Since it was established in 2009, the J.P. Morgan MOZAIC Index has delivered a 69% higher return than the S&P […]
How do Fixed Index Annuities Make Money?
By Cathy DeWitt Dunn With fixed index annuities, your money earns interest based on any positive changes to an external index, such as the S&P 500, over a set period […]
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 […]
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, […]
Innovative New Annuity Products Hitting the Market
By Cathy DeWitt Dunn Planning for retirement can be a confusing and stressful process, from the limitless array of investments available to complex end-of-life decisions. Making the choices that will […]
3 Income Annuity Questions That Matter Most
By Cathy DeWitt Dunn With a seemingly endless parade of insurers offering a never-ending selection of annuities, shopping for income annuities can be a daunting process. Many baby boomers planning […]
Questions to Ask BEFORE Buying An Annuity
By Cathy DeWitt Dunn Choosing the right annuity to help support your retirement income needs can be confusing and a little intimidating especially when so many different kinds of annuities […]
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 […]
Power-Up Annuities for Steady Retirement Cash Flow
By Cathy DeWitt Dunn Outliving retirement savings. That’s what many retirees—and those approaching the retirement ranks—cite as their number one fear. Generating reliable streams of retirement income used to be […]
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 […]
Can a 7% Annuity Outperform an 8% Annuity?
By Cathy DeWitt Dunn It may sound like a trick question, but the answer is simple. An account earning 8% simple interest earns less over time than an account earning […]
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 […]
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 […]
QLACs Beat the Longevity Conundrum. And the IRS.
By Cathy DeWitt Dunn Longer life expectancy and more years spent in retirement are two realities confronting the baby boom generation—and generations beyond. But longevity can be a mixed blessing. […]
The Annuity Cap Explained
By Cathy DeWitt Dunn The annuity cap can be a bit confusing. Is it annually? Is it monthly? How does it work?
Annuity Income Riders for Fixed Index Annuities Explained
By Cathy DeWitt Dunn “Consumers are practically bombarded with annuity marketing these days. Retirees need to know a retirement income plan is about much more than a flashy interest rate. […]
What You Don’t Know About Equity Indexed Annuities Could Hurt You
By Cathy DeWitt Dunn In the past couple of decades, annuities have become more popular with financial advisors and retirees for retirement planning. In many cases, annuities can be a […]
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 […]
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 […]
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 […]
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, […]
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 […]
Sell stocks in May, then what?
By Cathy DeWitt Dunn There is a mountain of data showing that the best time to sell stocks is in May and to stay out of the stock market for […]
8% Guaranteed Rate of Return on Income Annuities! Really? [Video]
By Cathy DeWitt Dunn With interest rates as low as they have been, buying an annuity now that pays a guaranteed 8% compounded rate of return sounds pretty good…on the […]
A Fixed Index Annuity Solves the 7 Biggest Retirement Fears (Video)
By Cathy DeWitt Dunn Find out how a fixed index annuity can solve the 7 biggest retirement fears of the Baby Boomer generation! Safe Money Talk Radio’s fixed index annuity […]
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 […]
The Truth About Annuities – Part 2
Cathy DeWitt Dunn Part 2 in a series where Safe Money Talk Radio annuity experts Cathy DeWitt Dunn and Matt Redding separate fact from fiction and tell you the truth […]
The Truth About Annuities – Part 1
By Cathy DeWitt Dunn Myth. Annuities are very complicated to understand and own. Reality. The concept of a fixed index annuity is very simple. In return for a lump sum […]
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 […]
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 […]
How a 62-year old Texan met his retirement income goal with just $500K
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. […]
Inflation Indexed Annuity – Don’t Let Inflation Bite Into Your Retirement Income
By Cathy DeWitt Dunn Regardless of whether you’re retiring tomorrow or ten years from now, inflation can take a toll on your retirement nest egg. Don’t be part of the […]
The Biggest Retirement Planning Myth for Baby Boomers
By Cathy DeWitt Dunn While some financial advisors may tell you that you’ll probably be spending less money in retirement than what you’re spending now, we don’t believe it. We think this is […]
The Annuity Revolution – A portfolio approach to income, growth, and liquidity
By Cathy DeWitt Dunn A fixed index annuity is the only asset in the world that provides a contractually guaranteed lifetime income. A bond can’t do this. A Certificate of […]
How to Protect Against Stock Market Loss
By Cathy DeWitt Dunn We have all heard stories from our parents or grandparents about forgoing bank accounts and sticking money under the mattress during the economic nightmare that was […]
Top 10 reasons not to buy a fixed index annuity
By Cathy DeWitt Dunn For over 25 years David Letterman’s Top 10 lists have consistently proven to get some good laughs about topics of the day. Now, Cathy and Matt […]
Baby Boomer Longevity and the Fixed Index Annuity
Cathy DeWitt Dunn explains the advantages of a fixed index annuity for the Baby Boomer generation. Free Annuity Educational Videos As baby boomers plan their retirement, they need to begin […]
Annuity with 8% Compounded Rate of return! Guaranteed!
By Cathy DeWitt Dunn Guaranteed annuity? Not so fast… With interest rates as low as they have been, buying an annuity now that pays a guaranteed 8% compounded rate of […]
Don’t Settle for Just an Income Annuity
By Cathy DeWitt Dunn Annuities come in all shapes and sizes…and “lifetime income” is just part of the story. And, here’s a dirty little annuity secret: there’s a steep price […]
59 1/2 – The Magic Age for Retirement Income Planning
By Cathy DeWitt Dunn When most people hit the magic age of 59 ½, retirement is just a few years away… and it’s time to get serious about putting a […]
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. […]
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 […]
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 […]
Questions to Ask When Considering Fixed Index Annuities
By Cathy DeWitt Dunn As with all retirement income planning solutions, there are pros and cons to fixed index annuities. In order to protect yourself, it’s important to know what […]
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. […]