Fixed Index Annuity | DeWitt & Dunn Financial Podcast

Let’s Talk: Fixed Index Annuity 101

By Cathy DeWitt Dunn

With the volatility we’re experiencing in the market today from increasing interest rates to political unrest, retiring with confidence is becoming harder to do. With all the highs and lows, it’s hard to know whether you need to be all the way in the market and embracing the risk, or totally out of it and making nothing.

Retirement and fixed index annuity specialist Cathy DeWitt Dunn of Dewitt & Dunn is taking a different approach, eliminating the confusion for investors. With over 20 years of helping build successful retirements and lifelong income, Cathy has a solution for you.

“So, what are my options?”

With the volatility of the market continuing to increase, we’re going to keep seeing ups and downs. When you invest in fixed index annuities, you can take advantage of the ups and downs. A fixed index annuity offers safety and preservation of principal. As you get older, these are more important than chasing returns at high risk.

With a fixed index annuity, if the market comes back, you’ll get the upside without giving anything up just to move your positions over. This is a great solution for those looking for high quality fixed income instruments.

Think of it like an elevator. Once you hit the first floor, you can’t go any further. Fixed index annuities work the same way, in that your floor is zero. As an investor, a plan with no risk to the principal will always be more attractive!

“But, I just have a bad feeling about annuities.”

We’re not talking about old-time annuities or variable annuities with outrageous fees. With fixed index annuities, you can often get strategies without any fees. There are rules involved, but one of them is that the value of your principal can never go down.

“Let’s take a step back. Can you tell me what an annuity is?”

It’s similar to a pension. The difference is that you’re at risk of going unfunded with a pension. With a fixed index annuity, you are guaranteed to receive all of your money, and you can end up with a higher income down the road and grow your asset base at the same time.

Let’s take the pension comparison a bit further. Pensions typically have a positive reputation, but they don’t always work out in your favor. Your pension fund could perform poorly, and because it is not contractually guaranteed, your check could easily decrease in amount. With annuities, it’s the opposite. Insurance companies have several backups, more so than municipalities or private companies. Insurance companies are also highly regulated. They put your money away into an investment portfolio where they are contractually bound to give you your income.

Let’s also compare it to a bond. With bonds, your asset base really isn’t growing. They just sit there, and you get a fixed yield of the portfolio that you don’t have access to until the maturity date. What if you need to get out? What’s par in the future? You could purchase a 25-year bond and be stuck without your money until it matures 25 years later. Most fixed index annuities allow you to access all of your money in 10 years or less.

“This sounds like a fit for me. So, how do I get started?”

Annuities are not one-size-fits-all. The team at DeWitt & Dunn would like to get to know you in order to offer the best solution for your needs.

Are you looking to leave a legacy for your kids?

Are you looking for immediate income?

Are you looking to invest in an annuity that has great death benefits with no extra rider fees?

There are many great strategies to explore that you won’t find at a big box retail firm. At DeWitt & Dunn, our experts will help you find alternatives that work for you. Not only that, but they work with compliance and suitability officers to make sure your retirement strategy is an appropriate fit. Just like you upgrade your smart phone every few years, you can re-evaluate your retirement portfolio to be sure you are taking advantage of the best strategies available today.

Here and now, you can make the decision never to sign off on an irrevocable decision when it comes to your money. The best thing about a fixed index annuity is that your paycheck is never going to decrease in value.

It can only go up from here, and that’s what retirement should be all about.

Fixed index annuity

Click here to schedule an appointment to sit down and talk with the annuity experts at DeWitt & Dunn. We can help you identify your strategy and choose the investment opportunity that best suits your income needs and financial goals.

To listen to Cathy’s latest podcast on fixed annuities, click here.

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Disclosure: Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company, not an outside entity. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated. A fixed annuity is intended for retirement or other long-term needs. It is intended for a person who has sufficient cash or other liquid assets for living expenses and other unexpected emergencies, such as medical expenses. A fixed or indexed annuity is not a registered security or stock market investment and does not directly participate in any stock or equity investments or index.


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