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How to get the most out of the annuities you buy

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Annuity sales topped $229 Billion in 2014 and 2015 could be higher. Demand for annuities continues to grow as American are looking to annuities to quell their fears and provide solutions:

  • Protection from market losses and keeping what you have
  • as Bond alternatives (due to the threat of rising interest rates and low bond yields)
  • Risk of outliving your money

Here are two critical things to know about annuities that could save you thousands in the long run as well as annuity landmines to avoid:

Annuities have an “Account Value” and “Income Value”. Knowing the difference is crucial!

The “Account Value” is the walk away value. Just like a CD matures in a certain period of time, the annuity will have a time frame, say 8-12 years. At the end of the time frame you can take all your money and go or leave it where it is and draw out money as needed. Principal is guaranteed against market losses but growth is not guaranteed. The interest earned is based on the performance of various market indexes (More on Market Indexes later). These are used for accumulation, market protection and bond alternatives while still maintaining flexibility down the road.

The “Income Value” grows at a guaranteed rate by adding an “Income Rider”. Rates are currently as high as 7%. You cannot walk away with this money. The growth and guarantee is only available by taking a lifetime income payout. The only purpose of the income value is to create a pension like income stream.

Annuity Landmines

So each annuity will have an Account Value and Income Value. Since this income value has the most curb appeal: It’s easy to talk about 7% guaranteed. The features of the actual account value often get overlooked or ignored. On indexed annuities, many of the account values have low caps and very little growth potential. On variable annuities the account values can suffer big market losses and have fees north of 3% per year.

But why does it matter if you are buying it for income and you have a 7% guarantee?

If you hear this from an advisor this is a “Red Flag”.  First, if your account value is getting eaten up by fees and losses it will drop to zero over time once you start taking income. The higher the fees and losses and the lower the growth potential of the account value the faster this will happen. You may have a guarantee but if your die early or change your mind and want your money back from the insurance company you could lose big. It is not just principal you could lose, but think about parking your money with an insurance company for 20 years and never earning one dime of interest. When you get into the math as I do, this is a real possibility for many of the annuities on the market today.

I use annuities in planning every day and they can solve problems and provide peace of mind when set up properly.

A good combo annuity will have:

  • Real growth potential – no caps on growth
  • Low cost – fees 1.5% or less
  • No market risk – principal guaranteed
  • Flexibility – the ability to walk away with your money or take lifetime income

In the next email I’ll discuss how the money grows in annuities. What you can look for and what to avoid.

It is always good to get a second look at what you are doing.

Contact me to set up a free consultation at 480-970-5663 or contact me through LinkedIn – Denver Nowicz.


How to protect and preserve assets when faced with Long Term Care expenses

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Here is our interview with attorney Charles “Mike” Dyer on protecting and preserving your assets when faced with long term care expenses. If you are concerned for yourself, your parents or your kids, you’ll find some valuable tips in the interview and the tips listed below.

The keys to protecting and preserving your assets when faced with long term care expenses is to know the rules, use them to your advantage and do those things that are allowed.

Here’s one area to know: Prepositioning

Couples planning often uses prepositioning to achieve benefits for the person in need while preserving assets for the healthy spouse. This can include things such as:

  • Paying off the mortgage.
  • Paying down or off a vehicle or replacing one.
  • Home repairs and home modifications for care
  • Medicaid friendly annuities

Also, having the right tools is essential:

  • Legal documents allow spouses and children to be able to act.
  • Power of attorney – financial
  • Power of attorney – medical
  • Metal health power of attorney

Children also need to be actively involved in the process:

  • Know where documents are
  • Know what documents will be needed should an application for assistance be necessary
  • Know what the health issues are
  • Know when not to assist in covering expenses

Without knowing the rules, poor planning can result in complete liquidation of the marital estate. Experts can not only guide you in the rules but often assist in the process as well.
For more information contact Charles “Mike” Dyer at (602) 254-6008 or visit

How to save $10,000 on a new or used truck for sale

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ford-f-series-review-2011-ford-f-150-ecoboost-drive-car-and-driver-photo-366545-s-429x262When it comes to large expenses, buying a new or used truck can certainly fall into that category. Recently my wife and I bought a new truck and Rob Murray of Peoria Ford was able to help us save over $10,000 on a new truck for sale. While Rob may not be able to save you $10,000 on a new or used truck for sale every time, he knows the ins and outs of the business and can save you money if you are looking for the best deal on a new or used truck for sale in Phoenix, Glendale, Peoria or even valley-wide.

I interviewed Rob for the Wealth For Life radio show on 1100am KFNX Newstalk Radio to get his best advice on buying a truck to save you money. Here is the interview and his top tips: Read More

$5.8 Billion in 401k early withdrawal penalties. Should companies provide a more liquid savings option?

Posted by | pension, retirement income, small business, tax strategies | No Comments

The IRS collected more than $5 billion in 2011 from penalties incurred by taxpayers who withdrew money from tax-deferred retirement accounts before the age of 59 1/2. The people who pay the penalty include younger workers who switch jobs and don’t bother to roll over their accounts and older workers who believe they have no place else to turn. The cash out factor occurs among all age groups: Read More

How to have confidence in a rigged market

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What strategies can you implement to keep your money growing in a rigged market?

This is part 2 of of our weekly radio show. If you missed part 1, here is the link:

We know the market operates the way it does. However, we can lose money by just sitting on the sidelines. There are certainly ways to grow your wealth and have protections. Read More

The market is rigged! Are you surprised? Part 1

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On this week radio show we discuss Michael Lewis’s new book Flash Boys and the his claim that the market is rigged.

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The U.S. stock market is rigged in favor of high-speed electronic trading firms, which use their advantages to extract billions from investors, according to Michael Lewis, author of a new book on the topic, “Flash Boys: A Wall Street Revolt.” Read More

Market trends and how they affect your wealth: Part 2 of 2

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Strategies for long term bear markets to keep your wealth growing.

Since we have seen how long bear markets can last and that most investors don’t have a 100+ year time horizon, we need to plan for bear markets that could fall into your peak saving years and income years.

There are strategies to overcome this and keep your wealth growing using real estate, investments and insurance products. Today we will focus on the using index crediting strategies in insurance products.

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