Independent Review of the Northwestern Mutual Select Fixed Annuity
In this annuity review, we will be going over the following details regarding the Northwestern Mutual Select Fixed Annuity:
- Product type
- Fees
- Current rates
- Realistic long-term return expectations
- How the annuity is best used
- How the annuity is most poorly used
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in.
We make the complex, simple.
Over the past several years, annuities have become a much more popular component of overall retirement planning. One reason for this is because, as people are living longer, longer lasting retirement income is necessary – and unlike any other insurance or financial product in the marketplace, an annuity is the only vehicle that can guarantee you an income for the remainder of your lifetime, regardless of how long that is.
Fixed annuities have become particularly favored by those who are at or approaching retirement time, as people are leery about entrusting their hard-earned savings to an extremely volatile stock market. So, if you’ve been considering a fixed annuity like the Northwestern Mutual Select single premium deferred annuity because you want to ensure that your money is safe and that you’ll have lifetime income that you can count on, this product could be a viable option for you.
However, before you go out and purchase it “sight unseen,” it is important that you know just exactly how the product works, and how it may – or may not – work for you and your specific financial related objectives.
Annuity and Retirement Income Planning Information That You Can Trust
If this is your first visit to our website, then please allow us to officially welcome you here to AnnuityGator.com. We are a team of annuity pros who focus on offering very comprehensive – and unbiased – annuity reviews. We have been at this for quite a few years now – longer than our competitors. And, because of the in-depth reviews that we provide, we have become a highly trusted source of annuity information online.
Over the past decade or so, however, there have been a number of “copycat” websites that have popped up on the Internet. While some of these can give you information about annuities, what you are likely to find is that they are oftentimes just simply reiterating what our information already shows.
If you’ve spent any amount of time seeking annuity information online, it is probable that you have also come across some highly conflicting information about these products. This is not entirely surprising, however, because there are a lot of annuities out there to choose from now, and everyone seems to have a different opinion of them.
It’s possible that you have also recently gone to an annuity seminar. Here, the presenter may have given you more in-depth details about the Northwestern Mutual Select fixed annuity, or some other similar product. In fact, it could be your attendance at that seminar that has ultimately brought you here to our website in search of more information.
In your quest for more information about annuities via the Internet, you may also have seen some annuity marketing websites that focus on luring visitors in for the purpose of obtaining their contact details. These sites will oftentimes do so by making some fairly bold claims about the annuities they offer, such as:
- High Annuity Income Payouts
- Guaranteed Income for Life
- Top-Rated Annuity Carriers
- Low Fees
Does this look at all familiar?
Unfortunately, as nice as these claims may sound, it is absolutely essential that you first verify their validity before you move forward with a long-term financial commitment, just like you would likely do before purchasing any other type of “high ticket” item.
In any case, if you have been seeking more information on the Northwestern Mutual Select fixed annuity, then you are certainly in the right spot. In fact, we dare say that our website is the only place online where you can get all of the key details about this annuity so that you can make a well-informed buying (or non-buying) decision.
It is important to note here, however, that in addition to providing you with all of the nice keen benefits of this product, we are also going to lay out the product’s drawbacks. This is so that you will be in a better position to make a truly well-informed decision as to whether or not this is really the annuity for you.
We do want to be clear on that, we believe that annuities are fine products – and they can be quite beneficial to some people – as long as they fit in with your overall financial objectives. This annuity review is here to provide you with what you need to know.
So, with that being said, let’s go ahead and get started!
The Northwestern Mutual Select Fixed Annuity at a Glance
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+ | |
|---|---|---|---|---|---|---|---|---|
| Charge Per Withdrawal | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0% |
Opening Thoughts on the Northwestern Mutual Select Fixed Annuity
Northwestern Mutual has more than 160 years of experience in the insurance arena, making it one of the oldest financial and insurance entities in the U.S. Over 4.4 million people are clients of this company – and roughly 96% of the company’s clients remain with Northwestern Mutual for over one year.
As a mutual insurance company, certain policyholders are eligible for dividends from Northwestern Mutual (although dividends are not guaranteed). In 2017 alone, the company anticipates paying out approximately $5.2 billion in dividends. For the year 2016, Northwestern Mutual paid out more than $4 billion in life, disability, and long-term care insurance claims.
Northwestern Mutual has consistently been named as one of the World’s Most Admired Companies by Fortune Magazine, and it is ranked in the Fortune 100 Company list. Given its strong financial footing, the company has extremely high ratings from all of the insurer rating agencies, including a(n):
- A++ from A.M. Best Company
- AAA from Fitch Ratings
- Aaa from Moody’s Investors Service
- AA+ from S&P
Due in large part to the unpredictability in the stock market over the past several years, the demand for fixed annuities has grown a great deal. One reason for this is because fixed annuities can provide the benefits of keeping assets safe, as well as an assurance of a stable and reliable income stream in the future.
However, because of the extremely low-interest-rate environment that we have been in for roughly the past ten years, the return that is offered by most fixed annuities is painfully low – and that can create problems for you and your money.
For instance, the returns that are obtained on fixed annuities have not even been enough to outpace the inflation rate over time. Because of these low rates, your future purchasing power could be affected – especially if you plan to use the income from a fixed annuity as a primary source of your retirement income down the road.
So, even though your money is technically “safe,” going this route may or may not actually be the most beneficial course of action for you. That’s why we’ve compiled this annuity review so that you can weigh the pros and cons.
Before we get into the gritty details, here are some necessary legal disclosures…
This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Northwestern Mutual Insurance Company has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners.
For additional information on how to compare fixed annuities so that you can decide which may be the best one for you, in order to obtain our free annuity report.
How Northwestern Mutual Describes the Select Fixed Annuity
Northwestern Mutual Life Insurance Company describes the Select Fixed Annuity as a single premium deferred annuity product that is designed to be both a retirement accumulation vehicle and a source of retirement income.
With this annuity, during its accumulation phase, the money grows tax-deferred, meaning that there is no tax due on the gain until the time of withdrawal. Then, the income phase of the annuity will begin when you are ready to start receiving income.
This annuity provides a list of key benefits, including:
- Guaranteed safety of principal – regardless of what happens in the stock market
- Guaranteed interest rate options – including period choices of one, three, or five years
- Optional first-year interest rate enhancement – which can allow you to essentially “jump start” your savings
- Guaranteed consistent growth – because your interest rate cannot fall below a guaranteed minimum rate
There are also some additional features on this annuity, such as a death benefit. Here, at the death of the annuitant (provided that this occurs before the annuity’s income phase), the full account balance may be withdrawn without penalty or an early withdrawal charge.
You may also be able to have access to your money without a withdrawal charge in certain situations, such as if you are diagnosed with a terminal illness and/or if you must reside in a nursing home (provided that you meet certain guidelines).
There are actually three different Select annuity options to choose from, depending on what your primary goals may be. These include the following:
- Select Silver – The Select Silver has a five-year guarantee focus where the initial interest rate is locked in over a full five years. Once that period has elapsed, you can choose a new renewal period of one, two, three, four, or five years.
- Select Gold – The Select Gold product has more of a market responsive rate focus in that it offers interest rates that are more responsive to market interest rate trends. The initial interest rate guarantee period is either one or three years without the first year rate enhancement (one just one year with the optional first year rate enhancement).
- Select Platinum – With the Select Platinum option, you can obtain relatively stable interest rates during the first eight years of the contract. Then, after the first eight years have elapsed, renewal rates will more closely follow market interest rate trends.
For more of the in-depth details, you can check out the Northwestern Mutual Select Fixed Annuity product brochure HERE.
How an Insurance or Financial Advisor Might “Pitch” this Annuity to Clients
Given that, on average, people are living longer today than at any other time in history, there are many nice benefits to be had, such as the ability to spend more time with friends and loved ones, and to travel the world. But none of this is possible unless you have the income to help you in supporting your lifestyle. An annuity can help you to do just that – without the worry of that income running out while you still need it.
With that in mind, it is likely that an insurance or financial advisor who is presenting this annuity to you will focus on the guaranteed income feature. He or she is also likely to key in on the safety of principal, as well as the fact that you can guarantee a set rate for interest for a certain period of time – no matter what occurs with the market, or even in the economy overall.
But, while having these types of guarantees can definitely help you to sleep better at night, the truth is that the interest rates today (and for the past decade or so) that are offered on fixed annuity products would have you hard pressed to meet, much less beat, inflation. And this could lead you to struggle financially when trying to keep up with the rising cost of the goods and services that you’ll need to purchase in the future. Plus, these guaranteed can also come with a “price” – in many cases, via certain types of fees and charges with this annuity.
What Fees are Associated with this Annuity?
Although the Northwestern Mutual Select Fixed Annuity can offer you some nice benefits and guarantees, you will find that many of these come with certain tradeoffs – and in certain cases, they could even “cost” you various charges and fees.
For instance, withdrawals may be subject to ordinary income tax – and, if you withdraw interest earnings from this annuity before you have reached the age of 59 1/2, then you could also be hit with an “early withdrawal” penalty of 10% by the IRS.
Plus, depending on when exactly you make a withdrawal, you could also incur a surrender charge from Northwestern Mutual. The amount of the charge can differ, based on which of the Select annuities you have purchased. These would be as follows:
- Select Platinum: 8 Years of Withdrawal Charges @ 9% in Year 1, and the next seven years grading down to 8%, 7%, 6%, 6%, 5%, 4%, and 3%.
- Select Gold: 8 Years of Withdrawal Charges @ 7% in Year 1, and the next seven years grading down to 7%, 6%, 5%, 4%, 3%, 2%, and 1%.
- Select Silver: 5 Years of Withdrawal Charges @ 7% in Year 1, and the next four years grading down to 7%, 6%, 5%, and 4%.
The Annuity Gator’s End Take on the Northwestern Mutual Select Fixed Annuity
Where this annuity works the best:
While the Select Fixed Annuity from Northwestern Mutual may not be right for everyone, it could be a good option if you are looking for the following benefits:
- Fixed interest rate for a set number of years
- Safety of principal – regardless of what happens in the stock market
- Guaranteed lifetime income
Where this annuity works the worst:
Yet, even with the benefits that it offers, this annuity may not be right for you if you are seeking:
- The opportunity for a higher rate of growth
- The ability to withdraw your funds penalty-free in the early years
This annuity may also not be right if you do not intend to use the lifetime income feature.
In Summary
There are a number of key factors that should ideally be taken into consideration if you are thinking about purchasing an annuity. These should include – but they are not limited to – how the annuity can produce a return, how safe your money will be, how the income will pay out, and whether or not there are any other optional features that may be added to the annuity (as well as any added costs).
If you are considering the purchase of the Select Fixed Annuity from Northwestern Mutual, then you can be assured that your principal will be safe and that you can count on a lifetime guaranteed income, no matter how long you may live.
Yet, even with all of the seemingly nice features that are included with this annuity, there could still be a better alternative out there for you – particularly if you are seeking the opportunity for a higher return.
Quite frankly, the only way to really know how this product could perform based on your specific situation and needs is to have it tested. We can do that for you by running the numbers through our annuity calculator, and can then provide you with a spreadsheet showing the results. In order to receive this information, just simply contact us via our secure online contact form here.
Do You Have Any Additional Questions About the Northwestern Mutual Select Fixed Annuity? Did You Notice Any Mistakes?
We do understand that this annuity review went a bit long. So, we thank you for sticking with us through to the end here thus far. When creating our reviews, though, we would much rather “err” on the side of being “too long” as versus not long enough.
With that in mind, if you found that this annuity review was helpful for you, then please feel free to forward it on to anyone else that you think may benefit from it. Alternatively, if this review led you to have even more questions, then please let us know that, too.
Are there any other annuities that you would like to see reviewed?
There are lots and lots of annuities available in the marketplace today. So, if you would like to see a particular annuity reviewed, then just let us know the name of the annuity (or annuities), and our team of annuity “geeks” will get on the case. So, be sure to check back soon for the new reviews.
Best,
The Annuity Gator
