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Nationwide Annuity Review

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This review was produced by SmartAsset based on publicly available information. The named firm and its financial professionals have not reviewed, approved, or endorsed this review and are not responsible for its accuracy. Review content is produced by SmartAsset independently of any business relationships that might exist between SmartAsset and the named firm and its financial professionals, and firms and financial professionals having business relationships with SmartAsset receive no special treatment or consideration in SmartAsset’s reviews. This page contains links to SmartAsset’s financial advisor matching tool, which may or may not match you with the firm mentioned in this review or its financial professionals.

Nationwide Life Insurance Company is one of the largest insurance and annuity businesses in the U.S. In fact, the company boasts almost $253.6 billion in total assets and has been in business for well over 85 years. There’s no shortage of annuity products available here, as Nationwide offers variable, fixed, fixed indexed and immediate contracts.

Before you make any final decisions on a Nationwide contract or another annuity, think about consulting with a local financial advisor to discuss what role an annuity can play in your retirement income plan.

Annuity Fees Annuity Type Minimum Initial Premium More Information
Soloist® Find an Advisor

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  • $30 annual contract fee
  • 1.30% combined administrative and mortality and expense risk fee
  • Varying fund operating fees
Variable annuity $0

Annuity Type

Variable annuity

Minimum Initial Premium

$0
Nationwide Peak® 5 Find an Advisor

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  • No annual contract fees
Fixed indexed annuity $25,000

Annuity Type

Fixed indexed annuity

Minimum Initial Premium

$25,000
Nationwide Quatro Select Annuity® Find an Advisor

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  • No annual contract fees
Fixed annuity $2,000

Annuity Type

Fixed annuity

Minimum Initial Premium

$2,000
INCOME Promise Select® Find an Advisor

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  • No annual contract fees
Immediate annuity $10,000

Annuity Type

Immediate annuity

Minimum Initial Premium

$10,000

As of 2020, Nationwide received very high financial ratings from some of the most prominent rating companies on the market. A.M. Best rated it an A+ (Superior), Standard & Poor’s (S&P) rated it an A+ (Extremely Strong) and Moody’s rated it an A1 (Upper-Medium Grade).

Soloist®

The Soloist® variable annuity from Nationwide offers an extremely low minimum initial investment. This makes the product attainable even for those with little to no money saved up. As a comparison, most similar variable annuities have a $5,000 to $10,000 minimum. The contract has a maximum issue age of 78.

Like any variable annuity, investing is central to the benefits of this product. Nationwide provides annuitants access to a wide range of mutual funds to flesh out their portfolios. Each of these funds adhere to a distinct investment strategy, with options focused on stocks, bonds, index funds or other combinations of securities. This allows you to pick the one that best aligns with your risk tolerance and desired asset allocation. The annuity also offers an asset allocation feature that automatically rebalances your investments as the market and your situation change.

Fees

Like the vast majority of variable annuities, the Soloist contract comes with a plethora of fees. First a foremost, a $30 fee is charged every year on your contract anniversary. Also on an annual basis is the contract’s 1.30% combined administrative and mortality and expense risk fee. Investments are the centerpiece of a variable annuity, but they don’t come free. Depending on the mutual funds you select, you'll be responsible for certain operating expenses.

When it comes to early withdrawals, Nationwide lets you take out as much as 10% of your purchase payment once your second contract year arrives. Anything over this cap is subject to the fee schedule below.

Withdrawal Fee Schedule
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8+
7% 6% 5% 4% 3% 2% 1% 0%

In the eyes of the IRS, annuities work like any other retirement savings vehicle. So if you withdraw money from your account before age 59.5, you’ll incur a 10% income surtax on top of your standard rate.

Realistic Return Expectations

A variable annuity is an extremely customizable product, as you’re handed the freedom to choose any investments you want within Nationwide’s network of available funds and securities. Given the plethora of investing options, and the inherent unpredictability of the market, it’s difficult to predict what kind of return you’ll see on your variable annuity. Over the last five years, the funds available through this contract have garnered returns from -0.90% to 30.31%.

Nationwide Peak® 5

If you want to open a Nationwide Peak® 5 annuity, you’ll need at least $25,000 ready to invest. For single annuitants, the maximum issue age is 90, while joint annuitants have a slightly lower 85-year-old maximum age.

As a fixed indexed product, annuitants will receive a fixed account and an indexed account. The former earns interest at a specific rate. On the other hand, the latter garners returns based on the performance of one of the following indexes available to annuitants: S&P 500, MSCI EAFE, Morgan Stanley 3D or J.P. Morgan Mozaic II. You can allocate as much or as little to either account as you want.

The death benefit for this annuity is equal to your contract value. But should you select the joint option, your spouse will be the co-annuitant, meaning they can either accept the death benefit payout or take over the contract.

Fees

This contract is free of annual fees, which is a common feature of fixed indexed annuities. However, while you’re able to take out up to 10% of your contract value annually, anything more than that will induce a withdrawal fee.

Withdrawal Fee Schedule
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+
9% 8% 7% 6% 5% 0%

Remember that the IRS will levy a 10% income tax penalty if you withdraw anything from your contract before age 59.5. That's in addition to standard income taxes.

Realistic Return Expectations

As of Feb. 2021, Nationwide offers a variable interest rate for this contract’s fixed account. Annuitants will receive a 1.00% rate. For the indexed account, each index adheres to an individual rate cap that also differs based on your premium’s size:

  • Premiums worth $25,000 to $99,999
    • S&P 500 index -2%
    • MSCI EAFE index - 2%
    • Morgan Stanley 3D index - 2%
    • J.P. Morgan Mozaic II index - 2%
  • Premiums worth $100,000 or more
    • S&P 500 index - 2%
    • MSCI EAFE index - 2%
    • Morgan Stanley 3D index - 2%
    • J.P. Morgan Mozaic II index - 2%

Nationwide Quatro Select Annuity®

The Nationwide Quatro Select Annuity® is a fixed annuity that earns interest at a certain fixed rate. When you open your account, you can choose between a one-, three-, five- or seven-year guaranteed interest rate period. The rate that comes with the option you select will be automatically renewed through your seventh year as contract owner. Also, the more money you invest, the better the rate you’ll receive.

This annuity automatically comes with a return of purchase payment benefit rider. This states that when you annuitize your contract, you’re guaranteed to receive your purchase payment back, minus any withdrawals or applicable taxes. You'll also receive a 1% bonus on any purchase payments you make during your first year.

To get your hands on the Quatro Select Annuity, you must be 90 years old or younger. The minimum initial premium is $2,000.

Fees

Nationwide does not charge an annual fee to continue owning this annuity. In addition to this, there are surrender fees associated with any withdrawals you take beyond the interest your contract has accumulated thus far.

Withdrawal Fee Schedule
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8+
7% 7% 7% 6% 5% 4% 3% 0%

If you’re 59.5 years old or younger, the IRS will charge you a 10% income surtax on withdrawals from your annuity. This won’t preclude you from paying your standard income tax rate as well.

Realistic Return Expectations

The Nationwide Quatro Select Annuity splits its interest rates up by the size of annuitants’ purchase payments. For reference, this contract has a 1.00% minimum interest rate. If you're not particularly satisfied with the interest rate you're given, a certificate of deposit (CD) could be a valid alternative.

INCOME Promise Select®

The INCOME Promise Select® immediate annuity calls for a $10,000 minimum investment. This money will be protected by Nationwide’s liquidity feature that affords annuitants the chance to make lump sum withdrawals from their account if a financial emergency arises, for an extra cost. The only stipulation is that you must select one of the term-certain or cash-refund payment options below.

When you purchase this contract, you can pick from monthly, quarterly, semi-annual or annual payments. There are also 10 income options:

  • Single Life
  • Single Life With Cash Refund
  • Single Life With 5- to 30-Year Term Certain
  • 3- to 30-Year Term Certain
  • Joint and Survivor
  • Joint and Survivor With Cash Refund
  • Joint and Survivor With 5- to 30-Year Term Certain
  • Joint and Last Survivor
  • Joint and Last Survivor With Cash Refund
  • Joint and Last Survivor With 5- to 30-Year Term Certain

Nationwide has also made available free annual cost-of-living adjustments of 1% to 5%. These must be selected at contract issue. The contract also comes with a liquidity feature that allows annuitants to make a lump-sum withdrawal under qualifying conditions if they have an emergency and need extra cash.

Fees

The INCOME Promise Select annuity from Nationwide is a virtually fee-free contract, as annuitants are not subject to annual fees or withdrawal charges. It’s worth noting, though, that this is a common setup for immediate annuity variations, as they are solely built to provide a steady income stream.

The tax rules surrounding retirement accounts like annuities are simple. If you withdraw from your account before you reach age 59.5, you’ll pay a 10% income surtax in addition to standard income taxes.

Realistic Return Expectations

Immediate annuities are not meant to provide returns. Instead they focus on guaranteeing income for life a specific period of time. However, should you choose life payments and outlive your premium, you'll technically receive back more than you put in.

Tips for Planning Your Retirement

  • Saving enough to meet your retirement income needs is easier said than done, but a financial advisor can help. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • Most companies offer some form of a 401(k) program. At the minimum, these offer tax-deferred savings, but many businesses also go the extra mile and offer to match employee contributions. To get an idea of how much a 401(k) could benefit you in the long run, check out SmartAsset’s 401(k) calculator.

All information is accurate as of the writing of this article.

Best Places for Small Business Owners

SmartAsset analyzed data to find the best places for small business owners in the country. This interactive map shows the best counties for small business owners in the U.S. and in each state. Zoom between states and the national map to see the top spots in each region. Also, scroll over any county to learn about that region's small business statistics.

Least
Most
Rank County Small Business Returns Small Business Income Income Taxes

Methodology Which places are best for small businesses owners? To answer this question, we considered three factors: the proportion of people in a county with small business income, how much business income those people reported and the amount of tax a potential resident must pay on their income.

To determine how attractive a region is for small business owners, we compared the number of tax returns that report small business income compared to the total tax-filing population of the region. Next, we compared the total amount of small business income to the overall amount of income reported in each region.

Small businesses are typically incorporated as pass-through entities, meaning that the business owners pay income taxes on the company profits rather than the company itself paying income tax. Because of this, income taxes can play a major role in determining the financial success of a given small business. To determine income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes for each location.

These three factors were then indexed and equally weighted to yield our small business index. Places with the highest small business index are the places which ranked the highest in the study.

Sources: Internal Revenue Service (IRS), US Census Bureau 2018 American Community Survey, Government Sources, SmartAsset