Episode Transcript
Speaker 1 00:00:05 This is annuity Straight Talk. Since 2008, your host Brian Anderson, has helped clients nationwide navigate the complex market for annuities With Brian's assistance, hundreds of clients have achieved a profitable and secure retirement. I would know because Brian has answered many of my questions concerning annuities and retirement planning so that you can benefit as well. Let's get started. Here's Brian.
Speaker 2 00:00:49 Hello and welcome everyone to the Annuity Straight Talk podcast episode number 63. My name is Brian Anderson, founder and creator of annuity straight talk.com. I wrote it all, I recorded it all. All came from right up here. Lots of research over lots of years and trying to compress that time period for you guys to make it a little bit easier to make a decision because not all of you want to work on your retirement plan for 20 years. And today I'm gonna tell you a story about one guy who might well spend 20 years continuing to ask questions and digging and doing research. So episode 63, I kinda wanna tell you guys a story about something I did in the past few weeks and got a chance to spend a little bit of time with a new client. Great guy, we get along really well and I kind of new before we were gonna do this that we'd have no problem uh, camping together one night, but it kind of ma it made me think of all the coincidences that I've run into since I started the website because it's a small world And let me see here, I don't know, maybe I will share my screen.
Speaker 2 00:01:44 You guys can see it. So I wrote this story out like this. Let me get back there and here we go cause I am gonna do some math at the end of this. It's not just the story, there's a little bit of a lesson here as well. And okay, so talking about the coincidence is running into people, just crazy things happening. One of the funniest ones at the very first one that I remember is I used to be a fishing guy in Alaska. I told everybody the stories about that. I've got more, if there's a way to draw it into this, I may come back to it at some point. But there was a guy named Bob from Arizona and I fished with him a bunch in Alaska and he became a friend and we kind of kept in contact and I remember it was just a couple days after I put an 800 number on the website back in 2009 and I got a phone call about, it was after 10 and it was Bob.
Speaker 2 00:02:30 I got a call, phone call one night and I thought, oh, I figured he's just calling to to BS with me a little bit. And so I let it go to voicemail and then before I went to bed I listened to the voicemail and it was Bob was saying, Hey, is that your annuity website? I didn't know he was calling the 800 number. I thought he was just calling me. So you know, you guys know it like it forwards to my cell phone. So if your number's in my phone, caller ID pops up as well. So that was pretty funny where he didn't know I was doing that. But we were friends and he happened to be researching annuities at the time and <laugh> ran into my website and thought, Wow, I had no idea this is what you're doing. Uh, which is pretty cool.
Speaker 2 00:03:04 So, but since then there have been a lot of people that I meet who are friends that came to me independently, which is always pretty interesting to me that there's two people, it wasn't a referral at any sort, anything like that. But as I meet with them and get to learn more about 'em, like what they do, where they live, the things they do for activities, their career and all that stuff, a lot of times like, Hey wait a second, do you know John or do you know Cindy or whoever? And yeah, as a matter of fact, her really good friend of mine, Oh wow, that's interesting. I'm having meetings with them right now too and go back and compare notes with each other. Hey, what'd you think of that guy? Pretty, it's just kind of interesting that it is a, is a really small world, you know?
Speaker 2 00:03:43 And I run into a lot of people say, Oh yeah, I've been to Montana, it was great and we were in your hometown and didn't have any idea you lived there but we loved it and all that stuff. So it's always been kind of fun. And then this year, however is probably one of the biggest coincidences that happened to me. Me. So Kirk is the guy I'm talking about. That's all I'm gonna tell you about him. Hell of a guy like him a lot and he signed up in late March and he got the emails when you sign up and he responded to one of 'em and said, Hey, I want to just, I was gonna let you know I come to Montana every year to go elk hunting in the bleep. I'm not telling you guys where I go elk hunting <laugh>. And I thought, Oh that's interesting.
Speaker 2 00:04:22 I said, Cuz that's uh, it was the same place I go hunting. And I thought, what does this guy know, right? And I like some, he's an outta state or he probably didn't know anything. And so I told him, Yeah, I know the area and I hunt there as well. And well it turned out when we went back and forth a little bit, I hunted this national forest land on the edge of, uh, private ranches. And he and some friends had been leasing a week to hunt this private ranch that was right next to where, so where he was camping was less than a mile away from where I was camping. So we were hunting two different, I was hunting on one side of the border, he's on the other. But it was crazy. And I, I told him, I said, You know what's interesting and what's funny about it is our act, our dates lined up.
Speaker 2 00:05:04 It was always opening week is when he hunted. So we could go back and say this year, this year, this year we were both there at the same time. We were that close to each other. But he didn't find me until he started researching annuities for his retirement. And so I always thought that was really, really a funny coincidence because we had something in common. We both love the place. It's an incredible spot. It's not very well known. It's beautiful rugged country. And so it's, it's just interesting to share that with someone that you met through, you know, business dealings and online websites. So anyway, so he goes with his buddies every year and I go with my buddies every year and I told them, I said, Well it's interesting. So I, I like to get up on the ridge tops, I'll ride my horse all the way up to the highest point so I can get a really good look around.
Speaker 2 00:05:47 And I'd see down on the private land I could see the guys with orange vests on and stuff. And I told them, I said, I've probably looked at you through a rifle scope on more than one occasion, but now yeah, carrying high powered rifles around again. But guess I'd better not screw things up for him cuz now he knows where I'm at <laugh>. So anyway, Kirk's one of those guys that does it. A ton of research asks a lot of really good questions. I love it because I like the more educated that you are makes it easier for me to explain different topics. Some people don't have a very big appetite for it and don't want to go into a lot of detail. Kirk is a detail-oriented guy and I truly appreciate it because we, we come to some really solid conclusions. They're never gonna have any questions or any uh, any concerns.
Speaker 2 00:06:28 And he's so thorough that sometimes he even asks questions twice. So, but I'm not gonna give you a lot of details about his situation because that's his business and uh, I'm blessed to be a part of that but it's not, not your business and I believe you guys would understand and appreciate that, but he ended up splitting annuities, half of his allocation in a fixed annuity, half in an index annuities, I talked about it in episode 52, splitting annuities, the assurance of the guarantee, the potential of the index kind of splitting the difference because a lot of people are concerned, oh well the index annu, what's the market gonna do? Will the index annuity perform? And if you kind of like the index annuity but you're not sure, then you split it up, you get half of one half of the other and it's worked really well for a lot of people.
Speaker 2 00:07:07 So he was kind of one of the inspirations for that episode. It's something I've been saying for a long time. He lives in the south but he spends his summer kind of near me just a few hours away from where I am at. So I actually got to deliver each of his contracts in person. The first one I mailed to him cuz I was gonna be gone. But when he signed the delivery receipt, we actually split the difference. We each drove an hour and a half, you know, met at a little coffee shop and it was, that's where we got the delivery receipt. And he came to the meeting with like the annuity contract. It's a moderately thick book. It's 60, 70 pages and explains most of the stuff is irrelevant to the purpose you're using it for, but it's all the legal bindings that go with the contract.
Speaker 2 00:07:46 And he probably had 20 or or so sticky notes marking the pages and on each page he highlighted the text that he had questions about. And I don't know Kirk, we probably sat there for an hour and a half and there was a lot of BS in talking about, you know, outdoors and we talked about hunting, we talked about what we do in the summer and all that stuff and we got down to brass tax and we went through every little piece of that contract that he might have a question about. I told him after, uh, before uh, we split up that day, I said man, I should have brought the camera and everything and we could have sat up and that would've been a perfect podcast. So if at Kirk, if you wanna recreate that, we <laugh> we can do that next summer cause I think you, you're down south again.
Speaker 2 00:08:24 So anyway, but I, I love that type of interaction. So I would say probably, I don't know, probably 20 to 30% of people will actually go to that extent in trying to understand making sure they know what to do. I love it because there's no surprises and anybody who does that's gonna completely understand the purpose of the commitment and also be able to verify that I did in fact disclose everything relevant to the contract. So I don't have a problem with that. I think it's a great idea. Anyway, so we got, I got to know each other pretty well in the second contract. He was actually coming by my place cuz they did a little road trip this summer and he gotta stop by here and pick up a second contract. So we did the same thing a lot more quickly because 90% of the information in an annuity contract is similar for all contracts.
Speaker 2 00:09:12 It's all state laws acquired, disclaimers, you know, insurance guarantees all that stuff. So the basic form of it is probably 90% similar for all contracts and each company will write it out a little bit differently. But so the second time is a lot easier to go through. So one thing we talked about is hunting. Well he actually had his tags and he was coming back to Montana for an elk hunt. And you guys know I went on a bow hunt cuz I had a special permit this year. But I was planning on going back to that same place to kind of return a favor to some friends and pack them back into the back country. That's a difference again, he hunts on the ranch where he can drive around a little bit where I get on national forest and I'm going into the back country behind private land.
Speaker 2 00:09:52 And so it turned out that he and I were gonna be there at the same time again and I made an offer to him. I said Hey cuz we'd hunted the same areas. And I thought, I've always wanted to kind of see it from the ranch side but I've never been able to, I didn't have access and he's always been curious, of course, like I said, he's a thorough guy so he is kind of been curious to see what's on the other side. He got a different perspective. And I said, okay, well if you come a day early, I think I went a couple weeks ago, it was on Wednesday. So this just happened a couple weeks ago. And on Wednesday I got there early to, you know, my friends lived in a, in a town that's local. And I decided okay, we'll make this easier.
Speaker 2 00:10:29 I'm gonna pack the camp and the cooler and stuff in there on Wednesday, then I'll come out on Thursday, get the final things I need, meet my friends on Friday, we'll come in for the hunt. And so I said, Kirk, if you can get there Wednesday, then why don't you ride into camp with me? We'll spend the night and then I'll bring you back out. You can meet your friends. All his friends were getting there on Thursday and I said, you're gonna get 24 hours with an annuity specialist. And it was, I think we met at the trailhead maybe around 2:00 PM on Wednesday packed up and on the trail by three 30 or so. And then I think we were out by 1230 or one the next day. So not quite 24 hours but pretty in close since he likes to ask questions. I suspected we'd probably talk about annuities.
Speaker 2 00:11:09 This is a bit bit of a different trail ride than I'm used to. He was right behind me riding my other horse and just rapid fire questions the whole time. Which is cool because it's what I do and what I'm comfortable with. But also it's like that's intermixed with talking about the area and oh wow, I've seen this from there. And again, you just get a different look at what he's been doing for a long time. Pretty, pretty cool opportunity to do it. So his significant other said, Man, I'm glad you get to spend all this time with Brian because maybe you'll get all your questions answered. You can stop talking about your retirement plan. Maybe drives her crazy cuz that's again, the difference in a couple is one person maybe takes a greater interest in it and dives deeper into it than the other one.
Speaker 2 00:11:50 I'm not sure we got all of his questions answered, but he tried. So, um, it was a really cool experience, happy to pull it off. It's not something I can do for everyone and there are a lot of reasons for that. Number one, I'm not an outfitter and I don't get to spend all my time doing that. And number two, some people wouldn't necessarily be comfortable on big horses, big meals going into the back country. I've put three year old kids on my meals and taken places. It's not a matter of of the stock being safe, but it's just not something for everyone. Plus, and again this is not to disparage anyone, but some people, I know a lot of people, you know like my dad has bad knees and he's in rough shape. It's hard for him to get up on the horse when my dad goes with me.
Speaker 2 00:12:31 He can do it, but it's kind of a stretch for it if someone and but he's done enough of it in his life that he kind of knows his way around. And so it's not something that everybody's physically capable of doing as well. So, you know, I like to take my aunt and her husband riding with us and it's, it's a lot of work cuz I've got five animals and I've got two extra people and my aunt's too short to put her foot in the stir so I have to lift her up <laugh> to do it. I'm a tall guy, I got big animals and, and I love 'em. So that's just the way it's anyhow, so it may happen one time, but no expectations, no promises if things work out perfectly. I got another client from North Carolina that comes out here every summer. I wanted to take him and his son out but I wasn't, wasn't able to this year and that might happen as well.
Speaker 2 00:13:16 So again, it's a possibility but not a guarantee. Let's see. Okay, so one of the questions Kirk asked is kind of the purpose, the reason why I thought this was a good thing to do. So he got tons of questions, retirement planning, RMDs, he's got a tax pinch that he, you know, likes to talk about and kind of think, you'll try to think ways around it, you know, it's just general stuff. All the things that I talk about. He just kind of wanted to reiterate everything, kind of get his mind wrapped around it and he's a great dude and I think he'll get to the point where he is fully in control of everything he's got. So, but he asked one question because rates have come up so much and he said, and it kind of gives us a good lesson about where rates are today.
Speaker 2 00:13:54 He said, Would there be anything wrong with putting all my money in annuities? And I said, and and I've written about this a lot in the past that there's a newsletter probably three years ago that says never put all your money into an annuity. And I wrote that because I was getting a lot of people calling me that said, Oh this one guy said I should put all my money into this annuity. And in that situation that's a sales pitch to put all your money into annuity. It's not you deciding to go all into annuities if that makes sense. There's a big difference there. I do have some clients who are all in safe money, CDs, annuities, money market funds, majority annuities for some people with a lot of money in there. That's what they're comfortable with. They like it. But that's something they gradually got into over time and are very comfortable with it.
Speaker 2 00:14:39 It wasn't, you know, a sales pitch on my part to say you gotta put it all in there. It's just suitable for them. That's what they like. Anyway. So this is kind of a different question. I don't recommend doing it, I'm not saying you should, but when I got home I ran the numbers for Kirk, okay? And so he is got a nice portfolio and I'm gonna run my little spreadsheet here, okay? Or not my spreadsheet, my uh, amortization schedule. So hopefully you guys can see that. And I'm gonna say 5% yield on a fixed annuity. So if you can see that in the center and let's just, we're just gonna assume a million dollar portfolio, right? And depending on the size of your portfolio you can ramp it up or ramp it down and I'm gonna show you how to do that. Okay? So his spending goals are 3% of his total asset.
Speaker 2 00:15:29 So 2,500 a month for 240 months, that's 20 years. So if he's 65 that gets him to age 85. We'll see what it does if he put all of his money into an annuity and he spent his 3%. So what I do here is I've got a nominal rate of 4.889 that's compounded monthly, which creates a 5% effective annual yield. And these are just rough numbers cuz it's simple. It's not telling you what the rate in the market is, it's just doing math here. Okay? So all I'm gonna do is calculate for his remainder. So what do you think he's got left million bucks, spends 3% for 20 years and at the end of 20 years he's got 1.6 1,645,000 wow <laugh>. Right now I would consider someone with a 3% spending goal I would consider to be ideally capitalized for retirement and not everybody's like that.
Speaker 2 00:16:22 Some are four, some are five, some are higher, which is very sustainable depending on the age at which you start. So at 65, anywhere from three to 4% game set match, we can take care of that no problem no matter what any of the, you know, publications say about the 4% rule a little bit differently with a specific attempt to a specific goal of addressing the objectives of the traditional 4% withdrawal rule. The stocks and bonds and all that stuff, right? So somebody might say, oh well 30,000 a year, 3%, that's not beating inflation, okay, yeah but you guaranteed to grow your portfolio to 1 million 6 45. Is there room to cover inflation? Yes. Is there room for long term care? Yes. Did you avoid market volatility? Yes. Is there money for a legacy? Absolutely right? Are you paying fees? No. So 5%, like you'd have to pay an investment manager 1% to do that on a million bucks.
Speaker 2 00:17:20 So then you'd have to get 6% in the market. So he avoids market volatility altogether, pays no fees, never has to worry about it. Game set match. So should he do it? I don't know. You know we've got 5% range, we're out at seven years or so. So you're not gonna get it for the entire 20 years but you can get seven years of it covered and we'll see what happens then. Then you get a chance to redo everything. That's the flexibility approach where you're not locked in for life. So we got 1 million 6 45 left there. Let's say you wanna bump it up to 4%, 3,200 a month, that's a little over 40,000 but 40 doesn't divide as easily as 30 by 12 do the same thing. So you spend 4% and a lot of people, and again it'd be if you got a $500,000 portfolio, then you're looking at a 15 to $20,000 withdrawal every year.
Speaker 2 00:18:10 That's the same thing. So all you do is cut these numbers in half. If you're at 500,000, cut 'em by a quarter if you got two 50. But I know a lot of people that are two 50 to 500, hey I just need an extra 10, $12,000 a year, uh, pension, social security, maybe rental income or any other thing and it's just uh, supplemental discretionary income. So my measure of wealth is based on what you need in relation to what you have. If you need 4% or less of your assets, then I consider you to be very well off and well capitalized for retirement. So if you do a $40,000 withdrawal, boom, 1,360,000 left, still incredible. Never have to worry about it, never pay fees, no concern. Increasing wealth through retirement at 4% withdrawal rate. That's what 5% can do. I've said this for years, it's amazing what you can do with a 5% fixed annuity.
Speaker 2 00:19:01 You can solve all problems in retirement. So that's pretty consistent to me to be honest with you. Now think about done with that. Stop sharing and I'm gonna look at this, but it's so simple and I look at it and say man, this is what's available. We're not talking about index annuities. And again, I still like the split cuz some people want a little bit more potential. You want some excitement, right? You know the index annuity that might give you 10, 12% in a year. Oh yay it made money cuz then everybody's gonna ask about inflation while growing your money not losing its number one. Then you gotta grow it. Cause we're not gonna have this level of inflation all the time. We get inflation back to two 3%. Your fixed annuities are gonna be back down to two 3% and then you're gonna say, Oh man, I should have bought that four and a half, five, five and a half percent annuity.
Speaker 2 00:19:48 The key to look at here is if you spend less money than you make, your assets are gonna grow. Okay? I'm not trying to patronize anybody, but that's as simple. It gets, it's as difficult as you need to make it. So at a 5% fixed, you can spend 5% of your asset maintain the balance over time. And I'll still argue that that's a pretty good inflation hedge because you still have control over all of your assets, legacy market, volatility, fees, all that stuff, right? So I'm not here to tell anyone to put all the money into an annuities, but with results like this, it stands the reason that everybody should probably do a little bit of it, right? What do we have that's getting 5% only annuities, the best five year CD in the market right now? Some of 'em privately that don't publish 'em, I see four and a quarter for five years, no liquidity.
Speaker 2 00:20:36 If it's non-qualified, you pay taxes every year, right? Annuities are always just a touch better anyway, so that's just a lesson for everybody today and hope everybody can kind of sit back and think about it. It's like, oh yeah, maybe I should get an annuity. Last week I, we kind of gave the hard pitch like the time to buy is now. We got the best stuff available. Will it go higher? Maybe Will, I don't know. Not quite sure about that. So, we'll only time will tell, but nothing wrong with getting into a little bit of it right now Anyhow. So I wanna say thanks to Kirk, it was great spending time with you. I look forward to maybe doing it again sometime. He provided the inspiration for this post. That's funny thing. One question that he asked made me rethink. So everything on the website, my advice is gonna be consistent, but I gotta go back and probably revisit all this stuff given the rates we have available today.
Speaker 2 00:21:23 Now, I don't know how long they're gonna last, but I'll change what needs to be changed and update everything to reflect the new environment. But it's still, it's the strategies are gonna be the same. We're just working with different tools. So I want to thank everybody for joining me for episode 63 24 hours with an annuity specialist. Kirk, I hope you got something good out of it. You know, I could tell you, uh, stories about the hunt afterwards. We had nice weather when he was in there. It was, it was very pleasant riding in a t-shirt kind of thing. Then we got rain and then it froze. Everything was frozen solid and it was, uh, tough. But I had a wood stove. We were nice and comfy warm in the tent, so no big deal. But anyway, episode 63, 24 hours with an nuity specialist. That's it.
Speaker 2 00:22:03 If you wanna make an appointment with me, top right corner of any button or any page on the website, there's a schedule a call button if you wanna make an appointment. The number is 804 3 8 5 1 2 1. Subscribe to YouTube or your favorite podcast platform to be notified when each episode is released. Give it a thumbs up. Like it. If you appreciate what I'm doing, it helps me out in the rankings and gets this out to more people. If you have any questions, you can gimme a call or set up an appointment. I'm here. So thanks again for joining me and you guys all have a great day. Okay, bye.
Speaker 1 00:22:46 You have been listening to annuity straight Talk. The proceeding information is for informational and educational purposes only and does not represent legal or investment advice. The views expressed by guests on their own and do not necessarily reflect the views of annuity, straight talk or his, its no information presented should be acted upon without leading with the qualified and licensed professional. It's important you all insurance contract disclosures carefully before making purchase decision. Guarantees are based on the financial strength and clean's paying ability of the insurance company.
