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 00:00:48 Hello and welcome everyone to the Annuity Straight Talk podcast, episode number 69, finishing off. Great 2022. We're on New Year's Eve is when you guys are gonna see this. It's gonna be out. I've got the most popular guest I've ever had is a guy from California that everyone loves. Everyone asks, what does he think? What does he think? I, everybody's like, I gotta spend most of my time like answering questions about what John Ballmer would think. But he's here for the final episode of the year. It's now. Say hello, sir
Speaker 3 00:01:21 Brian. Happy New Year. Merry Christmas, happy holidays. How are you doing?
Speaker 2 00:01:27 <laugh>, yada, yada yada. Yes, we're good family things being what they are. Great Christmas, all that stuff. So we're obviously recording this ahead of time, right?
Speaker 3 00:01:35 That's right. Hope everyone had a great holiday.
Speaker 2 00:01:38 And we're here to just crush retirement for people, are we not? That's
Speaker 3 00:01:41 Right. That's right. Let's do it.
Speaker 2 00:01:43 So we're going with, this is John's baby. He said like, what do we do at the end of the year? He said we're gonna do, he said introduce it like it could be, it doesn't have to have a number on it, right? Seven things you can do in retirement in the new
Speaker 3 00:01:55 Year. Seven things to do in the new year. I think that'd be a good start for everyone to, to go by the seven rules.
Speaker 2 00:02:03 Okay. All right. So do you remember what we have, we talked about it a little bit earlier, right?
Speaker 3 00:02:09 First,
Speaker 2 00:02:09 First is what? Did you write 'em down or do you want me to send it to you?
Speaker 3 00:02:13 Uh, you can send it to me. Uh, review your beneficiary designation,
Speaker 2 00:02:17 Beneficiary check. I told you the story. A couple of annuities a recently sold where typically we are looking at a husband and a wife. So a, a spousal couple. One spouse owns it. If it's an IRA especially and the surviving spouse is the beneficiary, then you usually put your kids as contingent beneficiaries, right?
Speaker 3 00:02:38 That's right.
Speaker 2 00:02:39 And my idea, which it's kind of one of those things you go through life like some stupid revelation where wait a second, I always took the kids and I put in their address and all that stuff where you should put your contingent beneficiaries, especially your kids at your address. Cuz if honestly if you die, they're gonna be there cleaning everything up
Speaker 3 00:02:58 Anyway. Yeah, that's true. And I mean I could go into a horror story that I learned of early on in my career when it came to checking your beneficiaries and I can go into that if you want me to a little bit
Speaker 2 00:03:10 Later. Okay. Well we might do like maybe a different episode honestly, because in some of the continuing education I've done talked about the house, different state laws affect like beneficiary and what the annuity actually does depending on who is the owner, the annuitant, the beneficiary, the contingent, the primary, all that stuff. Actually there's a pretty complex legal walkthrough that kind of determines what happens with that money when you're gone, right?
Speaker 3 00:03:37 That's
Speaker 2 00:03:38 Right. I'm guessing your horror story is related to that somehow, right?
Speaker 3 00:03:42 Yeah, it had to do with a, uh, a lady that was married later on in life and her sister who was an her initial beneficiary didn't like her husband. And that lady unfortunately came down with God awful cancer and she had never changed the beneficiary on her 4 0 3 <unk>. And so when it came to the husband collecting that money, the sister of the deceased spouse said, no way. That's my money.
Speaker 2 00:04:18 Okay. And so a giant legal battle ensues and money was spent. Lawyers profited and
Speaker 3 00:04:25 Absolutely. And the sister won. The sister won as she should have. She was a beneficiary.
Speaker 2 00:04:31 So that just a good reminder, make sure everything is tight the way you want it and call us to review accounts. Like call me, let me know if you wanna look over things and make sure everything's beneficiaries can be changed on IRAs, annuities, anything Right. At any point in time. So number one tip for the new year is review the beneficiaries. Right?
Speaker 3 00:04:52 Absolutely.
Speaker 2 00:04:53 You got my document. What's the next one on the list?
Speaker 3 00:04:56 We're gonna go through risk tolerance. I think that's, this is important, particularly on my side of the table.
Speaker 2 00:05:02 That's your wheelhouse. Yeah,
Speaker 3 00:05:04 It's, you know, one of those things that I always encourage people to do is review their risk tolerance. Particularly when you have years like we've had this year where most of the markets have been volatile or negative, it only takes a real volatile down market, particularly a prolonged down market like we've seen over the last year to let people rethink how much risk they're willing to take in their portfolio. And you know, I always tell people it's not the head that determines investment success. It's the stomach. And uh, I think the first quarter of next year is bring very much the same. And so I definitely want to encourage your audience to reassess or reevaluate their risk tolerance.
Speaker 2 00:05:47 That's a really good point because throughout this year, you know, obviously we had rising rates, we had a volatile market. We're ending the year lower in the, the stock market than we started the year year. I know a lot of people who would love to take advantage of the high rates, but they stuck in the market too long and lost a little bit of money. Right? So you have that. Oh well I want to get back. So just a reminder to make sure you keep everything in perspective and do things for the right reason, make moves and protect what assets you can protect so that the years like this don't phase you at all. Right?
Speaker 3 00:06:21 Yeah. I think it's uh, you know, if you're appropriately positioned in the first place for the long term, you can expect to have years like this. But you have to make sure that your wrist tolerance is always consistently reevaluated.
Speaker 2 00:06:35 Yeah. And so that's why we're here. Give us a call. 804 3 8 5 1 2 1. My name is Brian Anderson. You are not allowed to call John Ballmer unless you come through me first. So hit the top right corner of any page on annuity straight talk.com to make an appointment if you want to check on it. So John, he's got a firewall around him and that firewall is me. So wrist tolerance, big deal. So I'm gonna, do you mind if I skip down the list
Speaker 3 00:06:59 A little bit? No, go for it. Yeah,
Speaker 2 00:07:00 Because I said right now I told you this the other day. It's like why am I not just filling out paperwork all day every day? Right?
Speaker 3 00:07:11 Right.
Speaker 2 00:07:12 The number, number three on the list. Right. They're not sequentially ordered by any means, but buy a dang annuity right now. Okay. That is, they are better than they've been in 15 years. I'm gonna turn John and do an annuity salesman. I told them that.
Speaker 3 00:07:28 You did. You did. I love it.
Speaker 2 00:07:30 What are you waiting for as I, I got an email today. Oh. And as soon as they get to 6%, let me know. Annuities, greed don't mix right? Annuities are not for greed. You got a good yield on it. It's about protecting money and holy cow, we got some good stuff that probably is not gonna be here in the next six months. I'm gonna call rates being lower than in six months, right? By June. So I'm gonna say it right now on the podcast. We'll come back to it in June. John, maybe you'll be up here for your next trip. And why would you not get them at the top of the market? What do you think?
Speaker 3 00:08:02 I think rates will be lower in six months.
Speaker 2 00:08:06 So I talked to my, like the expert that I know that the institutional trader and I asked him, where do you think rates are gonna be in six months? And he gave me, I told you this, like he's gonna, he gives me the 50 things he thinks about that might affect it and he answers the question without answering the question. And I said, well I think they're gonna be lower. He said, yeah, it's not a question of whether they'll be lower. He said it's whether it's gonna be a hard or a soft landing.
Speaker 3 00:08:33 That's right.
Speaker 2 00:08:34 What do you think about that John? You
Speaker 3 00:08:36 Know, I think the fed's in a really precarious position right now. They have and continue to be behind the curve. And so I think, you know, they're really, the only way out of this is to have a really, really rough, hard landing. The best case scenario would be a soft landing, but I just don't think it's gonna happen personally in my opinion. You know, that might not come out to be true, but that's just my thoughts.
Speaker 2 00:08:58 Right. No, we're good. And again, like we're gonna give our thoughts and we're not a hundred percent right all the time. And John, you've been pretty spot on like judging the markets and telling people what to expect I think. Isn't it funny like if the, like the best thing about annuity straight talk is John Bomber's market predictions. Like, come on, I owe you for that buddy. Happy new Year. All right. <laugh>
Speaker 3 00:09:21 <laugh>. We've been pretty good this year but it's, it's only a lot of this is recognizing the charts and realizing taking a realistic 30,000 foot view of the markets and seeing uh, what's going on. It's a lot of, a lot of stuff going on.
Speaker 2 00:09:35 Being objective instead of subjective. Right. Okay. So next one on the list. What do we got? How about we do taxes and Roth conversions? What do you have to say about that?
Speaker 3 00:09:44 Annuities are tax deferred vehicles. So if you are sitting on CD money, uh, you can get a competitive rate and annuity, defer those taxes on the cd. Every time you go to the bank and put a bunch of money into a cd, you get what's called the 10 99 at the end of the year. And you do not get that with an annuity as long as those funds are held with the insurance company. And then Roth's conversions are phenomenal strategy to do get some money. Obviously you're gonna pay taxes now, but it's gonna get money out of the hands of the government, which ultimately is what you wanna do. So if you can afford to do a Roth conversion or if you have some stock that's depressed or off, it's all time high, don't sell it, convert it into a Roth, pay a lot less tax.
Speaker 2 00:10:32 Yeah and that's one thing that again we can help with like figuring out how that works. You want to stay within tax brackets and sometimes it makes sense, sometimes it doesn't. I always say with Roth conversions, like a lot of people come to me and the question was do you want to pay no taxes or do you want to pay the least amount of taxes over time? Right. Do you find less or do you want to pay? Because a lot of times Roth conversions are expensive too. If you're making money right now, you don't want to convert because the extra income is gonna come in a higher tax bracket. So if your goal is to pay no taxes, fine. Or if you wanna pay the least amount of taxes over time because a lot of times paying no taxes cost you a lot upfront.
Speaker 3 00:11:13 That's right. That's right.
Speaker 2 00:11:15 We should probably do you have some really good software don't you John, on Roth conversions?
Speaker 3 00:11:20 Yeah I do. And you know what I've found is the niche best time to do those Roth conversions, it's right after you retire and right before you start taking your social security, if you can delay that window, you're able to have a low, low amount of income, stay in a lower tax bracket, convert as much of that IRA as you can into a Roth and then start collecting. So by the time you hit 71 and a half or 70 and a half I think it's 71 Brian,
Speaker 2 00:11:49 72, 72, 72, 72,
Speaker 3 00:11:52 Now you're able to lower those required minimum distributions as much as possible and now you have most of your money working in a tax-free environment, it just works out really well. You can pass that on to beneficiaries tax-free. It's just a great vehicle.
Speaker 2 00:12:07 Yeah, absolutely. It's a really good opportunity for people. But you have to like do the math and figure it out and make sure that you're actually saving money doing it. But for anybody who's got an IRA balance into retirement, they don't ne necessarily need to use and you've got a little moro and a tax bracket where you can start converting that. That's a really good opportunity to do it. So lots of ideas. There's a lot of ways to do it right?
Speaker 3 00:12:30 Yeah, absolutely. And we have a software that that can perform those calculations. So if you don't wanna go outside of your, you know, your next tax bracket, we can definitely set that up.
Speaker 2 00:12:40 Okay. Require minimum distributions, RMDs, what do you think about those? Gotta take 'em. So that goes in with does it not go in with rock conversions? Is it kinda what you were talking about?
Speaker 3 00:12:50 Yeah. You, you want to make sure that you can lower that RMD as much as possible. You know I have uh, some clients that once they hit 72 they're actually TA having to take out a whole bunch of money from a big IRA or a big 401k and it just throws them into, you know, they're, they end up paying. I I think you and I have talked about this for a long time. I think the biggest lie, you know, that Congress set up was the 401K plan. They're the biggest tax beneficiary of all of
Speaker 2 00:13:17 That. Yes they are.
Speaker 3 00:13:18 Because you're required to take it out. There's a minimum age that you can start taking it out. You have to take it out at 72. It used to be 70 and a half and just all that money that you deferred has grown and grown and grown over 30, 40 years. It's just a much bigger balance and you gotta start taking it out and paying your taxes so you can reduce that. The RMDs, you also wanna make sure that you don't miss your rmd RMDs are calculated as of 1231 of the previous year. So look at all your statements, look at all your IRAs. Mm-hmm <affirmative>, add that up if Brian and I can do the calculations for you in order to, to determine the amount that you need to take out. Because if you do not take it out, then you're taxed. There's a penalty tax on not taking out enough money.
Speaker 2 00:14:08 Right. So the ira, the 401k, it's like you're going into business with federal government, right?
Speaker 3 00:14:14 That's right. You and I talk about that all the time.
Speaker 2 00:14:16 Yeah. And, and everybody does it and it's like, I'm gonna say right now John, I do not have an IRA and everybody's like, oh you don't have a retirement account. No I don't. Why? Because like 90% of my job is helping people deal with the garbage that comes along with their IRA and I don't wanna be there. Right.
Speaker 3 00:14:33 That's right.
Speaker 2 00:14:34 You see this
Speaker 3 00:14:38 <laugh>?
Speaker 2 00:14:39 That's what I got. It's a box of freaking money. Right? That's what I got. <laugh>. There we go. For the podcast.
Speaker 3 00:14:50 Yeah. Caveat. I do have a 401K and an IRA and I fund them religiously. You know, I just, I think it's a, a great force savings vehicle. If you're not gonna participate in one, your employer doesn't offer one, talk to Brian or I, we can set you up on an automatic investment program or your force forced savings so you can have that retirement nest day. Cause the biggest obstacle that I find with people is people just don't save enough these days.
Speaker 2 00:15:19 Yeah. And we like we're dealing in a business and typically like a lot of our clients, John obviously have more than enough money. Right. And it's kind of one of those things where I, you know, I started in this business from a contrary perspective and it was to fund my insurance and my savings and all that stuff first and, and it probably will do an IRA at some point. I'm only 44 years old. Right. But do it when, when it is actually beneficial from a tax deduction standpoint. And so like it or not, a lot of people are in that position when they have the ira. And again, our job is to help people like work within that framework, right? We're talking about Roth conversions, RMDs, all that stuff. So I like, I meet like a 55 year old with a bunch of money in an IRA and you say like it might be 15, 16 years away but you're gonna have to take that money out. So
Speaker 3 00:16:07 Yeah, absolutely.
Speaker 2 00:16:08 A lot of different ideas. You don't have to do a Roth conversion, but again, you talk about spending in retirement, if you retire at 63, you know you're gonna have to take it out at 72. And a lot of people that I know that I've met are overfunded for retirement, which is a great thing. And many of them would be well served by, you know, starting to take systematic distributions from that IRA so they don't have a giant tax bill when they get to 72, right?
Speaker 3 00:16:33 That's right. Yeah, absolutely. And you mean you've gotta figure out a, if you have a million dollar ira, you don't have a million, you have a million dollars minus what you owe the government. So just keep that in mind.
Speaker 2 00:16:45 Yeah. And then whatever the market does to it, right? So there's me, there's me. I like that. Doesn't they like that? Like silver, like just the the clank of the money.
Speaker 3 00:16:55 <laugh>.
Speaker 2 00:16:56 Okay. RMDs, well let's start, we got two left, right? Yeah. Right. Beneficiary check risk tolerance, taxes, rock conversions, RMDs, buy an annuity, buy a ding annuity for crying out loud. It's time we're here to help. And then you've got uh, make a plan to do something fun. Yeah.
Speaker 3 00:17:12 Come visit Brian in Montana. You'll have a hell of a time.
Speaker 2 00:17:17 What if everybody comes though? What if everybody comes <laugh>? It's like I'm just entertaining all the
Speaker 3 00:17:22 Time. You'll never get anything done but you'll have a great time.
Speaker 2 00:17:27 Yeah. I would like, I'll have like my hat out collecting donations for being a a host all the time. I did this what the podcast, I don't know, probably in April or May this year, which is leisure time in retirement And I talked about how I went fishing with my buddies, right? John came up here in late June, right? That's right. And we had a good time. But the point is like to do some things that are fun and time in retirement is a tough issue. So you somebody that works a long time, they don't know anything else but work. Right? And so a lot of people have, so right, like right now I'm taking my dad to my dad's one of those guys where he doesn't know anything but work cuz he is always worked. So now he works and he putters around his little farm but I'm taking him to the Fiesta Bowl so I'll be watching the game when this one goes out to the list. Right. John doesn't wanna drive over to Arizona and see me cuz he's busy. But the point is like you have to learn to, I've talked to my dad about it all the time. You have to find things that you enjoy and you can do for fun.
Speaker 3 00:18:35 I agree. Absolutely.
Speaker 2 00:18:36 For the casual listener. That's the number one thing. And I can gimme a little bit of credit. Okay. As far what I know about annuities and talking to old people and stuff, the biggest problem, and I've done this a number of times, the biggest problem is there's a lot of people you figure out the money side of it and we can nail that all day long, can't we John? Yeah.
Speaker 3 00:18:58 I think Brian, that that's one of the things that I tell people all the time when they ask us, you know, why should we hire you? Why should we hire you to manage our money? It's so you can do something fun. You don't wanna watch every tick on on the stock market. You don't wanna spend your retirement watching CN b, c or Bloomberg all day. You don't wanna do that. You wanna go out and have some fun, enjoy your life. That's why you worked 40 years for
Speaker 2 00:19:20 No, absolutely. I think I did a newsletter called it like the most important thing in retirement. It's not the money. Like you either have the money or you don't. That's very objective. But you gotta have a way to like go fill your time and enjoy yourself. Cause that's the point of it all
Speaker 3 00:19:33 Right? Yeah, absolutely.
Speaker 2 00:19:35 And so that goes right into the last one. And I said this, we were talking earlier, John, go give your wife or your husband a big kiss. That's the seventh thing. So John, you gonna get off this and go give Liz a kiss and tell you you love her. Life's too short to not enjoy the people you spend time with, right?
Speaker 3 00:19:51 That's right, that's right. And you know, Brian, I've had a tough month. I've had, uh, you know, some tragedies, some of my peers that I grew up with have passed away, lost one in November and just lo lost one last week. So nice. Too short cherish every moment that you have with the loved ones that you have and it's the only advice I can give you.
Speaker 2 00:20:11 No, that's all part of it. I mean, don't you agree like the reason we do this is obviously we make a living doing it. Neither one of us is that greedy. I can tell you everybody right now that John Balmer is the most selfless guy, right? He's never ever looking out for himself first. He's always looking out for other people. And I think that's important, but again, we do it because we feel driven to help other people make their lives easier and the money's just a, that's a result, right?
Speaker 3 00:20:43 Yeah, absolutely. It's a byproduct of, you know, we enjoy what we do, we're helping people. Yeah, we get to make a great living doing it. Um, but it's really kind of our why. You know, I think I shared with you before Brian, you know, my parents didn't really have a retirement. My dad had a small thousand dollars pension. He retired in 1983. My mom is 87 now. You can imagine that thousand dollars doesn't go very far in 2022. It's soon to be 2023.
Speaker 2 00:21:15 No, no, it's true. But, and again, just look at everything around you and do all this stuff like this part's easy. We do the easy stuff and the hard part is what you focus on and that's, uh, love the people around you because they're the ones that got you there, the reason you do it. Right? You got anything else we're gonna add to this John? There's uh, seven things.
Speaker 3 00:21:35 Happy New Year. Call us if you have any questions. Happy
Speaker 2 00:21:39 New Year. Merry Christmas. Call us. Yeah, call me and let me know if you wanna talk to John. Oh, I did have, I had a client today email me so people are listening to this. John. Hey, that one guy, that guy from California that you talk, would it be okay if I talk to him? So yeah, it's a good one. So I'm gonna send him to you.
Speaker 3 00:21:57 Much appreciate it. I appreciate that.
Speaker 2 00:21:58 You gotta do you email me, you'd let me know, like, hey, is it okay if I talk to John? You like how I'm like the gatekeeper for you.
Speaker 3 00:22:05 I love it. Thank you
Speaker 2 00:22:07 <laugh>.
Speaker 3 00:22:08 Let's be honest, it's been a really tough year. I talk to you almost every day about what's going on in the market and the ebbs and flows and you know, I, uh, as we head into this recession, those are some things, you know, you've gotta brace yourself for some continued volatility into the new year and, and I think maybe the back half of next year will be, yeah, there'll be a lot of improvement, but there's still a lot of stuff that we gotta get through. So it's, it's the prolonged negative numbers that really wear on people. So that kind of touches on risk tolerance again, you know, check your risk tolerance.
Speaker 2 00:22:43 Yeah, no, absolutely. And we, and we look at like the markets about flat over two years, right? Yeah. But we're gonna, no, John, we'll have you back. Obviously we want to, everybody wants to hear this. So probably sometime in January we'll get, do this again and we'll kinda look at the market. And again, it's not to freak anybody out or get make moves based on this or that, but just try to like, help people understand what drives the markets and how you can kind of see it developing over time. So it's, it's real money, it's things that do matter to you. And again, we're here to help. So there it is.
Speaker 3 00:23:17 Brian, thanks for having me on again. I appreciate it. Happy New Year.
Speaker 2 00:23:20 Hey, always great to see you. So everybody like knows like we talk about 30 minutes before we, before we actually record and we'll talk for a little while after we're done. But anyway, Merry Christmas, happy new year to everyone. 804 3 8 5, 1, 2, 1. Schedule a call. Top right corner of annuity straight talk.com. Any page you want, get ahold of us. You wanna talk to John, you talk to me first, we'll figure it out. But John, thank you again for being here and we'll see you guys in 2023. Okay, bye.
Speaker 1 00:23:58 You have been listening an the city information is for information and educational purposes only and does not represent tax, legal, or investment advice. The views expressed by guests on program are their own and do not necessarily reflect the views partners. No information presented should be acted upon without meeting with the qualified and licensed professional. It's important that you all insurance contract disclosures before making purchase decision guarantees are based on the financial claims of the insurance company.
