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 53. My name is Brian Anderson, founder and creator of annuity straight talk. Anyone who's been here for a while should know that if you are new, there's your introduction. And if you're new, man, go back through all the information. I've been having conversations recently with people. I know this, but people will ask questions and we'll talk about things. What do you think about long term care? What do you think about this guaranteed income? This product, that product, and my answer could be almost all of it. I did a podcast on that, or I wrote a newsletter three years ago about that. There's an incredible amount of information. And if you're the type of person that likes to do research on your own and figure things out on your own, that's the kind of person I am.
Speaker 2 00:01:36 <laugh>. I was in the shop yesterday to get a few tweaks on my bow for hunting season and a guy new in high school works at the bow shop and he was, oh, your bow is garbage. You need a new one and you gotta go look at this one. Look at that one. This is, you know, way better had me shoot a couple of them. And he's right. I probably do need a new bow, but I'm not gonna do that on impulse. I'm gonna take my time. I'm gonna research. I mean, they're 12, 1500 bucks for the base of it. So yeah, it's the same thing. Every time we shop, if we're making a big purchase and obviously annuity's retirement planning, huge purchase. But if you're the type of person that likes to do your research on your own, there's tons of stuff out there.
Speaker 2 00:02:18 So if you don't know how to find it, search buttons on the podcast now podcast, this is 53. There's not that many of 'em out there. Newsletters are over. There's hundreds of them. And there's a search box. Typing your question. If you can't find it, ask me if you have a really good question, then I have not addressed. I swear to you, I will, for your benefit, make a podcast and write a newsletter, build charts, spreadsheets, whatever it takes. If I can't answer your question, I'm gonna put it out there because if you have it, then somebody else has it as well. And I want everybody to be able to get, so this is a great place to do research, to figure out how you wanna retire, whether you want to use an annuity and how you do it. If you do want to use one.
Speaker 2 00:03:03 So it's kind of fun to see that it's very satisfying to say like, oh yeah, I mean, I talked to a guy yesterday and the questions he brought up it's like were, you know, Roth conversions, long term care annuities, legacy planning. Oh, it's like, oh, I did a newsletter. Oh, I did a podcast. Hey, you should look at this. And one would be a broken record. So in conversation, I just kind of explained things to him anyway. So, but this week buying the right annuity, and this is kind of an example of a meeting. It's a lady who called me last week and talking to a bunch of people and just really, really confused. Doesn't know what to do. It's a tough situation. It's a tough case. And you know, my initial reaction was like, oh man, there's not anything I can do. And then it kind of, as we were talking dawned on me, wait a second.
Speaker 2 00:03:46 There's a pretty simple solution here. So I wrote the newsletter and I'm going to, uh, just show it to you. Not that you need to really see it, but it's out there already. This is for next week. I think this is gonna go out probably oh, on about the 20th, 19th or 20th of August. Let me share my screen. So buying the right annuity and this really fits in well with a lot of the stuff I've talked about. I talked about index annuities and fixed annuities. Obviously my mantra for retirement income, as you've got a guaranteed income annuity, you've got alternate strategies that are appealing to others for control, potentially more output. I've done this. And then last week was released splitting annuities, where if you can't decide between fixed or index, you wanna protect money. You want a grade income. You can always split between products and strategies.
Speaker 2 00:04:40 So this one, when I say like, you do your research and I wanna provide different information it's so you know that there's another opportunity if I was like everyone else and just sold guaranteed income. I don't know if I'd be here. It wouldn't be that interesting to me. Like, I like to look at different ways of doing things and I like to be creative. If I couldn't be creative, it's like, oh, okay, here's the top product. As I've said forever. It's true. I did it in about 30 seconds on a phone call yesterday. Here's the highest guaranteed payout in your situation for your date of birth, your wife, it's simple and easy, but educate yourself. And maybe you go the route that everybody else recommends. And that's fine. There's some very good benefit, statistical academically proven benefits to doing it that way. I think you can do a little bit better in some cases.
Speaker 2 00:05:29 So I am here for the people who wanna do it differently. And I, I sell the annuities that everybody else sells as well. But if you don't know that there's another op opportunity, then I just, I think you could be leaving something on the table. So it's education. And that's what I'm here to give you a different perspective. And again, with last week splitting annuities, it's like, well, if you don't know, if you kinda like the benefits of one and you like the benefits of the other, how do you decide between you don't have to decide between the two, two, you can split it up. But once in a while, I see a case where it's not that open ended and it came across my desk last week, nice lady called me. She's a 75 year old widow on a very fixed income that covers basic necessities.
Speaker 2 00:06:10 And from what I was told, there's not a lot left over every month. So part of her income is sourced from a period, certain annuity, a period, certain annuity is a, is an income annuity. You buy that lasts for a specific number of years. And I think this was a 10 year annuity. She's getting 950 bucks a month for 10 years, but she started six years ago. So she's got four years left. Now she's on a fixed income. And by the time she's 79, she's gonna have to come up with another nine 50 for per month. So that's the biggest issue right now is like, we gotta replace that income somehow. And so, but in addition to that, she's on a tight budget and wants to relax and enjoy her life a little bit more. She would said, ah, it'd be nice if I could spend another few hundred dollars a month, just have a little breathing room and maybe go out to dinner, do some nice things, maybe buy myself something.
Speaker 2 00:07:05 So it's kind of thing where it's just, yeah, it's a tricky situation. So the asset she has to make this happen, she's got $150,000. That's sitting in the bank. Safety is a primary concern and it's good that she has that mindset. Cuz I've seen several cases like this. Some people say, well, can I just put it in the market and get like 20% and then maybe do it? Yeah, maybe, but taking risk when you're towing the line, you're walking a tight rope there taking risk is a really, really bad idea. So she's uh, safety conscious, but she also needs to enhance her yield to make this work over time. Her goal is to keep, she wants $20,000 available at all times for emergencies, which is a great idea that gives her 130,000 to work with. She had talked to a few other people, uh, got a standard pitch that was obviously better for the salesman.
Speaker 2 00:07:55 This is one of those really frustrating situations for me. And I look at, you know, the product that gets sold more than anything else. And everybody sells it for every situation. The product that's built for 55 or 60 year old, who wants to wait 10 years was pitched to this lady. Who's 75 needs a little bit of money now. And she needs a lot of money in four years. It's like, man, just slam everybody into that product. And it doesn't at all work. You know, the guy said put all 130,000 into it would immediately made her nervous, guaranteed income. She can take free withdrawals, this product it's a 10 year deferral requirement. So she'd be on free withdrawals before the 10 years. She's not gonna kick in that guaranteed income until 85. And then it's all gonna be depending on performance to see how that turns out.
Speaker 2 00:08:41 If you use the highest projected return, it's possible that this would work possible, highest projected return. The best case scenario, there's far too much variability in what the company can do with the contract. What the returns will actually be. You cannot guarantee a result. So my guess is if it's with average performance, it would fall short that guy's gonna be long gone by the time she really needs it. And she's got a ton of questions. I haven't looked at this in a long time, but it was, oh, it's right around. When I started the website, somewhere 2010, there was a guy in, and this lady's in California. There was a guy in California that got put in jail for selling an annuity to a woman who was 80 years old. And in that case, like the annuity wasn't now she looked that up, but seriously, her kids took him to court and you got put in jail for a little while.
Speaker 2 00:09:33 <laugh> so you gotta be careful when you're dealing with tight situations. Because if she, this is what I look at. If she was forced to make a dramatic change in lifestyle, when she's very a vulnerable time in her life, now she's got kids and grandkids and she wants to enjoy those guys and not have to worry about stuff. So man, can you imagine being out there at 80, 81 82 thinking, oh no, I'm outta money. I mean, that's the point of using annuities, I guess real quick for comparison purposes, it's important to note that the highest guaranteed lifetime income payout for 130 K with income starting four in four years for a 75 year old female gives her around $1,200 per month. It falls short of the total income goal and does nothing to provide for additional spending today. So she'd have to have no extra money today.
Speaker 2 00:10:22 And you know, we'll say, let's say we give her 300 bucks a month, an extra money today and nine 50 and four years. So in four years I'd be 1250. This is a little shy of that. And she's stuck in this rut. Now I just scratched out the numbers. It didn't even take any complex calculations, really the reasonable solution's something so simple that most people overlook it or a nice commission gets in the way. And the customer ends up getting the short end of the stick. Maybe the guy's close to his production goals. Ah, I gotta get one more of these things. Ah, this is the one right here. No, sir. That's not gonna happen. So let's give the guy the benefit of the doubt and say that he's probably just stupid, not a bad guy. Just not that smart. That's the only thing I could say.
Speaker 2 00:11:04 So the solution is just as simple as improving the yield and the portion of available funds set aside the 20,000 as plan, put it in an emergency fund, keep another 30,000 as separate account that is easily accessible. Maybe a savings account or money market get a little bit of interest on it. But checking account is fine by a five year fixed annuity that pays 4.2, 5% interest on the remaining $100,000 and it is done. That's it right? Easy and simple. I can't see another way to do this. Now there's a lot of other ways to assume you could do it, but you remember you wanna give a 75 year old widow security guarantee know what's gonna happen, right. Okay. From the $30,000, I'm hoping you guys understand this. She was a little lost because it was so simple. She can withdraw a few hundred dollars per month.
Speaker 2 00:11:52 And the interest interest from the fixed annuity will more than replenish what she takes out so long as she doesn't go overboard. So she still has to manage it. And I also thought it was a and a good idea to kind of put some money somewhere where she couldn't, that was outta touch. She's very generous gives to her family, which is really nice, but she can't do it to her own detriment. And she knows that, but that's where I can't get too. Can't get in the way of what she's used to doing with her family. So $30,000, she'll take 300 bucks a month for the five years till the annuity is surrender free. After four years, she can withdraw the nine 50 per month from either the annuity or the cash count. The five year fixed annuities completely liquid. In five years, she gets extra spending every month covers a shortfall from lost annuity payments in four years and arrives at age 80 with nearly the same amount of money as she has now all without taking risk, which is what she needs has to happen.
Speaker 2 00:12:43 If she spends 300 per month for five years and replaces 11,400 in lost annuity payments during the fifth year, 950 for one year, it will total 29,400 in spending. The 30,000 in the bank is essentially gone. But without touching the annuity, it would be guaranteed to accumulate over 123,000 during the five year period, she retains control over all the money. And five years of spending only cost her $7,000. Not bad guaranteed. Now I'm not, this is not, oh, wow. That's exciting. This is just what you gotta do. Now you could probably say bonds or like CD ladders. You're not gonna get the rate and it's non-qualified money. She's gonna tax. She's not in really in a high tax bracket. So it's not that big a deal. The solution is so simple that you don't have to figure out a complex contract. Now the other contractor's like, oh, there's a bonus.
Speaker 2 00:13:36 And there's a free withdrawal and there's statements every year and a projected interest rates and index credits and all that stuff. And you know what happens? What are my rules? What are the ideas? So remember those bonuses, they come with restrictions, nothing comes for free. So she will have PA lived past 80 in a very conservative estimate. We'll be able to continue spending the same amount of money into her early nineties before she runs out of money. Now, if you take 123,000 and buy a lifetime income annuity, age 80, you'd be well above. I didn't calculate those, but health concerns being what they are. She's not expecting like a long, long life, but you know, a slow spend down of her assets and a good interest rate will keep her pretty comfortable for a long, long time. I mean, there are a lot of things that go into this and obviously if any advisors watching this, oh, I would do this.
Speaker 2 00:14:29 Or I would do that. Yeah, go ahead and say it. This is my recommendation. And I think there's only one way to do it. That makes sense for her. You know, you could even honestly do a 10 year fixed annuity would be okay. And then you'd continue getting interest. You'd have a guarantee of interest for longer and then just use a free withdrawal provision to supplement income. So that's possible. I thought the easiest simplest solution for someone who's very nervous about getting pitched all these annuities was the most basic situation you could get. So yeah, lots of different details. I don't know if you want me to run some numbers. This is one of those situations. That's pretty straightforward. It's pretty simple customized solutions to the individual. We can get a lot more technical and that's certainly possible. You know, the phone call I had yesterday was fantastic.
Speaker 2 00:15:19 A really, really sharp guy, an engineer. I love engineers because they're good at figuring problems out. And they come to us, they come to a decision. They make a decision. It's a yes or a no. So you finalize all the work you do. Doesn't always work out for me, but it works out for them. And that's the point. Philosopher is the worst, never ending series of questions. I know some people that are like that, that don't have, but they're not philosophers. So anyway, but if you, if you want me to run numbers, if you want me to test a system, a strategy, if you want me to compare annuities, that's what I do. I'm here for whatever you need. Um, this is simple and straightforward buying the right annuity. Sometimes you have a choice in this case. Choices are very limited. I think that's the best solution.
Speaker 2 00:15:59 That's what makes sense to me. I hope it makes sense to you. If it doesn't let me know what you think should be different. So this has been episode number 53, buying the right annuity. My name is Brian Anderson and I appreciate you coming by and sticking around. A lot of people say they listen to these every week. I try to keep 'em, uh, engaging and interesting. That's the goal. If I don't have something worthwhile to talk about, then I'll probably, I did take a couple weeks off cause I didn't wanna force. It was summertime. I wanted to do some fun stuff. So gimme a call. 804 3 8 5 1 2 1, uh, annuity straight talk.com top right corner. Schedule a call. Any page on the site, subscribe to YouTube or your favorite podcast platform. If you wanna be notified when they come out, uh, they usually come out on Thursday mornings. I send 'em by email on Saturday, get a chance to look at it. But if you need something I'm here, I appreciate you sticking with me. And this has been fun and it's gonna get better and better as we go along. All right. Thank you so much, everybody. And you have a great day. Bye.
Speaker 1 00:17:04 You have been listening to annuity talk. The does not represent tax legal or investment advice. The views expressed by guests on this program, their own and do not necessarily reflect the views. No information present should be. I.
