Episode Transcript
[00:00:00] Hello and welcome, everybody, to the Annuity Straight Talk podcast.
[00:00:04] We made it. This is episode 200. My name is Brian Anderson, founder and creator of annuitystraighttalk.com this is my lifetime project, honestly, biggest thing I've ever done. Lots of years putting it together.
[00:00:16] I think about a little over two years ago is when I was doing episode 100. Probably did it in this exact same spot. Who knows if I'll still be here for 300, but we're going to keep this thing rolling.
[00:00:25] Please, like, subscribe or comment on any of your favorite podcast platforms or on YouTube. Schedule a call with me. Top right corner of any page on a annuitystraighttalk.com if you want to talk about your situation and get some easy answers and the best path to figuring out solutions for your retirement. Going to share my screen. Going to talk about what I want to do something special for the 200th episode. And I really wanted it to be something for everyone. And I had ideas. Oh, I could talk about my career and the work and all the stuff I did, you know, at some point, okay. But for this one, I want everybody to be able to get some benefit or some value out of it. And that's why we're here. So I got a couple ideas a few weeks ago. You guys know I offered a gift card to anybody who could pick the first person to respond. I got a lot of good ideas that might make episodes. So maybe we'll give an honorable mention gift to some of those people that gave me a good idea for a podcast. But I got this idea and I thought, hey, that's a great story to tell. This is what it's going to do. And everybody has a lesson in here. It's something everybody needs to think about at some point in time. Let's see.
[00:01:24] Oftentimes and most of the time, I talk about you as the listener because you're the main demographic. Right. We're talking about solutions for retirement, everything that goes along with that. But a lot of times people will call or get a hold of me and ask for help on someone else's situation. A parent, a friend, a child, whatever it would be. But one of the most common ways to do it is people will ask about aging parents and, you know, sometimes how should my kids get started? Whatever, right? So my clients right now range from 45 to over 90 years. There's definitely some diversity in the advice required to present optimal ideas and all that stuff. I'm gonna save that for later.
[00:01:58] I know a lot about how to get started Because I've been in this business since I started. But all my work right now has to do with finishing the journey. When I got into it, there was no information on it. Slowly getting closer to a consensus, but I don't think we'll ever get there. Okay, now everyone needs to know that if you buy something from me, you can always call for advice, whether it's for you or for someone else. Recently had a couple of people email me and say, hey, could you help my friend? Here's the email. They need to start listening to your stuff. That's great. And it's interesting. There's a handful of people who've never bought anything from me who seem to ask the most questions and that's okay too. I'll help out if I can. So a client came up with a really good idea. Allow me to weave it all together so this episode can demonstrate why the approach for everyone is truly unique. John and Simone are new clients from last year. Standard stuff that I talk about all the time. They took a piece of assets well before retirement, locked in a healthy guaranteed income payment that they will reuse for retirement several years down the road. Really nice deal. The kind you look at and say, why wouldn't I do that?
[00:02:55] So Simone wanted to get some advice about her parents who are in their early 80s. About 20 years ago, her dad put much of his money into annuities. Then four or five years ago, he bought more annuities and turned on some guaranteed income that he doesn't need. So the assets are kind of gone. Now he's got an additional $5,000 per month in cash flow. And long term care is a potential concern for Simone and her siblings. So the questions I have about that deal cannot possibly be answered. Right. Why did he put much of his money into annuities 20 years ago?
[00:03:24] You know, we know what's happened in the market. What have you been better off? Maybe having some money at risk to get some extra growth probably would have done better, but hindsight and then there's some people that are conservative minded, so that's okay. I can't say it was a bad thing or the wrong thing, I don't know without digging up old paperwork and all that stuff. But what's the point then next is did he improve his financial situation by buying even more annuities recently?
[00:03:46] It's not optimal if he's getting income that he doesn't need. Maybe he'd be better served with the flexibility of having a large pool of assets.
[00:03:53] The previous contracts would have certainly Been surrender free. He would have had a lot of options with all the liquid cash.
[00:03:59] Now he's got income he doesn't need. So it's definitely not optimal. Payouts weren't great five years ago, so he'd have been better to play it slowly with a myga, be able to get far better rates right now. Now it is likely that it could have done a lot better, but we will never really know the answer to that. It is justified for the kids to be concerned about the parents having the right financial foundation late in life. If long term care needs arise, then assets are at risk. You either need to be able to pay for it or sell off and drain assets. The oldest generation wants to liquidate, in this case gift assets in order to qualify for Medicaid. If that's the possibility, then there's a 60 month look back on, you know, gifts and getting rid of it where the assets can still be taken. Now if you need care, it sure helps to have as much money available as possible so that you have more options. But you need to remember that just because you need assisted living does not mean someone's going to come confiscate your money. So Simone might have been concerned, but after seeing it, you know, maybe it could have been better, but it wasn't all that bad. She was concerned about her parents well being. And although it could have been a little bit better, they are in a reasonably strong position if the need for care arises.
[00:05:02] They have all the income they need right now and quite a bit extra. Now a lot of people think about spending more and how much care costs and it certainly is something that you should consider and plan for. If you do need assisted living, you're not going to be living the same way you do today. To qualify for assistance, you truly need help with the simple activities of daily living. That's the industry term, that's bathing, transferring continents, right? If you can't get yourself dressed in the morning and whatever. So you're not taking vacations, buying new cars or going out to dinner, you're stuck somewhere, either at home or in an institution. The reason people think about gifting away assets is so they don't have to pay as much. And the reason the look back period exists is because if you need assisted living, then you have to pay for it. You cannot expect to get someone else's services for free.
[00:05:52] We're not playing a losing game here. That's not the type of advice I provide. You need something, you got to pay for it. Tough love, okay? If anyone goes Into a situation like that where they rely on Medicaid alone to cover the bill, you're not getting top of the line facilities and care.
[00:06:07] That's bottom of the barrel stuff. So think about what kind of care you want for yourself or your loved ones. And if you have to use your own assets to pay for it. The Medicaid system doesn't just take your money, it takes.
[00:06:19] They use your assets to determine whether you qualify for public assistance. If you have the money, you have to pay for it. Now that could last 10 years, it could last two years, it might only be a year or two. And that's not going to end up wrecking a retirement plan if that's the case. So a really good recent example of this is my grandmother passed away earlier this year at the age of 94. For the last three years of her life, she needed to live in a qualified care facility. She didn't have a lot of money, but Social Security and veterans benefits from my grandpa were redirected to give her very good care in her final days.
[00:06:49] She didn't need a fancy long term care policy or significant cash in the bank to cover it. And in full disclosure, my dad and his siblings pitched in a little bit. And by a little bit, it wasn't a ton. 2, 300 bucks a month each would put her over there and she had excellent care. It really depends where in the country you get this from. As it stands now, if Simone's parents need assisted living, they have additional cash flow that will go a long way in helping cover the costs. If they had met me five years ago and dad had bought some mygas instead, he would need to draw on that asset to cover additional expenses. Depending on how long the parents live, it could turn out to be six of one and a half a dozen of the other. Now if they had bought mygas, the question would be whether they're leaving a legacy. Simone and her siblings don't seem to be concerned about that. They're perfectly fine financially on their own. And so it's correct and that's the right thing to do is put the focus on her parents. Well being, I would say that the parents are in a pretty decent position. Plenty of flexibility with the additional income that will go a long way to helping things out.
[00:07:44] So the big takeaway from all of this, this is something everybody can use and should consider.
[00:07:49] Make sure to clearly document the assets you have and the purpose intended for them. At some point we will all need someone else's help and I think it's our Duty to make it as easy as possible on whomever that is. I talk to clients a lot about maybe involving a responsible child in the process, so at the very least they don't have to question the structure of assets at the last minute, like Simone is having to do right now. Drinking through a fire hose. Right. She's got to figure out, hey, what is this? Why do you do it? What do I do? What are my options? Oh, whoever's going to take care of you, they have their own lives to worry about as well. I've seen three of four grandparents pass away while I've been in this business. I paid close attention to how it was handled, so will no doubt be in charge of educating siblings, maybe even cousins, when it's our time to preside over the final days of our parents. When I talk about this, most people say they plan to do it down the road at some point, and it's certainly up to you, but it does not hurt to have a head start. Involving the kids early may possibly motivate them to set themselves up with a solid financial foundation like it did with me. I've been motivated to consider this for myself because of what everybody's gone through. And I'm prepared that as my dad gets older, we're going to be there. My brother and I are on top of it. We're the trustees of his trust. We're going to make the decisions involving input from all of our siblings. Big family, right? But again, give them the idea will motivate them to set themselves up potentially. Some of them are going to do it on their own. Some of them need a little bit of help. You know your kids better than anybody else. This has implications from every generation, from top to bottom. Make sure your parents are in good shape regardless of financial position. Then get your own plan solidified so you are not a burden on anyone else. Finally fully document or even share it with your kids so they aren't caught off guard when you need help. So they know exactly what to do. Legacy is not just a dollar amount. More importantly, it's a foundation of security which comes from diligent planning and education. I see the importance more and more these days, so I plan to make it bigger part of every planning case I do. Anybody wants to jump in line, any of my clients or anybody new who wants to this get on my calendar. Few case studies would be a good way to get it rolling again. Something everyone needs to talk about for the 200th episode. I really appreciate you guys being with me along the way. Giving me the ideas. I wouldn't have had the education if I hadn't been forced to do the research on your behalf. It is all here somewhere. Ask for help in finding it. That's what I plan to do. I want to thank you guys for joining us for the first 200, and we're looking forward to the next 200. It's going to be good. And we'll start that up next week. Thank you guys so much. You have a great day and I will talk to you soon. Okay, bye.
