Episode Transcript
[00:00:02] Hello and welcome everybody, to the Annuity Straight Talk podcast, episode number 229.
[00:00:08] My name is Brian Andersen, founder and creator of AnnuityStraightTalk.com helping you answer the toughest retirement question. Setting up the most efficient plans possible with all the tools to do it. More coming soon, and I can't wait to tell you everybody about it. I'm going to run those on the podcast in the coming weeks.
[00:00:26] A lot of really cool stuff we've got that we've been working on. So please like subscribe or comment on any of your favorite podcast platforms or on YouTube. To schedule a call with me, use the top right corner of any page on annuitiestraighttalk.com there is a button that says schedule a call, take you to my calendar, reserve your spot, and I'll help you figure some things out without the sales pressure. This is all advice, something that's big news to me and has been developing throughout the year, especially now when we're seeing the market kind of teeter at the top. People are getting nervous.
[00:01:05] We've got substantial annuity rate increases. So that's what I want to talk about here in episode 229. Now, late last summer, everybody talking about the Fed dropping rates and everybody was worried, and the people that were calling in and talking to me were saying so and so told me I have to buy this now because the rates are going to drop.
[00:01:25] And I said, hold up. I had a lot of people said, just wait, if it's the right deal and you know what you're getting into, then go ahead and do it. But hold off, because the Fed doesn't control annuity rates. As much as I wish I could say it once and have everybody understand, I realize I'm gonna have to keep reminding them that because the Fed did drop rates, that's going to directly affect the banks. They're either going to try to expand or constrict the economy, try to control inflation and all the crazy things they try to do. But they can't really totally affect the markets.
[00:02:02] And the markets drive annuity rates, okay?
[00:02:06] So CD and mortgage rates will change a bit, car loan rates, things like that, savings accounts.
[00:02:13] Part of what I'm talking about is a lot of people aren't getting the rates on CDs that they were so used to locking in for 12 to 14 months. And they're like, oh, now what do I do?
[00:02:22] So look at your options, okay?
[00:02:26] But for the rest of it, bonds and annuities, things like that, they don't move as quickly as the Fed makes moves. Okay, it's not even close. So I like to pat myself on the back a little bit because. And here's proof of what happened.
[00:02:44] I didn't make this up. It's just I learned from some really smart people, okay?
[00:02:50] The stock market advanced, so you made a whole lot of, whole lot more money. The interest rates are now higher in spite of several interest rate cuts by the Fed.
[00:03:00] And I hear people talking about some increases as well.
[00:03:03] So annuity rates are higher in every area. So you may want to think harder about the timing of protecting money after all those increases. Now, when I was waiting to record this, the stock market is down about 5%.
[00:03:19] So maybe I should have done it a week ago. I wasn't quite ready.
[00:03:23] Now, it seems to be a rule that I've learned over 20 some years that the best time to buy an annuity is when nobody wants one.
[00:03:32] Human behavior, emotional issues make more decision than objective.
[00:03:37] Objective reasoning.
[00:03:40] There's still a lot of people that are locking down guarantees right now, but there are a lot of people are in a frenzy over what the stock market has been doing. They want to hang on to that. Oh, I don't want to miss out on this great stuff.
[00:03:51] Now, I've talked to a handful of veteran investment managers, guys that I who have been in the business longer than me and have seen lots and lots of market cycles, unlike the majority of investment managers today who have been in for, you know, 10 to 15 years.
[00:04:10] They said people are starting to act like it's 1999 again. That's the kind of behavior they're seeing. That was back when unproven companies with no earnings record enjoyed incredible market valuations, only to disappear completely in a short period of time.
[00:04:26] The fallout led to three straight years of losses in the market, an absolutely demolished retirement portfolios. There are a lot of people that would not come back for a long time because of that and decided to just save their money and not put it at risk. Now, I'm not telling anyone to bail out of the stock market entirely, and I do not think we're in for three straight years of decline. We got some different things driving it right now. A lot of it is federal subsidies. Talk about SpaceX and all that garbage.
[00:04:58] Oh, my goodness. Data centers going up. Nvidia, Palantir, all those companies driving a different market than we've ever seen in the past, and they're federally subsidized. I don't know anybody gets behind that, but that's just the way it is and nobody's doing anything about it because you guys are participating in the stock market and pumping it up. Okay?
[00:05:16] Now I don't think like the, the guys that are calling for mass chaos. I don't think those guys aren't always right.
[00:05:23] You have to do what you think is best.
[00:05:25] If you're like, a lot of people have been hanging onto risk assets that you didn't have a few years ago, you might have more money than you've ever had before. Now I talk to people that I met three to five years ago. They come back because they haven't done anything when rates were low. They didn't really want to. They kept risk on. They were rewarded for it. A lot of these people have twice as much money as they did five, three to five years ago.
[00:05:47] So they were right to keep it in the market. But it's money they never had in the first place. Why not protect some of it? Okay.
[00:05:53] They didn't buy in the past because rates were low and they were paid off.
[00:05:58] Might be a good time to revisit it now. If you've already got your safe assets in place or your guaranteed income set up for your retirement, you got nothing to worry about. Just take the ride. I mean, you can play the market if you want. Not saying you got to go commit to something else.
[00:06:12] But if you've waited, then now is. Now is as good opportunity as I've ever seen.
[00:06:17] So one thing is different, slightly different this time is that we have a normalized yield curve, meaning that short term rates are lower than long term rates and yields. It flattens out from five to 10 years, but it kind of steadily goes up.
[00:06:31] So a normalizing yield curve means that there's a positive outlook on the long term economy. This is something I always watch and it can change fairly quickly. It's only bad news for those who really liked only locking money up for one or two years, maybe three years.
[00:06:51] So in the past few years, the highest rates available were in the two to three year range. So everybody wanted the highest rate. Some people said, I don't know if these rates will last. I don't mind locking in for five or seven. Okay.
[00:07:04] But what's been really good for the past few years, we had real short term rates and then we had a, like, it leveled off and lowered and then the long term rates were really good. So people were either getting real short term CDs and MyGas were great deals or long term income is a really good deal. It's kind of a funny market.
[00:07:22] So now you have to go a little bit longer to get the yield you want.
[00:07:28] You know, I talked to a few people recently who have been just rolling one and two year CDs and they finally decided now they're only getting 3.5%. It's like, okay, I'll take a five year Mygit, 5.5%.
[00:07:40] Not, not a bad deal. Okay, but that just takes a little bit more planning in regards to the type of liquidity you need and any long term goals you have in mind. Now, different annuity products behave differently because of interest rate maturity. 3 year MyGas are based on an entirely different interest rate than lifetime income products. One's really short, one's really long, one can change dramatically and the other not at all. We might have long term rates might stay high and income is a good deal and short term rates will drop really low. So I've got to keep an eye on both because everybody wants something different. I get some people that say, oh, I want to replace a cd. Other people saying, hey, I really got to make sure I don't, you know, outlive all my money. And those are two whole, totally different scenarios require two different products. That's not fun to be the guy who only sells one thing, right?
[00:08:33] So right now we have top deals in every area of the annuity market. CDs have taken hits. So mygas are the best safe alternative. That's a long or a multi year guaranteed fixed annuity. Mid range, fixed and fixed index annuities in the range of 5 to 10 years are as high as I've seen for anyone who wants a bond alternative that's a lot safer and has more liquidity.
[00:08:55] People are locking into bonds for 5, 10, 15 years and you've got a safer option that's going to yield just as much, maybe even more, but it's got more liquidity.
[00:09:05] Guaranteed income deals have just edged back up to the highest payouts I've seen since I started doing this, going back to probably 2009 or 10. Okay.
[00:09:18] Anyone who rode the market up to this point is getting an incredible deal.
[00:09:22] Just remember that market assets aren't worth anything until you sell them. It's not your money until you save it.
[00:09:29] Annuities allow you to keep the money and that's the type of luxury and a solid retirement plan deserves. If anybody wants to revisit a retirement planning opportunity or explore new options, then now is a good time to give me a call. Go ahead and get on my calendar if you want to have an honest conversation about it. I'LL shoot you straight, give you the options, never a sales pitch.
[00:09:50] That's what we'll do. So take a look at it. Everything's awesome.
[00:09:54] Index annuities, huge cap rates, mygas, great interest rates. Five years is kind of the sweet spot. People are okay with five years long term income deals. Those payouts went higher and higher.
[00:10:05] We, I mean we saw interest rates have really driven up in the past probably three weeks for annuity products. So we're seeing a lot of changes. We're going to stay on top of those so that when you design your retirement plan, we're going to give you all the options and basically give you the best opportunity to do what you feel good about. Again, don't have an agenda, don't have a product. Just here to help you make good decisions. So this has been episode 229, annuity rate increases. I look forward to hearing from you guys. The schedule is going to fill up quick, so go ahead and jump on the calendar if you want to chat about it, like subscribe or comment on any of your favorite podcast platforms or on YouTube.
[00:10:46] Schedule a call again, top right corner of any page on annuitystraighttalk.com hit the button. Get on my calendar.
[00:10:53] Thanks so much for joining me again for another episode. I will see you back next week with some website changes and in episode number 230. All right guys, you guys have a great day and I will talk to you soon. All right, bye.
