Episode Transcript
[00:00:00] Hello and welcome everybody to the Annuity Straight Talk podcast. Episode number 179. My name is Brian Anderson, founder and creator of AnnuityStraight Talk.com coming to you from Northwest Montana. Any late spring day, then all of a sudden the sun comes out, messes up my lighting, but I'm going to roll with it because I love to see the sun and love to get some moisture, make it a beautiful summer. It's greening up around here. Everything is gorgeous.
[00:00:25] Come for a visit this summer if you want to see Glacier park on your way from Yellowstone or if you just want to see the beautiful Flathead Lake, I'll make you a burger. Have you over, we'll chat, maybe even solve some of your problems.
[00:00:39] Please like subscribe or comment on any of your favorite podcast platforms or on YouTube. Schedule a call at the top right corner of any page on annuitystraighttalk.com if you want to talk about things in greater detail.
[00:00:52] Get down to brass tacks and see if we can find some solutions for you or debunk some myths, analyze a proposal sales pitch received, Set the record straight.
[00:01:04] Today I'm going to talk about how annuities create bigger portfolios. It's a common theme. It's something I've covered in a lot of different ways in the past and it's been coming up recently and I hear I don't want to get rid of the money and do this and you don't give it up without getting something to return in the long run.
[00:01:21] Safety, security, peace of mind, simplicity as well, help with your RMDs, normalized tax burdens, all that stuff. Oh yeah, and yeah, you can make a bigger portfolio too if you know what you're doing. Everybody said anybody that says you can't, maybe they've been doing this for a while, they just got kind of lazy and thought my book of business is big enough, I don't need to do it, don't want to mess with it. It's a lot of work for people. It's been a lot of work for me.
[00:01:49] So one of my biggest sources of pride after 22 years in this business is I know for a fact that I have some of the smartest consumers as clients.
[00:01:56] Not a single one person rushed into making a long term commitment for retirement.
[00:02:01] I have worked incredibly hard to help everyone answer all possible objections, address all concerns, set goals in the right order, take care of them one at a time and get retirement plans organized and make sure there is profitable as possible. The result of that has been A blessing to me, honestly. I've made a good living doing it. I can afford to continue doing it. That means as good as I am, I will get better. You guys challenged me a lot of ways, but I built solid relationships with a lot of these guys and several of them have become close friends. It's not a requirement. There's some people that use me strictly for the service.
[00:02:37] That's good enough for them.
[00:02:39] I do not take it for granted. And I will continue to alter my analysis and strategies to suit all economic changes that have yet to come.
[00:02:47] Things will get different. I will be there, help you guys navigate it. There are a lot of ways to convey an idea when you're using retirement strategies, whatever the idea may be.
[00:02:58] And it's okay because sometimes you'll explain that idea in a certain way that doesn't seem relevant to maybe you or another person or what's relevant to you is not relevant to somebody else.
[00:03:09] So when I say annuities can create bigger portfolios, it's not the first time I've done this. It's just a different title to get people to look at it from a different angle. And also there's a lot of episodes now. So if you haven't been watching from the beginning, don't worry if you don't have time to go back and watch 178 other ones in addition to this one. Some of them have been updated because things have changed. Even the past four years I've been doing this specifically.
[00:03:33] So we're going to look at this a different angle today.
[00:03:35] So about a year ago, a little over a year ago, I released a podcast called the Fundamental Purposes of Annuities.
[00:03:44] This is the academic use of them, what's been studied economically for decades. And it was a remake of it, of one of the first newsletters I, I wrote when that's all I did was just send email newsletters. And that's been almost 10 years ago because this is kind of the foundation, one of the foundational things that got this website started that kind of gave me the proof and the justification I needed to invest the time to make sure I could communicate this to you guys. But it essentially describes the benefits of using annuities in a retirement plan and the advantages it will provide over trad traditional portfolio management for income planning.
[00:04:20] Now these are not new ideas, they're not my ideas. I just communicated the information.
[00:04:25] And like I said, it has been around and verified for decades. No surprise. That's why the major financial investment institutions are now saying, yeah, go get an income annuity. It makes sense. So any of you holdouts and still think, hey, it's not necessary, think again.
[00:04:40] Go back to the drawing board.
[00:04:43] So two years ago I talked about it again in terms of legacy for someone who was most concerned about leaving money to their kids. And that was episode 86. Been almost 100 episodes since then.
[00:04:54] Annuities create a legacy directly address that point.
[00:04:58] When I proposed an income plan that would offer security and retirement for these guys, they felt that it was going to deplete their portfolio too much. And their secondary concern was we want to leave a legacy and that's just going to take a lot of the portfolio away. What and what I demonstrated there is to say, hey, that's kind of the same thing we're talking about now is that reducing stress and risk on a portfolio, create your income plan. What's left over is going to be free to grow and you're not going to have to take withdrawals. No reverse dollar cost averaging, that's going to make a substantial benefit over time and you will actually have a bigger portfolio at the end. If you want to leave it to your kids, well, there's your legacy.
[00:05:38] So with them, I told them that an annuity would solve their income planning concerns and it would create a bigger portfolio.
[00:05:46] Now, I didn't call it a bigger portfolio, I called it a bigger legacy. And then obviously there are other ways to leave a legacy. I've done some work on that as well to explain some of those things. But the whole point of the example was to show how the annuity would help them grow assets without damaging the rest of their portfolio. In either of the previous posts, the whole point was to show that an annuity done the right way improves a portfolio.
[00:06:06] But maybe I need to be more direct and just say that you're going to have more money because of it. What you decided to do with it is up to you.
[00:06:13] You can plan for inflation, adjustments, spending increases, large purchases, legacy. All those come to mind for most people, but the importance is going to be different for everyone. All of my intelligent clients have figured this out and that is why many own annuity even if they don't need one. I really love this with a guy with a bunch of money. When a bunch of money means you have more than you need to create your income, doesn't mean you have to have millions and millions of dollars. Well, this broker, I talked to a few brokers looking for investment management. They told me I don't need an annuity. I shouldn't even look at one, that's my favorite because that's a guy who's really thinking about it. That's a guy who's successful.
[00:06:48] It's a guy who's smart, who wants to figure it out and think about it. And I know I can show him bigger numbers because of it. So far this year, the stock market is well off of its all time highs.
[00:06:59] Now for a little perspective on that. There's only a few months throughout all of history where the stock market was higher than it is today. But people still hesitate to make a commitment at a time that doesn't seem optimal. Oh, well, I don't have as much as I've ever had before.
[00:07:17] I had 7% more last December, so I'm not doing anything. What's fine? Do it whenever it feels right to you. Now I can show you analysis whether you're at tip top of the marker or within distance of it.
[00:07:30] Using an annuity creates such a larger portfolio and so many more benefits that it doesn't really matter when you start. You start when you're ready to do it, when you understand the product, when you get a good deal, when the ages work out. I'm not recommending an income annuity for everyone. We could go back and talk about bonds versus MyGas, for example, or index annuities where you're not doing an income goal. Maybe it's just RMDs. There's a lot of different reasons to look at it.
[00:07:54] This is not a blanket recommendation for everyone.
[00:07:58] It's a message to everyone who says, oh, but I want to continue to grow my portfolio. Whatever the goal for reason for doing that is, maybe it's just to be efficient and be really good at what you're doing. As far as portfolio growth over time, this is going to make it better. And that has been proven. Everybody knows that. There have been several times in the past when it took years for the markets to recover. I don't think that will be the case this time.
[00:08:21] But who knows what the future holds. There is no guarantee unless you use an annuity. That is the only place it exists. So if you want to put a guarantee in the portfolio, you want to have consistency, direct deposit every month, don't have to think about it, don't have to worry day to day what that fluctuation is, where interest rates are, what bonds are doing. Oh, rebalance my portfolio. We're going to have to make spending adjustments next year. Who cares? Get it guaranteed. And you know that stuff's gonna work itself out and your portfolio is Gonna grow more because of it, because you're not tinkering with it all the time. So traditional investment management suggests using bonds or other fixed instruments to create income. In retirement income annuities offer payouts at least 50% higher than high quality bonds. As far as the interest payments, the income annuities are at least 50% higher.
[00:09:08] That's a bond paying 5%. Annuity pays out at 7.5%. Now someone will argue, well, yeah, but you're paying down the annuity asset, but the bond's going to retain the value, all that stuff. Okay, fine, but it takes a lot less money for the annuity, which means you can leave a larger remainder growing if long term growth, bigger portfolio, legacy inflation adjustment, spending adjustments are your concern.
[00:09:30] Or if you have a motorhome you think you want to buy in your 70s. Also in a traditional portfolio, sometimes the bond will produce part of the income. Maybe you do dividends. Or if you're systematically selling the stock side of your portfolio, you're going to get reverse dollar cost averaging at some point.
[00:09:47] It's a exponentially detrimental to your portfolio over time to sell at a loss if you have a down year and if you're not reinvesting dividends and you're not getting optimal growth out of those assets.
[00:10:02] So either of those situations, whether you're talking about systematic distributions from equities or using bonds to produce income, an annuity in place of either one of those is going to create more portfolio growth over time. That's just the way it is. Sorry if you don't like it, you're wrong. And I've been doing this for a long time. If you disagree with me, go ahead, challenge me. The worst thing that happens is I learned something new and I will share it with everyone. If you can do that. Oh yeah, and it's going to make your life a whole lot easier as well. I like to tell that to the guys that come in. Oh, they say, I don't need an annuity.
[00:10:33] Why wouldn't he? I got one client who's thinking about doing this, but he's got an investment manager on the other side. No, you got to grow, you got to grow. You got to do this.
[00:10:42] And then he's got RMDs coming up in four years, the guaranteed income annuity is going to take care of a lion's share of his rmd. And I said, you need to tell this investment guy to use his head because he's going to end up managing a larger investment portfolio if he just takes a Little time to research how this is going to benefit. So it's good for your investment guy too. And a lot of those guys can sell commission products.
[00:11:05] Well, I only do fees.
[00:11:07] You can sell a commission product too. You just can't charge a fee on it and get a commission.
[00:11:12] Yeah, and there are fee based annuities. You can. There's a solution if you want. Don't be so obstinate.
[00:11:18] Go find the right solution for your clients. All we're doing is trying to give you the best option.
[00:11:22] Avoiding long term commitment is another reason people stay away from annuities.
[00:11:26] Bonds can have very long term as well. I've talked to a couple of people who have laddered bond portfolios of more than 15 years. In one case it was up to 20.
[00:11:37] Now you got fluctuating interest rates, but if interest rates drop, the bond value rises, go ahead and sell it, you profit, but then you're reinvesting at a much lower rate.
[00:11:47] Guys running bond funds and these insurance companies are masters at it. So it's all going to work out in the wash. To be honest with you, be level. There's no direct advantage to doing it that way.
[00:11:57] So I'm not blindly telling you to go buy an annuity, but compare it end with all the right information, the right analysis. If you decide to do it, you should do it from every angle possible. And a substantial majority of people who engage with me with this question will see better results with an annuity. Not saying everybody goes and does it, then it goes back into timing and oh, I lost a little money in the market and, or I got CDs maturing in six months and I don't want to lose the interest. That's fine, try it for yourself. Make an appointment, we'll talk about your situation. If I'm wrong, at least you'll know for sure rather than relying on preconceived bias or some archaic information that may not pertain to what's happening economically. In the past six months, I've heard from consumers and investment managers that seem to think the most money can be made with exposure to the stock market in retirement. You will never achieve maximum performance without a little bit more stability, some risk management, because as each year passes, you have less time to recover from intermediate shocks. And also I know a lot of people in their mid-70s really don't have the appetite for it anyway, you gotta decide what kind of, I mean, kind of stress you want to bear in retirement. And this is going to relieve a ton of stress. And yeah, you're going to make more money.
[00:13:17] So that's pretty good too. So when I talk about my clients, the smart successful people, these guys worked hard. And again, doesn't mean they have a ton of money. They've worked hard, they saved more than what was recommended to them, stayed on their path for a long time till they're 55, 60, 65, and continued doing that, developed good habits. Someone like that is not all of a sudden going to start making a mistake with money. That's why I like that type of person, because they ask good questions, they give it serious thought, and they make good decisions one way or the other. I know people who retire comfortably with quarter million bucks in the bank or in an IRA or retirement savings. But maybe they got a little pension, maybe they got maybe Social Security. One guy I know, I would consider him one of the wealthiest people I know and he might have 8 or $900,000 in assets, but he saves half of his Social Security check. He just lives a modest lifestyle.
[00:14:14] So all it means when I say you're retiring comfortably or you're well set, if you're in the 99th percentile, it just means that you have enough money that you don't have to worry about financial matters in retirement.
[00:14:27] So if you are in this category, then you are above average financial and media, aside from special interests, serves the average person.
[00:14:37] If you're not an average person, then why would you accept average advice?
[00:14:42] Above average people should be looking for optimal solutions. And that's what I deliver.
[00:14:47] That's what I've spent 22 years researching. You guys get maybe a couple years to think about it, two or three months to really analyze the options when you're getting ready to do it. But I can compress that time period for you. If it is not in your best interest, I will be the first to say so.
[00:15:04] But in the vast majority of cases that I encounter, annuities do in fact create bigger portfolios.
[00:15:12] This has been episode 179. My name is Brian Anderson. Please like subscribe or comment on any of your favorite podcast platforms or on YouTube. Schedule a call at the top right corner of any page on annuity straight talk.com if you would like to chat about your situation and find some quick, easy results.
[00:15:30] I can usually nail these things down in a phone call, but then explaining why and giving you guys the tools to verify it so you're comfortable. That'll take a little bit more time. But I'm here for if you need me. I appreciate you joining me and next week I will be back with episode number 180. Dang it. If we're not closing in on 200, you guys have a great day, and thanks for stopping by. Okay, bye.
