Episode Transcript
[00:00:00] Speaker A: Hello and welcome, everybody to the Annuity Straight Talk podcast. Episode number 223. My name is Brian Anderson.
[00:00:07] Speaker B: I'm Nate Lee.
[00:00:09] Speaker A: And we want to welcome you back for another episode about surrendering annuities, old annuities. If they're not doing great, see what you can do to improve those. Please, like subscribe or comment on your favorite podcast platform or on YouTube. Send it to your friends, other advisors. Anyone who has a comment or suggestion, we'd be happy to take it. We are not afraid of the heat. We've been around for a long time, so. So today we're going to talk about. Nate's been coming in to help me out and talking to a lot of you guys. Can't I give you the highest recommendation? If you end up on his calendar and talk to him, he's going to get you started. I can always jump in and talk to you about it too. We got two perspectives and all the
[00:00:44] Speaker B: tools in the world.
[00:00:45] Speaker A: This is the best place to get your retirement planning done. Here we are. So Nate's going to talk about one of the cases he ran into just a few weeks ago. And I'll let you kind of take the lead on this, big guy.
[00:00:55] Speaker B: Sounds good. Thanks again for having me. And been down in Tucson now here for a while, but having fun.
[00:01:00] Speaker A: Might be our last episode. We'll see.
[00:01:02] Speaker B: Probably our last.
[00:01:03] Speaker A: How long will I stay this time?
[00:01:05] Speaker B: Maybe I'll come back and visit you. You know, as Brian said, we're evaluating some of these, you know, case studies right when we think it might help you in your situations. And so one of these had a gentleman. He reached out to me a couple weeks back. We hear this a lot. Age difference between husband and wife. He's 70, she's 60. So you got that 10 year age gap. And he just said, hey, I bought an annuity. He has a couple of them. But I bought one back in 2021.
Qualified money, half a million bucks. And all he said was poor performance.
And then, oh, I asked my advisor, what kind of income can I get out of this thing? And he's like, I thought it was a pretty poor payout. So we hear that a lot.
[00:01:45] Speaker A: Yeah, it happens. And this isn't to beat up anybody in particular, not the agent or the product. When we're talking about products that were issued in 2020 and 21 into 22, that's when things started getting good. But there's just a lot of people out there that are looking at it and seeing good rates now and saying, oh, ah, Is there anything I can do? And that's kind of the point of it. And then when you add in the age difference, like you said. Yeah, you want to verify a few things and make sure that you really do. And also, plans change over time. And if you've got an underperforming product, it's a perfect time to update it into something that actually works better for your situation.
[00:02:19] Speaker B: Absolutely, yes. And you know, that's one of those things too, Right. You hear Brian and I talk about this, what is your objective? And that's important because we're going to talk a little bit about suitability today. But unless your plans have changed and as you said, life happens, we're not going to be able to sometimes move these contracts. Okay. So we wanted to kind of tee this up, but we didn't give you the payout. But the client told me they were going to get somewhere between $31,032,000 a year on a single life payout. That sound about right? Kind of what you hear from.
[00:02:47] Speaker A: It does what I would call what was available back then. That sounds realistic. And you know, with the 10 year age gap, that's a big problem, right?
[00:02:55] Speaker B: It's a big problem. And then one of the other things is he's like, hey, my buddy sold this to me, my advisor, he told me I had to annuitize. I said, well, the good news is you don't have to annuitize annuity contracts today. You actually have options similar to, you probably heard me say, refinancing a mortgage, taking advantage of rates when they change. You can do the same thing with an annuity. And right now, as Brian and I have mentioned many times, it's a favorable rate environment and there's great companies with strong income payouts available today.
[00:03:26] Speaker A: Right. And so we looked at it a little bit and you can improve that stuff. So say, what do we want to look at here? What else do we need to know?
[00:03:31] Speaker B: So yeah, really, he just wanted to know some options, wanted to see, you know, what was available out there. And I said, sure, you know, I'll take a look. But I said, you don't have to annuitize. But I said, you are still within your surrender schedule. Right. There's still about another, what, four or five years left on his contract and wanted to run numbers for him just to give him something to compare to. And then the other nice thing is a lot of these contracts today you can do a joint payout. So if you are wanting to protect that younger spouse, of course it's going to be based on the younger of the two people. In this case, she's 10 years younger at 60. So we ran some numbers and wanted to compare if it was a single payout on him, which is still an option, of course, or if you wanted to run a joint to protect his 10 year younger wife.
[00:04:13] Speaker A: Okay, so let's look at joint payout if you want to.
[00:04:16] Speaker B: Yeah.
[00:04:16] Speaker A: Here's a fixed index annuity income quote calculator. The reason we're using this is they're going to have a product bonus on them which will be required to replace something that would have some surrender charges on it. Okay. So it's a little bit about suitability. The insurance company is going to, they have to verify that it is in your best interest to move it or that it improves your situation.
[00:04:37] Speaker B: Absolutely. And you bring up a good point. There's a reason why we work with high quality companies. Anyone who would say, sure, we'll take your money without doing a good job of, you know, suitability I'd be concerned with because, you know, they want to make sure this is in your best interest and that this is going to benefit you as you move, you know, your contract, otherwise you shouldn't move it.
[00:04:58] Speaker A: Right, right.
Absolutely. All right, go to the next, next one. And we got sample client again that you put your name and age in here. We ballparked it. These guys are in California, husband and wife. What do you think they could get for their $500,000 now?
[00:05:12] Speaker B: So on a joint payout, if I had to guess, it's going to be probably better than even what they were offering on the annuitization.
[00:05:18] Speaker A: Right.
[00:05:18] Speaker B: And sure enough, here's your number.
[00:05:21] Speaker A: Okay, we got Delaware Life 32, 437. We would probably say North American at 31 5. Right.
[00:05:28] Speaker B: So it's the, basically the same payout except for joint life. So it would cover his 10 year
[00:05:33] Speaker A: younger wife and then Midland national, if they have a birthday near, they could wait a few months and that would be what, 32, 33.
[00:05:40] Speaker B: It'd probably be a better payout.
[00:05:41] Speaker A: And yeah, and those are both really good companies. There's nuances in how all the products work. But so essentially what it looks like is he can slightly improve the payment but make it joint instead of single.
[00:05:54] Speaker B: Absolutely. Yeah. And I think, you know, for a lot of people, they are evaluating that. He did mention one of his biggest concerns was taxes. But what I said to him is this is qualified money. You're going to have to take RMDs off of it.
[00:06:05] Speaker A: You don't have to. Yeah, you don't have a choice.
[00:06:07] Speaker B: You don't have a choice. Yeah.
[00:06:08] Speaker A: Okay. So that, like, that might not be eye catching. Just going from single to joint, which is fine. Understand that there are a lot of the old contracts that I've seen. I've actually known people who replaced old annuities simply because they were set up as single and they couldn't be changed. A lot of these new products, you can choose single or joint. When you take the income, you're not locked into that.
[00:06:28] Speaker B: Yeah.
[00:06:28] Speaker A: But unfortunately seen it the other way, where a couple bought a joint life contract, deferred for 10 years. One of them unfortunately passed away in year three or four, and then they were locked into that joint payout when there was only one of them alive and could have received a whole lot more money.
[00:06:43] Speaker B: Yeah.
[00:06:43] Speaker A: So happens both ways. So I don't know, should we look at a single payout just to see what it would do for them?
[00:06:47] Speaker B: Yeah, just to give, you know, people an idea. Because again, we want to stress that there are options. Right. You are not stuck. And truthfully, a good advisor or agent should be telling you and evaluating your specific annuities throughout time to see if maybe there is a better option. Now, you don't want to move something again if it's not suitable. But that being said, client was disappointed in performance, didn't like the income it was going to generate. So it sounds like they started to poke around. We're more than happy to give a second opinion.
[00:07:14] Speaker A: Absolutely.
[00:07:15] Speaker B: To evaluate that. And I knew we'd be able to crush their payout if it was still about an income stream.
[00:07:21] Speaker A: Right. This is how the calculator works. You get your information saved there. If you want to look at single versus joint, there's reasons for married couples to do that. If there is a big age gap, some couples plan separately. In certain cases, maybe it's a second marriage later in life, whatever the issue is. Right.
[00:07:37] Speaker B: And you got to look at your health. Yeah. Right. Women are going to live longer than men. You know, that's what the tables are going to tell us. But yeah, everybody's case is going to be different.
[00:07:44] Speaker A: Yeah. And so all I got to do is switch this to single and it's going to keep the primary contact in their male, 70 years old. Right.
[00:07:52] Speaker B: And we're showing this as an immediate because he was looking at annuitization. And again, you do not have to annuitize annuities. You can still maintain control of those assets and have a lifetime income stream. Single or Joint.
[00:08:03] Speaker A: Yeah. So we're going to go apples to apples regardless of what he said. Well, okay. Well, I know I got to take the money anyway, but I don't need it right now. Let's set that out for two or three years. That payment's only going to go higher y and much higher than the old contract. So probably a good idea to switch it. Right.
[00:08:19] Speaker B: Well. And you just reran this. You're right.
[00:08:21] Speaker A: With a single payout and we got 41,000. Eight, 40,000 even. American general was probably where I go there, good, solid a company, AIG Group. But yeah. So again, that's a 33% increase over what he was going to get from the current contract. Yep. Okay.
[00:08:37] Speaker B: And you know, what's the trade off? You're going to have a new surrender period.
[00:08:40] Speaker A: Right.
[00:08:40] Speaker B: But for somebody, again, with qualified money, it's not really an issue. Right. Because you're not going to take in a lump sum and have a taxable event on all those qualified assets. Most people are going to take the RMD or want and need the income. So these are excellent options to maximize your income.
[00:08:55] Speaker A: Yeah. So what I see here is like you can either improve the payout on the current structure of the contract by 30, 40% or you can update it so that it covers both lives in a certain situation. Again, just the flexibility of changing plans, improving opportunities and all that stuff. That's where we are now. Where we didn't have that five years ago.
[00:09:15] Speaker B: Yeah. Brian just kind of hit the nail on the head again is you have options but don't be afraid to get a second opinion to ask questions. We both heard it a lot, you know, oh, my friend or even a family member sold me this annuity and you know, I thought it was a good deal.
[00:09:30] Speaker A: Yeah.
[00:09:31] Speaker B: Come to find out it wasn't. Maybe the best product or the best fit and they didn't even know what they got or why.
[00:09:36] Speaker A: Yep.
[00:09:37] Speaker B: That's where we can help guide.
[00:09:38] Speaker A: And if you have established relationships but you just want to verify it, you can get a hold of us. Right. And we'll help you. And we understand can't step on toes for long term good relationships with financial professionals, whether you're closely related to them or they're a very good friend of yours. In my case, some of my friends are every bit as much family as any of my family. No, we understand that, but we'll still, you know, give you a fair shake and if you don't want to talk to us, you can go evaluate the Options on annuitystraighttalk.com okay, check out the calculator.
[00:10:09] Speaker B: Right. It's available to run different scenarios, compare at least, see what's out there and available. And then we're happy to schedule a meeting with you to discuss and really get into detail if it makes sense for you. Again, we're using these case studies just to give you an idea that you are not stuck. You do have options. We're going to do it as ethically as possible, make sure it's suitable for you. And that's what you want?
[00:10:29] Speaker A: Yeah, we don't want to take take calls five years down the road like, hey, what, you didn't tell me something. No, we'll do that. We do the legwork, the due diligence now. So you understand every part of it?
[00:10:37] Speaker B: Absolutely.
[00:10:38] Speaker A: All right, guys. Well, this has been episode 223. Talk about surrendering contracts and improving positions, making changes to your plans and what's possible. Now, if you guys have a situation similar to this and you want a fair shake at it, just get us. Get a hold of us. Top right corner of any page on annuitystraighttalk.com schedule a call. One of us will talk to you. We're both available if you need two perspectives as well. Nate, thanks again for joining me in Tucson.
[00:11:02] Speaker B: It's been fun. Yeah.
[00:11:04] Speaker A: You guys have a great day. Thank you so much. And we'll see you next week on episode two, 24. All right, bye.
[00:11:08] Speaker B: See you guys.
