Episode Transcript
[00:00:00] Hello and welcome everybody to the Annuity Straight Talk podcast. Episode number 218. My name is Brian Andersen, founder and creator of Annuitiestraighttalk.com the best source for retirement planning information online. I'm traveling because I wanted to get out of the winter weather and do some mountain biking in Southern Arizona. Here I am in Tucson. If you're in the neighborhood or like a vacation in the desert like I do, give me a call. Breakfast, lunch or dinner is on me, schedule permitting of course. Had a couple great episodes with a lot of really good feedback from people. It's worth looking at if you haven't seen it yet. My buddy Dave, a heck of a guy, helped me out the last couple of weeks. Helped you out really? He gave me some content. But man, it was for your guys benefit and after that kind of thought about some changes that have come in the market and figured this would be a good time to do it when I'm back in what I've now considered my favorites city in the US I'm not really a city guy as you guys know, but we're going to talk about income annuities in the midst of mayhem and everything going on in the world in the markets and all that stuff. So here I'm going to do. I got a little glare out here. I'm a one man show as far as the production part of it and I could use a roadie. Anybody want to be an AST roadie, Set up the studio, fix my lighting because I can't seem to do it in these new areas. You know, there's a lot of glare and it changes. But I like changing my scenery and I think I'm going to be maybe a different spot next week. So anyway, here we go. Interest rates have held steady in the past year or so. Now we built a couple of income calculators. We've had hundreds of people use them. You get a free income quote, no obligation. We're not bugging anybody. And we've had, you know, you can just kind of come in and see where the market's at for whatever your parameters are. A SP is and guaranteed lifetime withdrawal benefits. Top of the market stuff run straight from databases. The GLWBs on the fixed index annuities, those are ones I hand chose to be the companies that I would recommend. Not always your highest, but it's going to be very close and it's your highest quality. You want to go get a minus stuff that you got to worry about. I mean we had one of those just A couple years ago or last year, I was like, oh, I bought this GLWB from a company that just got banned from doing business. What should I do? It's like, well, don't deal with crappy companies, begin with and avoid the whole thing altogether. So I knew at the time the biggest challenge would be to keep the rates updated because they can change very rapidly. And so with one of the calculators in the glwbs, we actually built our own little database with all the information in it. We have to update that when the rates change.
[00:02:26] Fortunately, we haven't had to do that until recently and that's not always going to be the case, but it was kind of nice in the beginning. Again, we only use the highest rated companies.
[00:02:36] Might be able to find a better deal if you go with some company with a substandard financial rating. But I care nearly as much about your money as you do. I'm only going to recommend something that lets us all sleep at night because I don't want to stress about it either. It's my job now. This podcast should be seen as good news to everyone interested in the retirement market. Interest rates are not down like everybody expected them to be and have risen to the point where many companies are confident offering long term guarantees. Considering the uncertainty surrounding the economy and geopolitics, this is a rare bit of positivity. With everything on the table right now, there has never been a better opportunity to secure your future. So going back to Dave last week, he bought this thing a couple years ago. Rates are right back about where he bought them. Holy cow. Good deals and we can prove it's better for your portfolio. So typically the top spots in the income quote list are held by A minus or B plus companies. We got to go down a few spots to find a solid company. The exception to that has been nationwide the been the top A plus company on the list and often beating out some of the other lower rated carriers.
[00:03:36] Some of the companies that I like to use, that I like to work with have been down the list of ways and were only relevant in a few specific scenarios, maybe specific deferral period or anything like that. Now that all changed a few weeks ago when I saw something that was like really stood out as far as what I understand of the annuity business. One of my favorite companies to use came out with a new option seemingly from out of nowhere and I'm going to explain that. So first of all, interest rates are a general factor for pricing annuity contracts, but there are other things that affect the deal as well. Companies have to make a profit. And not every company prices income products aggressively. You may see payouts from a company change at a time when market rates are not really moving. In those cases, the company is most likely putting their focus on a different type of product. Now, in terms of nationwide, a few years ago they had some of the very top myga rates, very competitive, put a lot of people into nationwide mygas, but they weren't really seriously competitive in their income market. They were in there somewhere, but they weren't top of the top. Now their mygas have been pulled back and they decided to price them a little bit lower. They're not interested in doing that kind of business because they did a bunch of it. They're doing a different kind of business. That's where they're putting their profitability is going behind their income products right now. So they've got one product that's really good for near term immediate income within a year or two or three, and they've got another one that's really good for those six to ten year deferral periods for younger people looking to, you know, defer it longer, get really ahead of the game in retirement. A few weeks ago I was running a quote for someone. When the list came out, I was shocked. Massmutual Ascend, formerly Great American, one of my favorite companies, One of the first companies I ever wrote index annuities with. They were at the very top of the list, above even the garbage. For some reason the company had decided to make a play for the income business and they found a way to beat everyone else. They price their products just right. So you guys might remember that this is one of my companies that has one of my favorite index annuities for growth.
[00:05:29] And I did a podcast on that sometime in the past year. People ask me what's the best ones for growth. This is a great company to deal with. Solid product stays competitive. They don't dink with the rates a bunch. They even have raised rates in the contract. Really good and great experiences. That what's very interesting to me, I'm going to like put my foot in my mouth on this a little bit is that the new income deal is an additional rider to the contract that I really liked for growth in the past. So yes, one of the best index annuities for growth now has an option for a very competitive income rider as well. Again, the base annuity is a contract value and whatever it does to grow fixed or indexed, whatever the rider is an additional thing you put on it for income that basically says no matter what happens with all that stuff in the account, we're guaranteeing this income for the rest of your life. I've said in the past that income products are not built to grow. Well, growth products don't produce a ton of income. I was proven wrong this time because they put two of the best things together in one single contract, which is cool. Now I was going to do an episode on just that because it was really big news. A double A plus company with a competitive income deal. Now I don't care if a couple of the lower rated companies beat it. It's like, man, that's worth it for that kind of security.
[00:06:39] Now they've always had an income product. I think one of the first contracts, the first contract I sold theirs was a guaranteed income contract where it was, but that was again, we're talking like 13, 14 years ago. Rarely did it ever hit the top of the list. And it's not that they couldn't do it, it's just their interest was elsewhere until they decided to put the profitability behind the income deal. Added to the fact that it's in addition to one of the best growth index annuities. This is a high quality option for anybody wanting guaranteed income. Often you're going to see the top quote separated by a very small amount. So it's going to be appealing to those who want the highest levels of safety. Oh, I'll give up just a little bit. Or it costs $700 more to get the same amount of income. Or my income's adjusted by $32 a month, but I get double A plus instead of a or A minus. Perfect. Now this comes on a seven year surrender schedule, so it enhances liquidity options if plans change and the income rider is not used.
[00:07:30] You shouldn't get into one of these things if you don't think you'll use it. But things in life happen, right? Premature death, one or the other.
[00:07:37] Something goes on and says, you know what, hey, maybe we don't need that. You've had good growth in it. You would have been paying a fee, but you're going to have a better option otherwise. So it's got a good backstop on it because of the growth and the quality of that contract that I have a ton of experience with. I had one call last week from someone, hey, someone showed us this contract. This is what we're going to do. What can we expect? And I said, go for it. Great deal. I would sell that to you too, right? I'm not just to sell everybody, I'm trying to help everybody. Now this didn't last so long as being the biggest news in the income space. And the rest of it is both good and not so good. Last week or a week and a half ago, Midland national and North American, both A plus. I like both of them. Salmons Group, they announced a rate increase that would make their respective products more competitive as well. For the past year these companies have been viable for long deferral periods. But this gives them an edge in other time periods as well. North American's been one where it was really good for, you know, 10 plus years of deferral. Midland, six to 10 years is where it got really competitive. And some other little details of the contract that are specific to the situation. I don't need to go into them now. But again we really shop and make sure we find the best deal for you.
[00:08:43] And I had a guy who wanted to talk about it for two weeks for crying out loud. Maybe some point you guys will believe what I say. Now unfortunately it's not so bad. But some of the lower carriers are equally as bold with the long term guarantees and have increased their payouts as well. You will still have to make a choice, but to me it's not that difficult when they're all aggressive. Go with the safest you can get. That's what we do here. These are not the best they've ever been, but it's pretty darn close. Consider the message shared by Dave in the past couple of weeks. He had he waited to buy the annuity. It would have cost more, but his market portfolio provided the growth to buy the annuity at a higher price. And I'm not saying everybody just sitting around waiting to buy either. There's some people that are just looking at this wondering if they're getting a good deal. They don't have to be two years into a retirement plan like Dave is.
[00:09:31] They could be retiring in two years or have been retired for five years. Whatever the case may be, whether he bought it then or bought it now, it was a wash. But he would have had to spend more money now to equal the payout even though the rates are the same. So he got his growth one way or the other. Either a growing income payout or growth in the market you choose. Don't lament it if you bought it in the last two or three years and if you hadn't, there's still really good deals available. So we have four A plus or better companies on my calculator that Will pay extremely competitive guaranteed lifetime income. Go check it out and run some numbers on it. Now, this is not complete without mentioning single premium immediate annuities SPIAs, because those are equally as viable depending on the situation. Now, SPIAs are continually marked to the market rate, so the payouts fluctuate daily and are still very solid. If everything else is up, those are going to be up as well. They should be in the conversation because again, to find the best deals, you have to look at all product types, not just the index annuity list and not just the spia list.
[00:10:29] Had a guy come in last week. I want a SPIA. The FIAs pay 5% more immediate income in that case. It's not always the case. It is critical to evaluate spia payments as well to make sure you don't leave a big payout on the table. As a reminder, SPIAs are most competitive for immediate income and tend to not offer as high a payouts for deferral polls longer than one year. But you should still look at it anyway because it's not set in stone. You got to deal with someone who knows markets well, both markets well. And unfortunately, a lot of the guys out there are showing you one or the other. I think we're sitting in a place where interest rates will stay up and the market faces some serious challenges. You might not be missing out on an annuity payout, but you might have less money to buy one in the near future. I think we got some headwinds for sure. Iran conflict was initial time period 48 hours. They already extended that to weeks, then maybe months. You get different reports of what's actually going on. Is it going on? Sorry, but it doesn't bode well for the price of oil. And it doesn't take a genius to guess what that will do to the stock market and inflation. So could we have rising rates and a falling market? Who knows? The idea is to add an annuity and lock up some security for the future. Leave some assets in the market just in case, hedge your bets, because that is the foundation of a good investment plan, is to have a backup. And when you're in retirement, guaranteed income is the best backup you can get. So if you want top rates from quality companies, book a call. I will show you every side of the deal. And before I leave, I want to show you how to get to the calculators. Anybody watching this? Top button. So you got schedule call to the right. If you want to talk to me or Nate, get on the calendar. And then calculators roll over Fi income quote, Speed income quote. Check them both. So IRA or non Ira. This is the last one I did. I'm not going to go to the next step because I think the guy's name is in there. It's going to save on your computer just like it saves on mine.
[00:12:17] Next step, name your email. The email just books in our system so we can see it. If you make an appointment, we can go look and see where your starting point is and help you figure it out. And then go back up to the top and do a spia quote, right? See which one gives you the higher payout.
[00:12:32] Then call us and we'll help you figure it out. I want to say thank you guys for joining us. There is good news and a silver lining in the markets right now. It's guaranteed income and interest rates. Don't worry about it. If it's time to take some chips off the table, this is a good time to do it. I appreciate you guys joining me. For episode 218, book a call at the top right corner of annuitystraighttalk.com like subscribe or comment on any of your favorite podcast platforms or on YouTube. I'm still in Tucson for a while. I said three weeks, maybe four. Last time I stayed two, three months. We'll see what happens. But I'm here. Get a hold of me working a full schedule. You guys have a great day. See you next week for episode 219. All right, bye.
