Episode Transcript
[00:00:01] Hello and welcome everybody to the Annuity Straight Talk podcast, episode number 241.
[00:00:07] My name is Brian Anderson, founder and creator of AnnuityStraightTalk.com helping you with all your retirement questions. My years of research going on, 24, I think, documented on this site. Everything that's relevant today. Do updates where we can. If you see anything that doesn't seem right for this time period, go ahead and tell me. Be kind of cool to update it and talk about how things have changed. Kind of one of the parts of what I'm going to talk about today is why it helps to, you know, have people who have seen different market conditions and scenarios. So this is episode 241, hard to find good annuity advice. And I've got a specific example of that. And there it's kind of a good, better, best mentality. Okay. Buying an annuity is good. There's sometimes a better way and then there's definitely the best way.
[00:00:54] Best way means the most efficient. Okay, we'll get to that in a little bit. But please like, like subscribe or comment on any of your favorite podcast platforms or on YouTube. If you want to schedule a call with me, hit the top right corner of any page on annuitystraight talk.com and Schedule A call. Okay? Competition in this market is at an all time high. There are really only a handful of people, many of those guys reputable, you know, that have been around for a long, long time. I'm almost 20 years online and, you know, almost 24 in the business. There were a few people that, you know, I know of a few guys that had started well before that. And this is really the beginning stages of the Internet becoming a valuable tool. Now you can't get away from it, right?
[00:01:42] But I knew like when I started I had to, like, I had to come up with my own ideas. I learned from people and had to kind of find my own voice.
[00:01:50] It forced me to create unique strategies that were different. It was not my goal to find everyone, rather to present ideas for those who are looking for alternatives and something creative. So too much of what you see today is produced by people who have only been in the business for a few years, four or five years, six years, seven years, whatever it is.
[00:02:12] So product sales with a personal spin. Talking mostly about the emotional reasons for using annuities. Those are all important because security and peace of mind is important, a lot of them. But you'll get more of that if you go deeper and find technical, technical reasons for using the annuities as well, and I can tell you right now, which happens, it's easy. And any of you guys could do it. You could probably ask AI to scrape the Internet and build you a cool annuity website. And I think a lot of guys are kind of doing that or really just piggybacking off of like what some of us have created over years and years and years. So one thing I pride myself in is that is something. Each one of these newsletters was written by me and it has been going that way since 2008. So because I had been, I started the podcast in early 2021, but I had been publishing research and information for 15 years before. That is not a moonlighting, moonlighting venture for me. It's what I do and have done since I graduated from college.
[00:03:16] Aside from six, seven months trying something else, but close enough, right? So people of course have helped me, but I had to do my own research and bring individual theories to this space on my own. Okay. Because I post these videos to YouTube, I also see a lot of other people who post videos pop up my feed, hey, check this out.
[00:03:35] Once in a while I take a look to the video to hear the message, see if I can learn anything or if they've got, you know, I just kind of want to see what they're talking about.
[00:03:43] Most of the time it's kind of a sales pitch and there's a little creativity, but there's, you know, nothing good or bad about it. It's just kind of ho hum. It's like, oh, here, here's an annuity.
[00:03:51] It's kind of same thing. It was like you could probably create a podcast just reading product brochures and it would take off. I don't know. So I saw one last week that reminded me of a case study that I did back in May.
[00:04:03] It had very similar, if not nearly identical inputs, the one I released. Which means the situation was much like the one I presented for my new clients and, and posted on the podcast. Cause it got me to feature the software that we're creating that's been incredibly helpful for us. You know, creating these optimal plans and make sure we're very efficient with this stuff. So I know it hadn't been copied because the guy proposed a strategy that I mentioned at the end of that podcast saying, this is what most other guys are going to do.
[00:04:32] This is what sales training teaches you. This is what brokerage companies teach you. This is what they say, okay, now you can go back to that one. And if you didn't see it, it's a really cool case study about using the software, the calculator that we're creating to solve the Social Security problem first. And. And that's kind of always been. My goal is like, no matter what happens, if you call me, I want to be able to help you with something. Okay.
[00:04:56] And in this one, we had to sort out a lot of things and I figured, let's run their Social Security to find an optimal time to do this, you know, to collect their Social Security. So I spent a lot of time working on the case.
[00:05:08] Not consistently, but I met this couple more than three years ago. So it's. We didn't work on it the whole time, but we talked, you know, once or twice a year between then and now. Every time we talked, we got closer, they got closer to retirement. It became more important to them.
[00:05:24] And this is the year where it said, all right, it's time to make it happen. Rates are really good. We found a great solution. It was very efficient.
[00:05:30] So we had a lot of different things to analyze and work through. And the new software was very helpful in helping look at all the different components of the strategy.
[00:05:39] So first we just started by determining when it was most advantageous to take Social Security.
[00:05:45] It was an interesting new take that I hadn't discovered. I think one of the reasons I wanted to put it on the podcast, because I was kind of scratching my head about how can we make this optimal form. I ran it into the calculator and I thought, oh my goodness. I mean, I learned something by what, you know, Case and I have been creating.
[00:06:01] So shout out to Case, Always the Canadian, American, Mexican guy. He's the one doing all the cool stuff, so.
[00:06:09] But yeah, we could look at different claiming strategies to see which one took the most stress from the remaining portfolio based on how the market performance affects the portfolio. That allowed us to find a long term income gap and a need for short term cash to bridge the gap between retirement and when Social Security starts.
[00:06:26] So my clients ended up buying an annuity with 25% of their portfolio and setting aside enough cash to handle the three year income bridge until Social Security and the annuity start paying. I'm not going to rehash the whole thing because it's out there and available. It's a really cool example of how to create the largest remainder portfolio. And the more money you have, the better it is everywhere. Right?
[00:06:48] So they ended up using about 30 to 40% of their portfolio to do the whole thing, with the additional cash on the side, fully liquid and giving them plenty of flexibility. So here's an example. They set aside cash to handle a two or three year income bridge. What if there's a big correction in the market and they decide to take some of that money and buy into the market assets very efficiently, you know, get a good 20, 30% bounce on that rebound. That's how you stay flexible. By flexibility is one of the most important keys of long term portfolio performance.
[00:07:21] So now it's up to them, but they have the the option and that's very important. It's a plan that works flawlessly and it's backed up by a sophisticated calculator that considers high and low market scenarios from the past as well as current scenarios. We can even do hypotheticals based on whatever you think might happen. Okay, so everybody that's followed along for a while knows that I'm not a proponent of taking Social Security or delaying Social Security Security. But in reality, if it's a year or two, it doesn't make a whole lot of difference.
[00:07:51] And when, when we have market driven data that gives us another angle. I'm not afraid to admit that I was wrong. I never thought that them delaying Social Security for a few years would make give them such an advantage in retirement in terms of portfolio performance. And at the end of that, I wanted to show it everyone what the typical agents do. They just assume taking Social Security when it's available, buying an income annuity to fill the gap at that time.
[00:08:16] That's what agents are trained to do. If you let someone else tell you how to run the business. One of the reasons I went out on my own is because I didn't like what I was being told told to do. And it didn't work in every scenario.
[00:08:27] Okay, but I ran that scenario as well. Hey, what if they just take Social Security in two years and then fill their whole income gap? They had the money to do it.
[00:08:37] But that scenario produced dramatically lower results. In fact, the worst result of any scenario that I ran, I think it was like, I'll go back and look at it as well. I think it was even worse than just keeping all the assets in the market or close.
[00:08:50] So this has implications for every other challenge you're gonna see in retirement. It's critical to get it right. The more money you have, the easier it is to deal with the unexpected. So this is exactly what I saw in the other podcast. Income needed in retirement minus Social Security right away, sell an annuity for nearly 70% of the couple's assets to make up the difference. Now, he made a nice pitch for the annuity, but all in all, nothing but a sales pitch. And that's reminds me of what I see. It's like you got to find the income gap. You have no idea how many years I listen. Find the income gap, sell the annuity. That's all you got to do, right?
[00:09:24] Got to be more to it.
[00:09:26] Okay. I don't know if they bought the annuity. Maybe they're happy with it. It's going to work out, so it's probably fine.
[00:09:33] But my guess, just based on the parameters, because this is a nearly identical case to the one that I ran, they probably left a few hundred thousand dollars on the table. There are a lot of people out there that can follow the sales literature to pitch a product. They can go to a weekend seminar and get ideas for simple sales solutions.
[00:09:50] Not many of them are strategists. That's the difference between sales pitch and advice. Now, the biggest difference between the two couples, these guys, literally, they had, you know, a couple years to retirement. They had the same income goal.
[00:10:05] Everything okay? My clients had more money to deal with.
[00:10:10] Makes it all the more important to make sure the plan is as efficient as possible. My clients could have easily purchased a larger annuity, but it wasn't optimal. And I proved that that would only taken up to like 45% of their assets, whereas the other couple spent 70% of their assets on it. It has implications on every other concern in retirement.
[00:10:29] Inflation, healthcare, unexpected expenses.
[00:10:33] I want to create good working relationships with people who trust me. For the long term.
[00:10:39] I'm grateful to have clients who are as patient as me, because if I can't figure it out right away, I hope you're not in a hurry. I will figure out the best way to do it. So we always solve the problem in the end. If you're the type of person who doesn't mind putting some extra thought into the challenges ahead and you want an optimal plan, maybe you're in the right place. It's up to you. Jump on my calendar, and I promise you, you'll never get a sales pitch. Do everything I can to help you out, no matter what it means for me. And a lot of people come in, help them make sense of two or three things. Comes to the annuity, they put it off, they don't do it, anything like that. It's okay.
[00:11:13] I know the averages work out and I'll win in the end because I've been here long enough and I've been very patient in my career.
[00:11:19] So, guys, this has been episode 241 hard to find good annuity advice. It's just too easy to become an agent, too easy to build a page.
[00:11:28] People just hand you up template. Here it is. I don't know. I had to figure it out. Made a lot of mistakes, you know, but I tried and I always put it put out the best thing I could get anyway. So like subscribe or comment on any of your favorite podcast platforms or on YouTube. I'm in the office, I'm available. Be happy to talk to you and help you sort out some problems. Or if you want me to look over what somebody else has pitched, we can run it through the calculator and see if it's optimal. And there's a lot of times people come and it's like, you know what? That's a good idea. I think you're right.
[00:11:54] So I'm not going to just beat up what anybody else says. If you've got a good advisor, I will pat him on the back and I will tell you to go forward with confidence. So I'm here. You can call me. Thanks for stopping by. I'll be back next week for episode 242. Have a great day, guys. Bye.
