Annuity Cost Calculator: Decide How Much You Should Spend

So, how much should you spend on your annuity using an annuity calculator? How does that all work? Of course, I'm going to tell you, I'm Stan The Annuity Man, America's annuity agent, top agent in this beloved United States of America. Be a skeptic. I'm a skeptic when it comes to annuities. You better be a skeptic as well because you'll hear everything. I always say that if you call 10 agents, you'll probably hear what you want from nine of them. The 10th one is going to tell you the truth. And I'm not saying there are bad people in the industry. I'm just saying a lot of people sell sizzle. I sell the steak. What's the steak? The steak's the contractual guarantee. It's the will do, not might do. Now let's get to the books real quick. You can download all my annuity owner's manuals for free. No cost, no obligation. We just want you educated.

‌Now, do I want to work with you? Do I want to speak with you? Absolutely, if it gets to that point, but there's a lot of education, including these blogs, videos, my podcast, going to The Annuity Man, and getting our newsletter and books. After that, hopefully, we're going to talk.

‌By the way, at The Annuity Man, there are a myriad of calculators you can use: Immediate Annuity calculators, Deferred Income Annuity calculators, and Qualified Longevity Annuity Contract calculators. We'll personally run Income Rider quotes for you. You can also look at our live MYGA feed fixed rate. Which one of those do you need? You might want to know that. Here's how to figure that out.

‌Two Questions to Ask

‌There are two questions you need to ask and answer. Number one, what do you want the money to contractually do and when do you want those contractual guarantees to start? From those two answers, I can determine whether you need an annuity and, if so, what type. Then, from the type, we use the calculator specific to that annuity type to find the highest contractual guarantees, shopping for all carriers. The other thing that I use is PILL. P stands for principal protection. I stands for income for life. L stands for legacy, and the other L stands for long-term care and confinement care.

‌The acronym is PILL. So, you do not need an annuity if you don't need to contractually solve for one or more of those items in the PILL. Do not buy an annuity for market growth, please, I beg of you; even though most are sold as this pie in the sky market growth, you get your cake and eat it too. There is no cake you can get and eat it too. If it sounds too good to be true, it is every single time with annuities. Why? Because annuities are contracts. You can't polish it up. I'm going to say the world-famous saying that I read in some book somewhere, some motivational crazy man, and his comment was, "You can't polish your poop, but you can roll it on glitter." I think that's genius. Annuities, contracts, you can't polish them up. Remember that. That's going to stick with you.

‌How Much Should You Spend?

‌So, how much should you spend? How much should you put into annuities? Never, ever, ever ask that to anyone but me. Promise me that because they'll say, "Well, how much have you got? Oh, let's put the whole shooting match in there." No. One of the biggest mistakes I have seen is that people put too much money into an annuity. What you should do is try to put in as little amount as humanly possible to solve for the contractual guarantee. Let me give you some examples. I had a person call the other day, and they said, "Well, I got $420,000, and I want to put in an Immediate Annuity." And I went, "That's great, Chester, that's fantastic. However, tell me a little bit more. Tell me what you need."

He needed a specific amount of income to fill an income gap. I call this the income floor. The income floor is like Social Security. It's an annuity for all you haters out there, Social Security, your pension if so fortunate, dividend stocks, and things that produce income every single month. So, I said, "Chester, how much income do you really need in addition to what you already have?" We got the calculator out. He goes, "Well, I'm getting this and this and this." By the time we got down, he had a gap of $1,700 to $2,000. We just rounded it up. So, let's solve for $2,000 a month. Well, for him at his age, it didn't take the $420,000 that Chester wanted to put into an Immediate Annuity. Now understand the sales gods and the annuity industry's like, oh my gosh, you should have taken the $420k."

‌No, you use as little money as humanly possible. I'm serious about as little money as humanly possible. The bottom line with Chester is that we did not use the $420k, so he kept the other amount of that money powder dry. He was happier than a clam at a clam bake, and that's the way I look at it.

‌How much money do you need to spend? With income, I like reverse engineering the quote. I like saying, "Okay, how much money do you need? And let's contractually solve for that." Which leads to the next question, which are questions that are asked by me, which are pretty good questions, which is, "How about inflation, Stan The Annuity Man? What do I do then?"

‌Inflation

‌Well, same thing. If inflation hits in the future, we will solve for that specific dollar amount at that time. How much should I spend on that Immediate Annuity or Deferred Income Annuity? Let's solve for the situation, let's solve for that amount of money, and then when inflation hits, if inflation hits, it might not hit, but if it does, we solve for that inflation amount gap at that specific time. So, questions about how much money, how much should I spend on Indexed Annuities or Multi-Year Guarantee Annuities. Don't ask an Indexed Annuity salesman how much money you should put in an Indexed Annuity. They're ordering in the car, man. They're like, "Well, I got a Porsche, and I got the convertible." No, don't do that. What you should look at from the standpoint of Multi-Year Guarantee Annuities and Fixed Indexed Annuities, those are CD products.

Those are principal protection products. It's not how much I should spend on that annuity. With those products that are CD type products, how much money do I want to protect? How much of the principal do I want to protect of my portfolio? Then, that answer fills in the blank for Multi-Year Guarantee Annuities and Fixed Indexed Annuities. Here's the danger: if you don't have a specific amount of money you want to spend on income or principal protection, someone's going to sell you more than you need. With annuities, they're contracts. How are they going to fit into your portfolio? How will they be allocated proportionately to work with everything else? Certainly, you shouldn't have everything in annuities or anything else for that matter, but it can be a portion of your portfolio as transfer of risk contracts, which is what they are. You transfer the risk to the annuity company to do specific things, primarily to protect your principal and lifetime income.

‌One of the things that we like to do when we talk, and I hope you'll set an appointment with us. You can access our schedule there, and we'll speak one-on-one about your specific situation. One of the biggest things we do out here that sets us apart from everybody is that we're going to shoot it straight. Connect with us so we can go through the steps to figure out how much you should spend, and then use the annuity calculators to shop all carriers to find the highest contractual guarantee.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.