Annuity Strategies Across the Political Spectrum: Shootin’ It Straight With Stan

Welcome to Shootin' It Straight With Stan. I'm your host Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Today's topic is annuity strategies across the political spectrum. It's political silly season. It is actually always a political silly season. And as Michael Jordan always said, "Republicans and Democrats buy sneakers." Now, I'm not political at all. If you knew me, I am out. I'm just out because I always say, think of the dumbest person you know on the planet. Close your eyes and think of the person. You probably went to school with them or they might be a family member. Think of the dumbest person you know. Their vote just nullified yours. I mean, you vote, do what you do, do your own research, go with your gut, whatever floats your boat and makes your socks go up and down. But at the end of the finish line or the political finish line, whether it's the two-year term, the four-year term for president, whatever it is, and whatever party you're affiliated with or voting for, it doesn't matter.

‌We have to prepare for either party leadership at the top, either party leadership in the Congress, senate, and House, and either party leadership at the state and local levels. You have to prepare. You can be gloom and doom if you want. And I love to hear the pundits say, "Well, if X wins, it's the end of the world." And then the other channel goes, "Well, if the other person wins, it's the end of the world." Both candidates are an existential threat, depending on who you're listening to. And the whole thing is one big confirmation bias in my opinion. So, what I want you to do is be pragmatic and put the blinders on, the financial blinders on and prepare for both.

‌And then you say, "Wait a minute Stan, I'm not going to do that because I hate that other side." Whatever, whoever. Just remember this. Really rich people, wealthy people give to both sides of the aisle, both parties, because they're hedging their bets and making money moves regardless. So, you need to do the same. Now, annuity strategies across the political spectrum. I won't go into detail about whether this party wins or not, but let's just look at things that could happen.  

‌Lifetime Income Products

‌Life insurance companies issue annuities. There are four lifetime income products: Single Premium Immediate Annuities, Deferred Income Annuities, Qualified Longevity Annuity Contracts and Income Riders. Those are primarily based on your life expectancy or life expectancies that are set up jointly at the time you take the payment. The older you are, the higher the payment, the younger you are when you start the lower the payment's, pretty basic, pretty simple. Interest rates play a secondary role.

‌People get caught up incorrectly on the whole interest rate conundrum, and they think it drives lifetime income. No, your life expectancy drives lifetime income. And what I would tell you to do is go to The Annuity Man. We have the best quotes, 24/7/365. We show kind of a spreadsheet of the different types of quotes and how they are structured. You can structure them lifetime income, period certain, or you can make sure that 100 percent of any unused money goes to your family, not the evil annuity company.

‌Commodity Products

‌If you think one party will lower or raise rates, this might be time to lock something you feel is an excellent contractual guarantee. And by the way, the bell doesn't ring at the top or the bottom. You're not going to be Gordon Annuity Gekko out there and say, "Well, I can time it." No, you can't player. Nobody can time it. Life insurance companies have the big buildings for a reason. These are commodity products. I always tell people annuities are commodity products, meaning that if XYZ company is selling a lifetime income immediate annuity, and they get enough people that are 75 years old to buy it, then they're going to lower the guarantee for the 75-year-olds that want to buy it after that until they have to fill that gap.

‌They're filling tranches of age ranges. It's the same with the MYGA type products, which is the annuity industry version of a CD. When they issue or announce a MYGA five-year at X percentage, they have a bogey amount. In other words, they have a goal that if they reach that goal of a premium raise, they're going to lower the guarantee because they're going to back up that guarantee. They know they can back it up when they raise that specific amount of money. It's very, very simple. It's a capacity issue. That's the reason if anyone says they have the best annuity, they don't. These are commodity products. You shop all carriers for the highest contractual guarantee for your specific situation. So, if you think rates are going to go down if a party wins or if the basic economics, we have 30 plus trillion in debt and you have to service that debt, then it might be time to look at locking in.

‌Deferring Taxes

‌Now, if you think one of the parties is going to raise taxes on you, the evil rich, and by the way, both parties do that, so let's not point fingers but let's just say you think taxes are going to go up. How do I get around that Stan The Annuity Man? Well, you can't get around the IRS, but you can postpone your interaction with the IRS. And what I mean by that is that you can buy Deferred Annuities that defer any taxes taken out of them.

‌Now, annuities can be purchased in Roth IRAs, traditional IRAs, some 401(k)s, and non-IRA, non-qualified accounts. And what I'm talking about when I say defer non-qualified accounts is you can do that if you think taxes will go up. Let me give you an example.  

‌Let's just say you're a big-time CD buyer or bond buyer, and that's fine; that's great. I'm not talking about muni bonds; I'm talking about corporates, things that are taxable on an annual basis on the coupon. You could buy MYGAs instead that have a guaranteed interest rate of which you could defer in a non-IRA, non-qualified account. You could just defer, defer, defer, defer, and it grows and compounds deferred. And your political strategy would be to wait until your preferred party is in place, and then they lower the taxes, and then you take the money out at that point in time. But regardless of what party wins, we still have a 30-plus trillion debt. We still have some serious issues from a financial standpoint and economic standpoint that are going to have to be addressed. And for all of you baby boomers, seniors, and people who are part of the 15,000 people turning 65 daily, you have to make some moves.

‌It's Your Money

‌You have to make some contractual moves for income. In addition to the annuity, you already own Social Security. And if you have a pension, that's the second annuity that you own. You have to make some moves and look at contractual guarantees. Now remember that annuities solve for four primary things, principal protection, income for life, legacy, and long-term care. And the way to find out if you even need more annuities than your Social Security or pension is to ask two questions. What do you want the money to contractually do? And when do you want those contractual guarantees to start? My advice to all of us during the political silly season that's ongoing every two and four years is to do our part, participate, vote. But don't take this thing too seriously, even though I know there are some of you out there saying, "Stan, you're missing it. This is serious."

It might be, it might be. But what are we going to do? You have to make decisions with your money and with annuities; these are contractually guaranteed decisions. Do you need more contractually guaranteed lifetime income for you? Do you need to set it up joint with your spouse? Do you need to make sure that 100% of the money goes to your beneficiaries if something happens to you or your spouse? Do you need to just protect the principal and defer taxes and let it grow and compound? Do you need to lock things in before you think interest rates will decrease? Or if you think they're going to go up, you're going to wait. But at the end of the finish line, politically where we're headed, you will have to make some moves. And what I want you to do is just pragmatically think not about the anger toward whatever client you don't like.

‌And if you're like me, you're looking at some of the candidates from the Congressional side down and going, "Really? Is that the best we have?" And I think the ones who are really, really qualified people, number one, don't want to deal with politicians and number two, don't want to take the pay cut. A lot of it is that a different animal or character goes into politics.  

‌Income Floor

‌Annuities can help you through this. If you're at the finish line of retirement, thinking about retirement, and planning for retirement, then you're planning on chapter two of your life. I don't like using the word retirement, but everyone does, so what the heck. But chapter two is about putting those contractual guarantees in place, especially what I call the income floor. The income floor is Social Security, a pension if you have one, dividend stocks, and any income-producing properties that you might have, and then filling that gap with annuities for a lifetime income.

‌The way to do inflation using annuities is by solving for the specific gap you need at the specific time you need it. You can go to The Annuity Man, and run what I call reverse engineered quote, meaning that, hey, Stan, we need 475 more dollars a month. You can run the quote, quoting all carriers to find out which carrier will back up that $475 using the least amount of money. I always tell people to use the least amount of money with annuities to solve the contractual goal. But those are some strategies. Those are the primary strategies, regardless of who wins the White House, Congress, and state-level periods. You either think you need to defer taxes, or you think you need to lock guarantees in because interest rates are going down, or you need to hold, hold, hold, as they said in Braveheart, because you think rates are either going up, et cetera.

‌But just remember annuities, and there are many types. They're not market products; they're not growth products. They're contractually guaranteed transfer of risk products that solve for four primary things: principal protection, income for life, legacy, and long-term care.

That's Stan The Annuity Man's political take on things. Life would be a lot better if I did run for office, but I don't think that's going to happen because the lovely Christine, wife of 36 years, I don't think would go on that ride with me and she'd have to go on the ride. Know what I'm saying? My name is Stan The Annuity Man, that's Shootin' It Straight With Stan. I will see you next time.

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.