Belt & Suspenders Annuity Strategies: Shootin’ It Straight With Stan (TAM Classic)

I'm your host, Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Today's topic is a great one. I come from the deep south, where I grew up in Charlotte, North Carolina. Actually, the town—seriously, and I'm not kidding—look it up, it's called Stanley, North Carolina. Just like it sounds: S-T-A-N-L-E-Y. And I'm going to tell you right now, it was named after me. It should be, but it wasn't. But that's where I grew up—Stanley, North Carolina, Gaston County.

Belt and Suspenders Annuity Strategy

But this topic is a good one: Belt and Suspenders Annuity Strategies. And you might be thinking, "Wait a minute, Stan. What? Belt and suspenders?" Well, for all of you out there who remember suspenders, when I was in Wall Street and looking dapper, going to work in New York at Morgan Stanley, I had the suspenders. I was looking pretty suave. But I don't do that anymore.

We all have that uncle who shows up at the family reunion wearing a belt and suspenders. If you go to some of the large big-box retailers out there, or my favorite restaurant in the world, Waffle House—if you don’t know where that is, you haven’t driven on I-95 yet—and it is truly my favorite restaurant on the planet. To work at Waffle House and be a chef, you need to be a Mensa-level mental person. If you've ever heard the orders being yelled at by the waitresses and waiters to the cooks, there's not a person reading this that can do that unless you've been a Waffle House cook. And there's not one of you, because it's like a code. They’ll give seven straight orders, and they all get them right, and it comes out perfectly.

But the belt and suspenders strategy is like my Uncle Chester showing up to the Garrison family reunion—that's my mother's side of the family. We were Abernathy's and Garrison's. So, during the Abernathy-Garrison reunion, Uncle Chester shows up with a belt and suspenders, I guess just because he wants to make sure his pants don’t fall down. And thank God for that, because we don’t want to see that. You know what I’m saying? Nobody wants to see that.

But as a kid, I always thought, "That's kind of repetitive. Why does he need both? Why not just go with suspenders, or just wear a belt?" And on Wall Street, if someone showed up with a belt and suspenders, they would've been roasted. They would’ve been made fun of, paraded around, put on the trading floor desk, and yelled at.

This brings me to a true story. My first day on Wall Street—coming from no money, I didn't know anything. I was a basketball player in college, and boy, could I shoot the rock. But I showed up in a short-sleeved dress shirt, which is a misnomer. It doesn’t make sense. They roasted me and took me downstairs to Brooks Brothers, which I couldn’t afford, and my manager put it on his card, saying, "Please buy him some clothing because that’s ridiculous." But I didn’t know—my parents had bought me short-sleeved dress shirts.

How to Apply the Belt and Suspenders Strategy

So, the belt and suspenders annuity strategy hits home. Why? Let me explain. There are several ways to look at belt and suspenders annuity strategies. The first one is when people look at the state guaranty fund. If you want to check out the state guarantee fund, visit www.nolhga.com. You’ll see that for Fixed Annuities, each state has a specific rule in place to protect you and your money in case something happens to the carrier. However, we don’t recommend that carrier anyway, because we seriously consider the carriers' financials. But if you're saying, "I don’t care what you say, Stan. I want a belt and suspenders," then what we’ll do is look at the state guarantee fund. Let’s say you wanted to buy three annuities—we’d buy them under the state guaranty fund. That’s the belt and suspenders strategy.

Recently, I got a call where the person asked me about state guaranty funds. I said, "Yeah, it’s not FDIC. It’s not SIPC. It falls under those from a safety standpoint. But you should really be buying the Claims-Paying Ability of the annuity carrier—the life insurance company that issues the annuities." I honestly think that the true safety of the annuity industry is the industry itself policing itself. Companies buy other companies and make sure the golden goose of confidence stays intact because once it’s gone, it’s over. If my mom didn’t get her annuity payment one month, she’d be on national news saying, "I’m going to tell you something about that annuity company. They didn’t get my money." It would be game over.

But, despite my 30-plus years of experience advising people to focus on the strength of the carrier and not worry about the state guarantee fund, many of you are still thinking, "I’m going to do the belt and suspenders thing," and that’s okay. Recently, someone said they not only wanted a double-plus carrier, the top of the line, but also wanted to buy multiple annuities, different carriers, and under the state guaranty fund. That's the ultimate belt and suspenders strategy. It’s like getting the coverage of the state guaranty fund, which has never really been truly tested, by the way. That's a good thing.

Lifetime Income and Annuities

Now, let’s talk about belt and suspenders for lifetime income. Some people out there think, "I never bought an annuity because an annuity company might keep my money if I die." But that’s not true. Let me break it down for you: There are four types of annuities that provide lifetime income, plus annuities for principal protection, legacy, or long-term care. So, there are plenty of annuity types.

For lifetime income, a belt and suspenders strategy would involve options like life with cash refund, joint life with cash refund, life with installment refund, joint life with installment refund, or life with a long-term period certain. These options cover your life as long as you’re breathing. The joint-life option covers as long as one of you is breathing.

You can structure lifetime income so that 100% of any unused money goes to your beneficiaries, not a penny to the "evil" life insurance company that issued the annuity. So, the idea that the annuity company keeps the money when you die? That’s garbage.

Putting It All Together

Belt and suspenders means you’ve got triple coverage. You buy a good carrier, then buy under the state guaranty fund, and then use lifetime income options like cash refund, installment refund, or long-term period certain. That’s what I call "belt and suspenders with duct tape around the middle." It's a superty-duper belt and suspenders strategy.

I would love to see my Uncle Chester walk into the Abernathy-Garrison family reunion with a belt, suspenders, and duct tape around the belt. I would’ve said, "Chester, I love what you’re doing. I love the look." I might have even started a trend right there!

Conclusion

I’m making this point: You can protect yourself and your hard-earned money in many ways. You can buy from good companies, buy under the state guaranty fund rules, and use lifetime income strategies to ensure that your beneficiaries get any unused money.

If you live forever and reach 155, there won’t be anything left, but that’s okay. But you can structure it so that if something happens to the company, the state guaranty fund steps in. That’s the belt and suspenders strategy.

And I hope this brought back some fond memories of family reunions with that delicious food, like Aunt Martha's peach cobbler. By the way, my last meal will definitely include a peach cobbler. Not the crumbles—I'm talking the real deal with the hard bread stuff. Unbelievable.

I'll leave you with this: A peach cobbler story. Once, I went on a family trip in the mountains of North Carolina and came across a barbecue restaurant selling full pans of cobbler. Of course, I bought two full pans—blueberry and peach cobbler. We couldn’t finish it all, but we sure tried.

So, remember, belt and suspenders annuity strategies—just like a peach cobbler—you can have your cobbler and eat it, too!

My name is Stan The Annuity Man. Wasn’t that a fun ride? I’m America’s annuity agent, and yes, I’m licensed in all 50 states. Shooting It Straight With Stan. See you next week.