Election 2024: Are Annuities in the Political Crossfire?

Hi there, Stan The Annuity Man. America's annuity agent, licensed in all 50 states. Today's topic is the 2024 election. Are annuities in the political crossfire or crosshairs, however, you want to say? Without mentioning any candidate, political party, convention, ads, or anything else. Forget about that for a second. We need to focus on annuities, and I'm going to encourage you as we go down this election cycle and future election cycles. If it's red and if it's blue, it's actually both equal green, which is money. You have to think about your specific situation and prepare for either candidate to win. I know there are people on both sides of the table going, oh my God, if the other person wins, then the world is over. Notice that both sides are saying that. So, hopefully, neither of them is correct. We will survive as a country; we always do.

I am not a political person because my comment on all of this is that I need you to pause for a second before I get to the topic. Please think of the dumbest person you know on the planet, like the person that when you talk to them, you literally lose IQ as you're talking to them. They're dumber than a box of hair. Just think about that for a second. And there's that person right, there might be more than one. That person's vote just nullified yours. As much as you want to watch cable news and podcasts and all that stuff, you need to chill out, my friend. So, let's talk about annuities. Are they in the political crossfire for this election? Well, let's establish a fact. Every single one of you reading this with a Social Security number already owns an annuity.

Social Security

You're like, what? Yeah, it's called Social Security. It's the best inflation annuity on the planet. So, the question is, in the election of 2024, which candidate is going to mess with that? I'm going to tell you, neither one will mess with that. And the reason they're not going to mess with that is that people that get Social Security vote and they don't want to mess with those voters, and it's an easy target if one person actually on either side said, we really need to address this because it's a problem, and mathematically and financially it is, but they're not going to get anywhere close to that. Now, the Cost-Of-Living Adjustment increase you get with Social Security makes it the best inflation annuity on the planet. Once again, I don't think the candidates or either party will mess with that collar.

Certainly, the House and the Senate aren't because, again, people who get Social Security vote, and it was never put on the planet to be the primary income source for people, but it is, unfortunately, or fortunately, however, you want to look at that. But it's like that third; they call it the third rail. No one wants to touch the third rail. Social Security is like that golden goose no one wants to get close to. Eventually we'll have to address this. Somebody pragmatic will have to look at it. But from that standpoint, I do not think the annuity that you own, Social Security, will be touched or changed or anything like that. Now, for you rich, rich people out there, you evil rich people, and if you don't think you're evil rich, you might be depending on the definition, but the taxation of Social Security could be something that they could play around the edges.

Well, the evil rich have made all this money, and they shouldn't get all that stuff. I don't give tax advice because I'm not a CPA or a tax lawyer, and I think you should consult with those people from a taxation standpoint. If you can't find a very good Social Security expert, I recommend Larry Kotlikoff. He's been on my podcast Fun With Annuities and can help you with those decisions for Social Security. Now, the other things within the 2024 election that we're going to see, there's going to be some rate decreases. We don't know how many, but do those affect annuities? Yes, there's different types of annuities. There's not just one annuity. There are income annuities, there are annuities for principal protection, there are annuities for legacy, there are annuities for long-term care. That is principal protection, income for life, legacy, and long-term care; the acronym is PILL.

Whiz Banger

Obviously, lowering rates will affect some of the annuities differently than others. Just remember, with lifetime income annuities, the vast majority of the pricing, what they price the payments at, is based on your life expectancy or life expectancies at the time you take the payment. So, the 2024 election will be a whiz banger, as they always are. But from the standpoint of what you do with that, are annuities in the crosshair? In my opinion, the only way they are would be for interest rate movements to probably go lower. Just what everyone's saying. The annuity industry, and you got to remember, life insurance companies issue annuities. The life insurance lobby on the hill in D.C. is probably the most powerful lobby out there. They make the NRA look like pikers. They don't need the guns. I don't think any of the tax deferral nature of some of the Deferred Annuities; I don't think any of those rules within annuities are going to be affected at all.

Prepare for Both

If you go on the conspiracy theory of whether you're leaning left or leaning right or independent, whatever that is. The conspiracy theory is if everyone's saying, well, if this guy or girl wins, then all heck's going to break loose, and if this guy or girl wins, all heck's going to break loose. We're probably going to meet somewhere in the middle. But I would prepare for both. If you think that one's going to raise your taxes, you might look at annuities for tax deferral and make sure that you're controlling those taxes, and we will discuss that later. But I wanted to talk about the election and dampen down the emotion if possible. I know you're saying, Stan, what are you? A political pundit? What are you sappy here?

No, I'm not sappy. But I want you to think about this. If a Republican, a Democrat, and an independent were standing beside each other at a random place, and one or both of those people beside you, whichever party you're on, was attacked randomly. I know you. You would defend them just like 9/11. We all came together. I really wish that politics were about issues, but it's a little personal. That's kind of the way the game is played. But I want you to be pragmatic. I want you to think about it. If this person wins, I have to prepare for that. If this person wins, I have to prepare for that. And look at the annuities for what they are. Transfer of risk contracts, you're transferring the risk to solve for, primarily its lifetime income or principal protection. Again, the PILL acronym, legacy and long-term care.

Annuities Are Contracts

Those are the primary things. It's not a market growth product, even though you're going to hear that, they're just not. They're contracts, they're commodity products. They should be shopped with all carriers. You can visit The Annuity Man and run quotes 24/7/365 at your leisure.

Don't Get Caught Up in Emotion

You need to remember a couple more things about the election 2024: if annuities are in the cross hairs, crossfire, however you want to say that. I don't think payout rates are going to change as well. If they do, the actuarial tables will be on the margin, but just remember that you shop all carriers to get the highest contractual guarantee because they change like a gallon of milk. So, don't get caught up in the emotion. I need you to look at annuities for what they are: a contractually guaranteed transfer of risk products. A demographic tidal wave is going on out there, and you might be part of it. 13,000 people are turning age 65 every single day, and most of those people, and that might mean you, are looking for some of their portfolio to be contractually guaranteed.

Income Flooring

I'll leave you with this one idea. I think you should consider what I call income flooring. Creating a contractually guaranteed income floor can survive a Democrat, Republican, independent, or whoever Green party. It doesn't matter that money will hit your bank account every month. Now, what is that? That would be the annuity you already own, Social Security. If you have a pension and are fortunate enough to have one, that's part of the income floor. Required Minimum Distributions that you take from your IRA is a kind of a pseudo annuity because that's income coming whether you need it or not. Dividend stocks, rental property.

In other words, what's the amount of money you need every month without disrupting your growth investments or your non-annuity investments? That's what I call the income floor. For the 2024 election, regardless of who wins, I would focus on your income flooring strategy. Do you have enough income floor and go into it solving for that number, understanding that if there is continued inflation, then you just reverse engineer a quote to solve for that specific monthly number increase that you need.

Remember, inflation is, and pundits love to talk about it from a 30,000-foot view, but it's customizable to your specific situation. So, the election in 2024 is going to be a doozy. I am looking forward to seeing how it all plays out. I don't watch a lot of the pundits. I certainly get tired of the TV ads like you do, the radio ads, and all that stuff.

Just remember this, regardless of what side you're on. The candidate that you hate, I want you to think about that person. They're a pretty good person and fun to be around. Probably smart. You might not vote for them, but they have a family. They're trying to do good; they're Americans. Let's tamper down and dampen down the emotion and the anger because it doesn't do anybody any good. And when it comes to annuities, there's no emotion, there's no anger, there's none of that because these are contracts. They're policies issued by life insurance companies, so you're buying for the contractual guarantees, which pretty much eliminates emotion.

Hey, my name is Stan The Annuity Man. You've been reading the Stan The Annuity Man blog, which is growing by leaps and bounds. 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.