Retirement Tips: What Are the Four Best Annuity Types for Retirement?

Hi. Stan The Annuity Man, America's annuity agent, licensed in all 50 states. The question is, what are the four best annuities for retirement? We will go over annuities and which types I think are the best for retirement. That doesn't mean you need an annuity, but these are the ones that I feel are pro-customer if used correctly. Before we do that, I encourage you to subscribe to my YouTube channel because we're just starting. I'm putting out videos weekly, Monday through Friday. I encourage you to go to The Annuity Man and download my books. Six owner's manuals. You can download them for free and under no obligation. I also encourage you to schedule a call with us if you're considering an annuity strategy or someone's pitched you an annuity, and you might want a little more clarification. I will give you the brutal facts of how these things work. Let's get started.

‌Multi-Year Guarantee Annuities

‌The first type of annuity that is really good for retirement is called a Multi-Year Guarantee Annuity. This is for the person who says, "I don't want any market volatility. I don't want to pay any fees. I want it to be simple. I want to know what the interest rate is going to be. And I want to control the term." In other words, "How long I lock it in." That's a Multi-Year Guarantee Annuity. What is that? It's a Fixed Rate Annuity. It's the annuity industry version of a CD. Neither is better than the other. CDs are good in the short term, like from a year or less, up to about a two-year time period.

‌A MYGA, Multi-Year Guarantee Annuity, typically has a higher contractual guarantee of three years in and out, so they work well in conjunction with each other. You can ladder CDs and MYGAs at the same time. But, for the retirement person, the retiree, pre-retiree, or if you're already retired and you don't want to lose a penny, you don't want to pay any fees, you really don't want to keep up with it, you just want to know exactly what you're going to get, an annual interest rate, Multi-Year Guarantee Annuity.

‌Now, at The Annuity Man, I'd encourage you to go there. We have a live feed, a proprietary live feed, of the best-fixed rates in the country. A MYGA, Multi-Year Guarantee Annuity, is a Fixed Rate Annuity, and a life Insurance company issues it, and it's approved at the state level. When you go to my site, you're going to pull up the MYGA feed and you're going to filter the state of residence and the duration. Let's just say you're from Oregon. You're going to put Oregon, and I'm interested in a five-year. You'll hit five years, hit go, and it'll list the top carriers that have contractual guarantees for five years for that multi-year guarantee annuity. You can do three years, four years, five years, two years, 10 years, whatever. The point is these are Fixed-Rate Annuities. They protect the principal. There's no market attachment. There's no moving parts. They're very simple, easy to understand, and very good for return.

‌The other thing I forgot to tell you about Multi-Year Guarantee Annuities. Some of the carriers that offer them allow you to peel off that interest every month, which hits your bank account. It also can be an income stream as well. Not all of them do that, but that's the reason you and my team need to talk so we can filter down to exactly what you're trying to achieve and what you're looking for.

‌Index Annuities With an Income Rider

‌The second type of annuity that is good for retirement is an Index Annuity with an Income Rider. You're like, "Did you really say that, Stan?" Yeah, but Index Annuities, in my world, in my terms, the way that I look at them, Index Annuities are CD products. They were developed in 1995 to compete with CD returns. That's exactly what they do. But I think for retirees, you might be looking for income in the future. The way that we like to use Index Annuities a lot of the time is as a delivery system for that income rider guarantee. If you come to me and say, "You know, I think I need income in four, three, seven, or 10 years, but I want to control the money. I'm not sure I'm going to turn on the income stream. I want to control the money. If I need to pivot and say, "Stan, I don't want to do that anymore, just send me the money." Index Annuities with the Income Riders are pro-retirement, pro-retiree. Because, you have your cake and eat it too a little bit.

‌You're going to get CD returns on the index side. Understand that, not market returns. I know that's what people are telling you, but listen to me, the top agent in the country; I've written a book on it. If you go to The Annuity Man you can download it for free. But when you attach that Income Rider, now you have a pension guarantee that you can turn on at your discretion for future lifetime income, and you can attach a spouse or partner. It's really a good strategy. What we found, though, is that the Index Annuity with the Income Rider provides the highest contractual guarantee on the Income Rider side when compared to other products that have Income Riders attached. The second product I want you to think about, consider, and talk to me about is if you need future income but want to control the asset, Fixed Index Annuities with an Income Rider are a good fit.

‌SPIAs and DIAs

‌The third type of annuity that I think is good for retirement is the SPIA DIA category, which is Single Premium Immediate Annuities and Deferred Income Annuities. The reason I combine those two products is they're pretty much the same product. It just depends on when you want the income to start. Immediate Annuities, Single Premium Immediate Annuities were designed and introduced in Roman times back in the day as a pension guaranteed gift to the dutiful Roman soldiers and their families. They have been sold in this country for a couple hundred years. Now, Deferred Income Annuities are Immediate Annuities that you defer. Let me give you the rules, but they are great for retirement because these are pure pension products. There's no moving parts. There's no annual fees. There's no market attachments.

‌The income stream guarantee is primarily based on your life expectancy, or life expectancies if joint, at the time you take the payment, with interest rates playing a secondary role. They're commodity products. They really, really are. You just need to quote all carriers for the highest contractual guarantee. And oh, by the way, they expire like a gallon of milk. What does that mean, Stan? It's because the quotes expire every seven to 10 days, just like a gallon of milk. Think about that.

‌When we're quoting SPIAs and DIAs, think of a gallon of milk. You don't have to make a decision every seven to 10 days, but if we are in the process of talking and seven to 10 days go by, I'll have to re-quote those for you. That doesn't mean that you have seven to 10 days to decide. You have seven to 10 days to get the paperwork into the carrier if you want to lock in that specific rate.

‌The Rules

‌Now, let's go over the rules with Immediate Annuities. If you said, "Stan, I want income to start as soon as 30 days up to a year," that's an Immediate Annuity. That's a Single Premium Immediate Annuity. Once you go to that 13 month, I want that income to start in 13 months or beyond, and some Deferred Annuity companies allow you to defer up to 30 or 40 years; yeah, people do that because they want those contractual guarantees for their kids or wandering ambiguity kids or people they love and they know they're not going to have an income stream in the future, they want that Deferred Income Annuity. But in essence, that's how it works. "Hey, Stan, I need income now, between now and a year," that's an Immediate Annuity, "Hey, Stan, I need income in a year or five years from now," that's a Deferred Income Annuity. Once again, there are no annual fees, moving parts, or market attachments. It is very, very simple to understand.

‌Remember this: Immediate Annuities are the best annuity type for retirement if you need income right now. Deferred Income Annuities, when you need income later, we will quote not only those but also Income Riders because those are the two strategies that we quote for what we call income later, income down the road.

‌Qualified Longevity Annuity Contracts

‌The fourth and final type, which is really pro-customer and good for retirees, is what's called a QLAC. Qualified Longevity Annuity Contracts. It's a Deferred Income Annuity. So, an Immediate Annuity is a Deferred Income Annuity, and a QLAC is a Deferred Income Annuity. Are we confused now? The bottom line is it's a transfer of risk pension product that you can use in your traditional IRA and some, not all, employer-sponsored plans. Most people are using QLACs in their traditional IRAs. The good news about a QLAC is you can defer as far out as age 85; it doesn't have to be that far. You can start it sooner, say age 70, 72, whatever. The other good thing about a QLAC is you can attach a spouse or a partner for joint lifetime income, even though it's your traditional IRA. QLACs also have the potential to lower your taxes because any amount of money that you use in a QLAC is not subject to RMD calculations, which is a good thing.

‌Now, the downside of the QLAC is you can't put a ton of money into it. At the time of this blog, which is in 2024, and this will change, so you need to connect with us. I've written a book on it that you can download as well. $200,000 is the max you can put into QLAC. But if you and your spouse have QLACs, you both can do that amount. But the good news is you can use your retirement account to plan for future income. Now, QLACs were designed and put on the planet by the Department of the Treasury and our friends at the IRS. They wanted us as a country to start utilizing those IRA assets for future income needs.

‌You already own the best inflation annuity on the planet, which is called Social Security. QLACs and DIAs work just like that. The older you are, the higher the payment. You need to connect with me if you want a QLAC so I can get a little bit better picture of what you're trying to do. We can structure it in a myriad of ways. We can ladder the income. We can buy two or three different policies under that premium limitation to have income starting in future years to address inflation. The bottom line is they're great, great products. Sometimes, pundits say you should never buy an annuity inside of an IRA. They obviously have not heard of a QLAC.

‌Visit The Annuity Man and set a time to talk with us. Remember, contractual guarantees only, you buy an annuity for what it will do, not what it might do, not the hypothetical, theoretical, back-tested, projected, hopeful stuff. We're only looking at contractual guarantees in the four annuity types I talked to you about today. Maybe that's for you. If it is, contact us. I'm Stan The Annuity Man, I'll see you on the 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.