Strategic Retirement Planning Using Annuities: Shootin’ It Straight With Stan

Welcome to Shooting 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 Strategic Retirement Planning Using Annuities. Now, for a lot of you out there, you're going, wait a minute, are you a certified -- no, I'm Stan The Annuity Man. I specialize in annuities. We work side-by-side with many of the best fee-only planners in the business because they don't do annuities. So, I have been on that side of the ledger. I used to work with Dean Witter and Paine Webber -- tells you how old I am -- UBS and Morgan Stanley, so I do understand that. And for a long time in my life, chapter one, I did a lot of that type of retirement planning. So, I fully, fully understand it, and I know where annuities fit and where they do not fit.

Let's talk about if you're a self-directed person out there, or you have an advisor that you want to have a discussion about this with them. That's fine, and we will have that discussion with them as well. We don't give tax advice. We're not CPAs or CFPs or anything like that, nor do we want to be. We are specialists in our field.

Enhancing Your Retirement

Let's talk about ways annuities can help and enhance your retirement. I think the primary way is lifetime income. I always tell people that annuities solve for four primary things. And if you don't need to solve for one or more of these items, then you do not need an annuity of any type, period. And the acronym I've come up with is PILL.

The 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. So, let's look at it from the standpoint of retirement planning and take a look at those. In addition to the PILL acronym, I have two questions that my team asks. If you go to The Annuity Man, if you ever schedule a call, these are the questions we're going to ask, two. What do you want the money to contractually do? And when do you want those contractual guarantees to start? From those two items, we can tell you whether you need an annuity or not need one. When you want market growth, real market growth, never ever buy an annuity. I don't care what anybody pitches, sells, promises, and shows you. I don't care about the brochure. I don't care about the chart. I don't care about the stake in our seminar. I don't care. Do not ever do that.

Additional Income

You own an annuity for what it will do, not what it might do. Now, where annuities really fit is additional income with the current annuity that you already own. Social Security is the best inflation annuity on the planet. And if you're working with a retirement advisor or someone like that, a CFP, or doing it yourself, that's the core of the income floor. Now, if you're so fortunate that your employer-provided or provides a pension, that's your second annuity. That's a lifetime income. Say, it's like an Immediate Annuity or Social Security. Having done this for decades and decades and decades and been on that other side of the ledger, I truly think that the true benefit of annuities with your type of planning is the income part.

You can set it up lifetime income for just you, joint life income with your spouse. You can make sure that 100 percent of any unused money will go to the beneficiaries and the annuity company doesn't keep any of it, even though they're on the hook to pay. That could be life with cash refund, life with installment refund, life with period certain. If you go to The Annuity Man, you can run those numbers to see what they are. And remember, lifetime income is primarily based on your life expectancy or life expectancies at the time you take the payment. Interest rates play a secondary role. In retirement planning and the strategic planning that you're doing or want to do, inflation is where annuities can help as well. Now, you already own the best inflation annuity on the planet. That's Social Security. But the way annuities solve for inflation is when you need to fill a gap.

Fill the Gap

Let's say your income floor is $5,000 a month; a year from now, you need $5,400. You've run the numbers. You're one of those box checkers. Then you go to my site and run a reverse engineer quote solving for $400 a month, which is, in essence, you're quoting all carriers to see which carrier is going to take the least amount of money to provide that gap fill. There's no floating product. Any type of annuity income with increases, Cost of Living, Adjustments, COLAs, annuity companies don't give that away. You need to not do that. You need to solve for inflation at the time. You need to fill the gap. And for your specific situation, everybody's situation is different. The primary thing you should look at is income, which could start now or later. It's now, it's an Immediate Annuity, Single Premium Immediate Annuity.

If it's later, it's a Deferred Income Annuity. You can use IRA assets with a QLAC. You can use an Income Rider. All of those calculators are at The Annuity Man site. You can run at your leisure. And if you ever want to engage with us, then you can set an appointment, and we'll call you right on the dot. So, income is the biggest one.

Principal Protection

The other one you might want to look at is the P in PILL. We just covered the I, income for life. The P is principal protection. There are principal protection products like a CD. The annuity industry's version of that is called a MYGA, Multi-Year Guaranteed Annuity. You can lock in for a specific period of time you choose, as short as one year out to 10 years, with a guaranteed interest rate just like a CD.

The difference is in a non-IRA account, it can grow tax-deferred, but you can use it in an IRA, non-IRA, whatever. The guarantees are the guarantees. So, there is a principal protection product out there for you as well that would work.

Legacy

We've done principal protection, income for life. Now, let's talk about legacy. If you can't qualify for life insurance and we don't sell life insurance even though life insurance companies issue annuities. If you can't qualify for life insurance, you can get a Fixed Annuity with a death benefit attached, a death benefit rider. Now, that benefit's going to be taxable as opposed to life insurance that's not taxable. But if you are drinking a bottle of Jack Daniel's a day and smoking a carton of cigarettes, that's your only shot for legacy.

Long Term Care

Then, the other L of the PILL is long-term care. That's a messy one. We do have a specialist who works side-by-side with the Annuity Man to whom we can refer you. But there are products that are guaranteed issue if you can't qualify for long-term care.

So, principal protection, income for life, legacy, and long-term care. Those are the four items and the four goals that Fixed Annuities can contractually solve for. Remember, you own an annuity for what it will do, not what it might do. When looking at your strategies for your overall portfolio, you might say, I don't need that. Everything's going fine. If it ain't broke, don't fix it. But understand where they fit if you need to fill those gaps. And you're filling those gaps with the contractual guarantees. You're filling those gaps with transfer of risk strategies, meaning you're transferring the risk to the life insurance company issuing the annuity to cover for that. So, if it's income for life, you're transferring the risk, that longevity risk, meaning outliving your money, so that you know that income's coming in just like Social Security and/or your pension. Principal protections self-explanatory. And so is legacy and long-term care, depending on your situation.

Annuities do have their place. I'm frustrated with the bad rap annuities as a category and an industry get. Unfortunately, a lot of that is self-imposed with some of the sales practices out there. But understand that these are great products if you buy them for the contractual guarantees. And when you do that, you've commoditized them so that you can go to my site and shop all carriers for the highest contractual guarantee for your specific situation. And understand that because it's a contract, there's no urgency to buy. You need to make that decision on your terms and your timeframe, making sure that that contractual guarantee that you're inserting into your portfolio and your plan fits, period.

We look forward to speaking with you if you want to do that. But you have complete carte blanche to go to The Annuity Man and watch all the videos; we've got thousands of them and seven books you can download for free. We're just here to educate. Hopefully, you choose us if there is a fit. If not, thanks for reading along today. This is Shooting It Straight With Stan. My name is Stan The Annuity Man. 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.