Strategies for Future Income

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 Strategies for Future Income_._ Let's dive in.

The Basics of Income Later

Future income or income later is when I ask two questions: What do you want the money to contractually do? And when do you want those contractual guarantees to start? The answer to the first question might be, "I want lifetime income," and the second question could be, "I want it to start in two years, three years, five years, seven years, or ten years." There are four ways to get there using annuities. Unfortunately, none of the four are better than the others. There are no sweet spots or best options. After speaking with you and if you set an appointment, we may tell you which one is most suitable and appropriate. But let’s go over the four.

Option 1: Do Nothing and Buy an Immediate Annuity

The first option is very simple. If you need income in five years, three years, seven years, or whatever, don’t buy an annuity now. I know, I can feel the annuity gods glaring at me, but it’s true. Many of you don’t need an annuity right now. But when the time comes to start your income, buy an Immediate Annuity. You can shop all carriers through The Annuity Man, and look for the highest-yielding product with the best carrier-rated guarantee. Annuities are commodity products, and by commodity, I mean they are standardized. When I say commodity, people might think of wheat or gold futures. But in this case, I’m talking about annuity products. You shop all carriers for the highest contractual guarantee. That’s what I mean by commodities.

Option 2: MYGA to SPIA

The second way is what I call MYGA to SPIA. A MYGA is the annuity industry's version of a CD. For example, if you want income in five years, let’s buy a five-year MYGA that gives a guaranteed interest rate, like a CD. At the end of the term, we can transfer it into the highest-paying Immediate Annuity. This transfer is a non-taxable event, whether it’s an IRA, Roth, or non-qualified account. That’s the second way.

Option 3: Deferred Income Annuity (DIA)

The third way is a Deferred Income Annuity (DIA). Remember, an Immediate Annuity is a product with no moving parts, annual fees, market attachments, and nonsense—it’s a straight transfer of risk. You can use an IRA, non-IRA, or Roth IRA for a DIA. If you say, “I need income to start in five years,” that’s possible with a DIA. It’s an illiquid, irrevocable product, but that’s okay. You buy it today, and I can tell you to the penny what your income stream will be in five years. For example, if you want $2,750 every month for the rest of your and your spouse’s life, we can run a reverse-engineered quote for you. You can do that at The Annuity Man, to find out how little money it takes to create that contractual guarantee.

Option 4: Indexed Annuity with an Income Rider

The fourth way is the one that most agents will try to sell you: an Indexed Annuity with an Income Rider. There’s nothing wrong with this, but the Income Rider is a commodity. You shop all Income Riders for the highest payout, period. There isn’t one that’s better than the other. Having an upfront bonus doesn’t make one better, nor does an increase in income with the index performance. When you hear about these features, understand that the annuity company lowers the initial payment to make up for that potential increase. It’s no free lunch. If it sounds too good to be true, it is.

Who It Fits

Let’s go through the four options from the standpoint of who they fit. The first one—hold, hold, hold, and then buy an immediate annuity—is for all you players out there. Traders, masters of the universe, and Gordon Geckos who want to control everything. You can trade it, you can make your money, but eventually, cognitive ability will decline, or you’ll want to set something up for a spouse who couldn’t care less about your trading strategies. For example, when you tell her about a successful trade, she might not be impressed and wish you’d stop talking about it. That first option is for those who want to control their income but ensure a guaranteed income stream later.

Example of How to Set Up Income for Your Spouse

I got a call today from a gentleman who was that type of trader. He asked how he could set something up for his wife. The answer? If you have a trust, specify that upon your demise, an Immediate Annuity will be purchased for your spouse to provide lifetime income. This way, when you're gone, your spouse will have guaranteed income to visit the kids and grandkids. You don’t have to buy anything now; you can dictate it in the trust and purchase it later. Hopefully, you’ll use us for that but just make sure to structure it with a life with cash refund for your spouse.

Example Option 2: MYGA to SPIA for Control Freaks

The second option is MYGA to SPIA. I like this one because you control the asset. If you’re a control freak who wants to plan ahead and you’re not sure if you’ll need income, buying a MYGA might be a good fit. For example, you could buy a seven-year MYGA with a guaranteed interest rate. At the end of that term, we’ll reach out to you and ask if you want to transfer the funds into a lifetime income stream with an Immediate Annuity for you and your spouse.

Example Option 3: Deferred Income Annuity (DIA)

The third option is the DIA, which is perfect for those who like to plan ahead. If you're a planner who wants a guaranteed income stream, a DIA lets you know exactly what to expect down the road. For example, your DIA should start in five, seven, or ten years. This option is best for those who want everything lined up and who don’t want to think about it. If this fits your personality, a DIA could work well.

Example Option 4: Indexed Annuity with Income Rider for Flexibility

The fourth option is for those who need more flexibility. An Indexed Annuity with an Income Rider might fit you if you want more control and have a longer time horizon, say seven or ten years. The Income Rider is not the same as annuitization—it's a drawdown mechanism, where you can turn it on or off. If this flexibility suits your needs, then an Indexed Annuity with an Income Rider could be the right fit.

Conclusion

So, those are the four ways to secure income later: hold, hold, hold, and then buy an Immediate Annuity, MYGA to SPIA, Deferred Income Annuity (DIA), or an Indexed Annuity with an Income Rider. If you need income in the future, these paths offer different approaches. I look forward to speaking with you. Go to The Annuity Man to run quotes 24/7, 365. Check out the videos, download my books, and more.