The Older You Are, the Higher the Annuity Payment: Shootin' It Straight With Stan

Welcome to Shootin' It Straight With Stan. I am your host Stan The Annuity Man, America's annuity agent, licensed in all 50 states, sporting the ever-popular annuity goatee. Yes, so I'm looking forward to 200 days from now when it's like six inches long, and people are like, "What are you doing, Stan?" Or my wife's trying to reach around here and cut it off with scissors. It's not funny. We're having fun here, right? We're having fun. I even have a podcast called Fun With Annuities and yes, we have fun.

‌Today's topic is a good one, and it's a no-brainer, but one that I keep repeating, so I'm going to hammer it factually as only Stan The Annuity Man can do. It's the older you are, the higher the annuity payment. I know what you're saying. "Wait a minute, Stan, how about Chairman Powell and the interest rates? How about that? How about that index? How about that variable? How about that, that, that, that? Ba-ba."

Here's the way to look at it. You already own the best inflation annuity on the planet, Social Security. And I get these calls all the time. "Stan, should I turn on the income at 65 with Social Security, or should I turn it on at 70?" And I was like, "What do you think? What do you want to do?" "Well, Stan, I looked at the numbers. It's higher when I turn 70, and the income's a lot higher." Of course, it is, you're older. You're older, so your life expectancy is less, which means there are fewer projected payments, which means those payments will be higher. It's that simple. But that doesn't make it the better choice.

‌Factor in the Payments

‌I'm not a Social Security expert. I don't want to be or plan on being; please don't call me for that. I have some experts who, for whatever reason, find Social Security endearing and interesting, and that's what they do; we send their names to you for you to call. But I always tell the person that asks me that question of the 65, "Should I take Social Security at 65 or 70," I always say you got to factor in the payments that you missed, those five years of payments, 60 months of payments that you missed, waiting on that higher payment. And then how long will it take to make up for that money you didn't have with those higher payments?

‌Everyone's Situation Is Different

‌I find it comical, mathematically comical, that most financial journalists or advisors with large followings on YouTube, et cetera, are in the space of stocks and bonds and all that stuff. I'm the king of the hill in the annuity space on social media, ain't no doubt, but people out there are going, "Well, you have to wait until 70. We just have to wait until 70." Come on. If you look at the math, everyone's situation is different. You cannot make that carte blanche statement. You can say that your payments will be higher if you wait till 70. That's true, but everyone's situation is different and customizable.

‌Go-Go, Slow-Go, and No-Go

‌And I've had people on my podcast, brilliant people on my Fun With Annuities podcast, say, "Well, you just have to wait until 70, Stan. We've run the numbers and..." I understand you've run the numbers, but what if the person needs the money and needs the income to start sooner? You want them to do without even more? And that's my biggest problem here. I come from rural North Carolina, and my parents did without and did without and scrimped and saved. And you probably did too. And you're always trying to thread the needle and you're always trying to time it. And I'm going to tell you that you can't time it. You can't time it with annuities. You can't time it with lifetime income. Just remember that the older you are, the higher the payment. But that doesn't mean you wait until you're older.

I always say there are three phases of retirement: Go-go, slow-go, and no-go. Go-go when you're rolling, slow-go when you're slowing down, and no-go when you're drooling on yourself. And if you live long enough, we'll all get to no-go, and that's no fun. That's the reason they call it no-go. No fun, no go.

‌But I need you to think differently in chapter two of your life. And at the time of this blog, so many things are happening in the world. There always is. I know the historians will say, "Well, Stan, if you look back in the '40s and the '50s," I understand that, but I'm not looking back. I'm right here. I'm in the moment with everyone else listening to me.

‌My Questions to You

‌I don't take a lot of calls anymore, just because of my schedule. But you might get me when you schedule a call. But people ask me, "Stan, should we wait, or what would you do?" My comment to that every time is, "Well if you wait, you're going to get a higher payment because you're older. The older you are, the higher the payment."

But my question to you is should you wait, or why are you waiting? Tell me again why are you waiting? Why are you continuing to do without? Why are you continuing to scrimp and save? Why aren't you turning on the income now? There might be a tax reason why you don't want to do that. You might have other income sources coming in while you're deferring. I get it. And that's what we're going to figure out, whether you're talking to me or my team, we will figure out why. We're going to ask questions and try to make sure that you're doing the right thing for your situation. But if your comment to me is, "Well, we're going to wait because we're going to get a higher payment," and you need income now, and you could enjoy it now during the go-go years, then I'm going to probably put my foot down and put the flag in the ground and say, "Why are you doing that?"

‌Client Example

‌I had a situation the other day, and someone's trying to sell them. This makes me sick to my stomach. A lot of Income Riders attached to Variable and Index Annuities, you have to wait a full year to turn on the income stream. It's just the rule of a lot of those riders. It doesn't make them bad or good; it's just the rule. But I always ask people two questions, "What do you want the money to contractually do, and when do you want those contractual guarantees to start?"

‌And I asked this gentleman this because he wanted my second opinion on what's been pitched, and of course, I'm going to give it to him brutally. And I asked him, "What do you want the money contractually to do? He said, "Me and the wife want lifetime income." "When do you want that income to start?" "We kind of need it now, like in the next 30, 60 days." "Okay, great. That's an Immediate Annuity." "Well, shouldn't we wait? If we waited, would it be higher?" "Yeah, it's going to be higher because you're going to be older but that doesn't mean you wait. You just told me you needed it now."

‌Well, and his comment was typical of where I grew up in the middle of America. "Well, we can do without. We can make it work and wait that year." But really what they were doing was waiting a year so that person could sell them a high-commission product because that was the rule that they were under. They weren't listening to him, so I convinced them to take the income stream now, buy an Immediate Annuity, and enjoy life. It's amazing to me, after COVID, you know how we all make those sayings to it. "Well, I'm telling you, this COVID thing's changed me. I'm never going to just hold on, and I'm going to live for the day. I'm never going to wait." And what's happening? People have forgotten that and are back trying to thread the needle and maximize and find the sweet spot.

‌There Are No Sweet Spots

‌There are no sweet spots with annuities. There's no arbitrage moment with annuities. The older you are, the higher the payment for lifetime income. When you're looking at lifetime income, it's that simple. And if you want to wait, you have to tell me why. And you might convince me that's a good reason. But if you can't convince me, I will say, "Well, why don't you turn it on now?" And you'll say, "Well, because the payments are lower." Yeah, because you're younger. But factor in all those payments you would miss if you waited until you're older.

‌Annuity decisions, annuity products. Annuity strategies are custom to you, are accustomed to your situation and your family's situation, and for lifetime income, they're customized to your income needs. Yes, you are right. Lifetime income is higher when you're older, but that doesn't mean you always do that. If you could live your life now, why wouldn't you just live your life now and enjoy it? Why do you keep waiting and waiting and waiting.

‌Every single year, and I've been doing this a long time, decades, I'll have two or three people call me and say, "Stan, if I ..." These are such crazy stories it's hard to believe, but they're true. They'll say things like, "I should have listened to you. If I could give $5 million to feel good for a week today, I would." Or "If I could do it all over again, I'd have turned on that income stream because now I have been diagnosed with this, and I'm not going to live a long time. I should have enjoyed the money."

‌Don’t Thread the Needle

‌I think we can look at this title and this topic and say this: the older you are, the higher the payment. Yes, with annuities. But don't look back on it and say you should have enjoyed the money while waiting for the higher payment. Don't thread the needle. Look at your situation. Look at how it affects you. Look at how you can enjoy it. And remember this. Look back at your work time. You've worked for decades and done without and scrimped and saved and planned, and now you're here. You don't need to keep doing that. With a lot of this you can just say, "Okay, we're going to turn on the income stream now. We're going to enjoy it now. It might be a lower payment. We're going to enjoy it now." Because if you wait five more years, your health might not be there. If you wait five more years, your spouse might not be there. If you wait five more years, who knows where we will be as a country? If you wait five more years, who knows where we will be in the world?

‌And I'm not being a fatalist. I'm not Mr. Armageddon. I'm not. I'm glass-half-full Stan. You know me, I'm up. But part of my job is to grab you and remind you of what you've done, what you've achieved, and what you've accumulated and remind you that it's time to start enjoying that. It's time to create that income stream. It's time to not try to time it. It's time for you not to continue to try to be Gordon Gecko. You're not going to beat the annuity company because if we go under the premise that we all agree upon, whether Social Security, your pension, or an annuity lifetime income stream product, and there are four different types, SPIAs, DIAs, QLACs, and Income Riders. You can run quotes at my site 24/7/365. But if you remember, the older you are, the higher the payment, great.

‌Live Right Now

‌Then the next round of questions is, "Do I want to enjoy it now, or do I want to wait to enjoy it?" And the only person that can honestly answer that is you, and I need you to answer it honestly. I don't want you to answer it with what someone's whispered to you. I don't want you to answer it with what you've read. I don't want you to answer it with whatever study you saw about Social Security, payments, or longevity. I want you to answer it based on the life you want to live right now until you die. That's what I want you to do.

‌We're all getting older. Hallelujah to that. I've got a gray goatee, aka the annuity goatee. I got to trademark that before someone trademarks it before me. I told my wife that, and she said, "Don't worry, you're good." What a saint. But listen, we look forward to speaking with you. I've got a full team of great people, smart people. I hope you get me on the phone. If you schedule a call, there's a 5% chance you get me because I open my schedule when I'm not traveling. And I'd love to talk with you. And I hear many of these stories during meetings, and I'll say, "Tell me what people are saying. Tell me what they're saying. Tell me what they're worried about."

‌One of the reasons I'm doing this blog on this topic is because people are struggling with when to turn income on. People are struggling with this, knowing what they know but unable to get out of their own way. We're here to help, and we really are. And I love what I do. I love the fact that we're helping people, and I love the fact that we're changing the annuity industry for the better. And I'm telling you, we are. They're coming kicking and screaming the whole way.

‌But here's the fun part: they're coming with me and changing their message. And the annuity industry is getting ready to triple because of it. Because we're going toward a contractual guarantee only message, a lifestyle message, and letting the baby boomers know, all 13,000 of you that turn 65 every single day, and the younger ones and the older ones, that these products are good, they're great transfer risk products, and they're contractually guaranteed.

My name is Stan The Annuity Man. I'll 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.