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[music] >> Hello Peter. Welcome back everyone. A really important question today, should you surrender or replace that old annuity? Annuities can play an important role in retirement planning, but what made sense years ago may not fit your needs today. So let’s walk through how to evaluate your options. So when should someone consider surrendering or replacing an old annuity and what’s the difference between the two? >> Yeah, well, what made sense years ago might be able to be improved today or it
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might no longer make sense and I think that’s the difference here between surrendering or replacing. Surrendering is getting out of it completely, going a different direction, take the money and run and do something completely different than an annuity with that money. Um, whereas replacing is taking one and then basically refinancing into a different annuity. And my parallel here and I I’m going to just pull some numbers out of the air, but if we remember back like to COVID and pre-COVID times, we were in a very,
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very, very low interest rate environment for an extended period of time and if you were out buying a house and you had a $2,000 a month budget at 2 and 1/2% interest rates, maybe we could afford a $500,000 house, but when interest rates went up to 5 or 6%, if our budget was still $2,000 a month, we could only afford a $300,000 house. Well, the same is true for annuities, but in reverse. The lump sum that it’s going to take to generate our $2,000 a month is also impacted by the prevailing interest rates. So back when
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the interest rates were very, very low, it took much more money to generate the same amount of income that we can generate today for a lower amount. Or if we are replacing an annuity, if we’ve got that same money in there, we can improve and increase the amount of guaranteed lifetime income that is going to be generated from that annuity. And so that’s the reason why we would want to replace. We want to improve an existing vehicle. We’ve been in an annuity, but maybe it’s not the best
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annuity or the rates have have gotten better, which they have. We are in a historically beneficial period of of time and environment here for annuity growth rates and payout rates. And so a lot of people who got into annuities five to 10 years ago or even longer are looking at these payout rates that are available now and saying, “Well, my current annuity won’t pay me out that much.” So dollar for dollar, just take it and replace it, which is a tax-free move in in the replacement regardless of
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the type of money it is. Take it and replace it and get these guarantees for these higher income as well as potentially some some health care benefits that maybe weren’t around or included 10 or 15 years ago. >> Yeah, really good points. Yeah, speaking of those more favorable terms right now, that’s one of the reasons that we’re seeing record sales with annuities, which LIMRA, according to LIMRA, which tracks the numbers. All right, next question, Peter. So what are some of the
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most common mistakes people make during the surrender or exchange process? >> I think maybe focusing on the wrong thing. A lot of times there is this upfront bonus that is kind of a carrot on a string, but it’s the thing that is talked about and discussed that oh, you take your old annuity and you’ll get an upfront bonus by moving it to this new one and, you know, ignoring the potential costs of getting out of the old one and really sitting them side by side and evaluating, am I getting more
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from the new one, or am I losing by getting out of the old one? But at the end of the day, a lot of what we look at with with an annuity is dollar in per dollar out of guaranteed income when we want to start taking that income. And a lot of the rest of it, the the the bonus up front, the guaranteed growth rate on your income account value, and the payout rates, this is all part of basically what is an algebra equation, and the variables can change, but what we’re looking at is dollar in per dollar out of guaranteed income.
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When we intend to take that income, is making a move going to be beneficial and increase that income. And and that’s what we really want to look at, but you can’t do that with with focusing only on one of the variables in that algebra equation. It could be a monstrous up front bonus, but if the growth and the payout rates are are very low, then you might not see an improvement. So, don’t get caught up. Something that we intend to be in place for life, we shouldn’t judge on what happens day one. We should judge on what
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happens over the period of life. And so, don’t be, you know, caught up in an up front bonus, and also don’t ignore the surrender charges for getting out of the old vehicle. Now, sometimes surrender charges can be made up for on the other side. There is absolutely a reasonable case when we might take a small loss on one hand in order to get better terms and bigger advantages on the other, but that does need to be carefully evaluated, and a lot of times that’s sort of glossed over when people are
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making these replacements, and and it absolutely should not be. >> Mhm. So, [snorts] someone then decides to move forward. What can they do to ensure it goes smoothly? >> Well, we do have a resource. It’s a topannuityincome.com and and that is a resource that shows you the highest payout rates that are available, competitive rates from well-rated companies. And remember that the the strength and claims-paying ability of the issuing company does also need to be considered. You don’t want to
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deal with subpar companies. You want to deal with strong, well-rated companies who stand behind the guarantees that they issue. But topannuityincome.com will give you a comparison. That’s a great place to start just on your own online to see a quote for what annuities could offer if you made a deposit or replacement today. But also just evaluating all of the definitions, all of the bells and whistles cuz annuities, there are there are many different types of them. And and they can be complex. The the
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different types often lead to confusion and even within just a singular type, there’s different nuts and bolts and bells and whistles on every company’s contract. And every company often offers several different contracts. So it can get confusing. I think all of that needs to be sorted through with an experienced, qualified professional advisor. And and that’s what we offer at Roshan Planning. I mean, along with access to the market, which is obviously vitally important for our long-term
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financial progress, we do offer the insurance world as well. We’ve got access to the full spectrum of the financial world. So if if we are looking at I want safety, I want certainty, I want protection, I want guarantees for my growth or income, if I want a protected principal and live off the interest kind of approach, or if I want a maximum amount of guaranteed lifetime income, that those are all statements that we you consider things that are on the insurance world side of of the balance. And annuities
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can do those specific jobs. So, we need to evaluate not only like where is the proper placement of an annuity in our total financial picture and progress. Never the right place for all of your money, by the way, because there are liquidity restrictions. You can’t just walk away without cost. So, but for what we want safe and certain, protected, guaranteed, and have that income from, that’s where we would consider the annuity side. That’s how we help people weigh and evaluate that along with the
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balance of the risk that we are taking in the market. >> Mhm. Mhm. What’s your best advice um for investors who are thinking about making a change, but aren’t sure where to start? >> Well, I again that topannuityincome.com certainly is a great resource to get started. But, give us a call at Rashaun Planning. We know these products, the ins and outs. We we we work with them. I have for 20 years now, and I can help guide you in evaluating something that you are considering or evaluating an annuity
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that you already and and have currently owned for quite some time. Is it time to purchase an annuity? Are you rolling over a 401k, getting ready for retirement? a finite amount of money and an unknown amount of time. You want to make sure that it lasts, and you want a certain amount of income. Like, all of these are again reasons why we might consider the annuity side of of the equation. And if you would like to look at making sure that you’ve got a strong company offering you strong guarantees to to maximize the bang for
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your buck. Uh give us a call at Rashaun Planning. 919-300-5886. 919-300-5886. You can also go online, rashaunplanning.com, or that website again topannuityincome.com. topannuityincome.com. But, I I think the biggest thing I’m seeing, you know, big up front bonuses as being kind of the the incentive and the selling point. Don’t fall for big up front bonuses that pay you less over your lifetime. Make sure you’re evaluating all of the elements of the equation and what each dollar you you
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invest and and deposit is going to result for you when you need it to be there in the future. >> Right. And Peter, I know you also welcome second opinions if somebody is being pitched an annuity and maybe they’d like to crunch the numbers with somebody else. Again, just to do your own due diligence on what could be well, a lifetime decision, right? >> Yeah. Yeah, if you are considering an annuity, if if you are being offered or recommended an annuity, you already own one or you are shopping for one, we are
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a resource and and here to help and and would love to talk to you and help any way we can. Yeah, give us a call 919-300-5886. >> All right. Again, Peter, thank you so much for your time today. I appreciate it. >> Of course, Erin. Thank you. Hey folks, Peter Roshon here with Roshon Planning. So glad that you are enjoying the podcast, [music] Planning Matters Radio. You know, one of the tools that we’ve put out there that people really seem to appreciate and really are are finding of value is at 919retired.com.
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It is your retirement tax bill calculator. If you’ve got any kind of retirement [music] account, your tax deferred 401k or IRA, this is the website, this is the resource where you can go, you can plug in your own numbers, your information, you can slide the the the tool calculator up and down for your tax rate or your amount of savings and see what your tax bill is likely to be if you default and defer to the IRS’s plan versus what you could potentially bring that tax bill down to. A lot of times it is a very significant
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savings. So, if you have not yet, go to the website 919retire.com, run your numbers on the retirement tax bill calculator. >> This has been Planning Matters Radio. >> The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are [music] encouraged to seek investment, tax, or legal advice from an independent professional advisor. Any investments [music] and/or investment strategies mentioned involve
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risk, including the possible loss of principal. Advisory services offered through Brookstone Capital Management, a registered investment advisor. Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker-dealer services. Advisory clients are charged a quarterly fee for assets under management while insurance products pay a commission which may result in a conflict of interest regarding compensation. >> [music] >> Any bonuses mentioned may be subject to
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additional restrictions and regulations based on the offering annuity company. You may not receive the bonus if the contract is fully surrendered or if traditional annuitization payments are taken. And if the policy is partially surrendered, it could result in a partial loss of bonuses. Because these are bonus annuities, they may include higher surrender charges, longer surrender charge periods, lower caps, higher spreads, or other restrictions that are not included in similar annuities that don’t offer a bonus
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feature. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims-paying ability of the issuing company and are not offered by Brookstone.
