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My belief is that annuities are specifically geared for income generation and that is their strongest power potential. Peter, hello. So good to see you. Welcome back everyone. We’re going to start with a really important topic. We’re talking top annuity income strategies. Finding the right fit for you. Annuities can be a great way to create guaranteed income in retirement, but not all annuities are created equal. Of course, what matters most is figuring out if an annuity and which kind fits
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into your personal retirement plan. Peter, I want to start simple here because when people hear annuities, there is often a very strong reaction. Why is that? >> Yeah, some people have already tuned it out or turned off uh just because of the the word annuity. I I I get it. It is a divisive financial vehicle somehow. Uh it it is the connotation that is attached to it um for for generations. Uh well an annuity has been around since Roman times. They are a guarantee of payment to somebody and on the back of
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our dollars the the word annuitant is there because it is a promise of of payment. Um but for several decades at the very least they did get a bad connotation because of the lack of control the the evaporation of of a legacy value. Um and I think that they were misold and misplaced often. On the other hand there is no financial vehicle that can provide the specific guaranteed income that an annuity can provide. And this generation is really beginning to see the value in that because we’ve got
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this 401k or these retirement investment accounts that we’ve built up our life savings in, but we have a finite amount of money and an unknown amount of time to make that last. And the question is, well, how do I know that I’m not going to run out of income producing ability over retirement? And you know, social security is one tool to address that. pensions from companies used to provide an answer to that. But these days, more often, we’ve got to trade some of that lump sum to try to secure that income.
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And an annuity can be an appropriate tool and a powerful tool to do that. >> So then let’s break it down because I think you know people have heard of several different types of annuities. There are many. Here’s high level. We have fixed, indexed, and variable. How do these annuities create stable retirement income and how do they vary in risk? >> Well, and and again going back to kind of the connotation, I think part of that is a misunderstanding of the type of annuity and people might have asked for
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one thing and and gotten another or not understood the type of annuity that they were getting into. So this this question is very important and as you see on the screen fixed or indexed or variable a fixed pays a set rate of interest for a set amount of time and that could be you know whatever percentage rate for three years or two years or five or seven or or 10 the very uh the the amount of time can vary. An indexed on the other hand has the potential for gains but no guaranteed interest rate
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unless you’re in the fixed account. And and so here’s where the nuances are is that you’re not actually invested in the market if you’re trying to share in the gains. It is at its core a savings account that has no market risk attached to it. So it’s been made out that you can make all of these market linked gains and people have some expectation of probably making more gains than a vehicle that does not have any risk associated with it is going to make for them. So with an index annuity when the
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market goes up you can share in those gains. You will not get all of them probably a modest gain. There are some that have have participation rates of 100 and 120% and things like that. I I I don’t get too into the weeds on the individual indexing options. Just know that you’re probably not going to make all of the gains of like the broader market or the S&P. Uh and then variable annuities are directly in the market. So, they do have risk. You you actually own investments inside of them. Uh they
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are called sub accounts, but they are akin to mutual funds inside of an insurance rapper. And I think a lot of people uh get caught up on on on which type they have. They want something safe and then they end up with a variable annuity somehow. That’s probably not appropriate. And then some annuities have higher fees than others. Some have no fees at all. And that’s another place where where I think people got caught up or there was a lot of confusion or unfortunately some undisclosed surprises. But bottom line, they all
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have a time and a place. There’s no investment vehicle that is always wrong all the time. And there’s also no investment vehicle that is all the solutions to all of your problems and the best things since sliced bread. Sometimes annuities are made out on both sides of that spectrum and and neither is universally true. It’s just whether or not they are appropriate for your situation and your goals and then which type is most appropriate. >> Right? So let’s say Peter that you’ve
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determined an annuity could be the right solution. How then do you determine which type of annuity is the right fit for someone? >> Well, again, my belief is that annuities are specifically geared for income generation and that is their strongest power potential. Uh so you need to ask yourself, are you looking for a uh the the highest amount of guaranteed lifetime income that you can possibly generate from your deposit dollar in per dollar out, but are willing to potentially sacrifice, you know, a high
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remaining legacy value. Annuities can generate a higher cash flow than what Wall Street has suggested for the last 35 years. A significantly higher cash flow and therefore meaning income to you, paid to you in retirement. Uh or do you want a protect the principle and live off the interest kind of approach so that your nest egg stays intact and you are just pulling off the interest that is generated along the way? or are you looking for something where you can harvest gains in good years, maybe take
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a little off the top um but but might not have a guarantee in in down years. So more of a market linked kind of return on that uh and and therefore determining the t the type of income that you are looking to generate can go a long way. Also, maybe you don’t want it strictly for income now or in the near future. Maybe you are just setting aside dollars for a lump sum or income in the future. How long is that time? That is also going to determine the type of annuity. But I I mean this is why we
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created the website topanuityinccome.com. That is a resource for people to go to to get a quote. It will show you the dollar in per dollar out, what you deposit, what you would get into the future across top carriers, give you a comparison, give you the type of annuity that uh would generate that result for you. So, if you are interested in in figuring out what’s the best bang for your buck or the most appropriate type of annuity for the the purpose and the reasons that you would be considering
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one or even if you’re already in an annuity or or are considering a purchase right now and just want to double check and make sure you’re getting the best bang for your buck that topanuity.com topanuityinccome.com is the resource that we created for that reason. And you’ve mentioned the word timing in your answers throughout here. And of course, timing is everything when it comes to retirement planning. When is the right time to buy an annuity? >> Well, I mean, you’ve got to
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look at your situation. I It is really dependent on what your needs are. I I don’t think annuities are generally the right tool for like a 20 or 30 or maybe even 40year-old who’s looking for uh getting the most growth from their investments as possible and has a long time period in front of them. But as we get into our 50s and are beginning to think more seriously about retirement and the prospects of creating income from what we’ve saved and built and and especially in our 60s as that reality is
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is really near, then an annuity can be a very reasonable consideration at that point in time. And also for folks who are nearing that RMD stage, if you’ve got IRA funds in an investment account or across multiple investment accounts and are coming up on that time or already in that time for RMDs, if if you’re taking that RMD from the investment account, you’ve got to account for the whole entire cumulative balance of your tax deferred asset. But again, remember I said annuities are specifically geared to create more
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income than what Wall Street would suggest. So, you know, oftentimes we’re finding that we can take a fifth of the IRA balance and generate a half or more of the RMD from the total balance. So, we’re being more efficient with one tool to satisfy the IRS’s requirements. Maybe we can take a third or a half of the total balance and satisfy the RMDs. Um, so it can be a reasonable tool at different times and different stages, but probably for different reasons along the way. Um, so I would say timing wise,
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probably not if you’re young and aggressive, but as we get more into the preserve and protect and certainly as we get into the distribution phase, the income phase of our financial lives, that is when an annuity can can be a reasonable consideration. Mhm. I feel like we can’t have this conversation without also talking about social security, which is essentially a government provided inflation index life annuity. Again, offering guaranteed lifetime income. So, determining when to claim social security, one of the most
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important decisions you’ll make in retirement. And then that decision, of course, has to take into account the rest of your retirement plan. >> Ah, you you hit the nail on the head there, Aaron. I think a lot of people um look at the calculators online or or maybe don’t even do that. Just make a decision on social security without looking at the rest of their financial situation. And look, social security is a very valuable tool that we all appreciate uh in in in retirement for the confidence of income that we can
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rely on from social security. And hopefully we remain confident in the income social security is generating for us. But there is a big decision and and a big difference in claiming it at 62 versus your full retirement age versus waiting all the way till 70. I mean, you could cut your benefits by as much as 30%, you could raise your benefits by as much as 24%. And and and then if social security becomes not as reliable in the future, you know, you don’t want to cut your benefits and then have the benefits
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systemically cut on top of that. But you need to make a decision on social security that works in in your best interest and your best favor. and and looking at social security alone by itself in a vacuum on an island without considering the rest of your financial situation just ultimately doesn’t often amount to an optimal decision on social security. Um, in my opinion, you know, there there’s kind of two schools of thought. Take it early, get it as when the getting’s good, as soon as as soon
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as you can, or wait all the way until 70. Both of those have a a kernel of truth to them, but neither is universally correct. My opinion, use social security as effectively as possible to protect the rest of your assets because if emergency strikes, you can’t reach into social security and pull out extra money. That’s what your personal assets are for, right? If you pass away early, the rest of your social security doesn’t doesn’t pass along as a legacy value to your next generation.
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That’s what your personal assets are for. So, we want to try to protect those personal assets as much as possible and utilize social security effectively to do that. But when it comes time that you need a regular recurring monthly income and you see that that’s going to be the situation kind of for the foreseeable future of the rest of your life, that’s probably the time to look at social security and maybe we need to supplement that with an additional annuity. by the way, not the only tool, but a very
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powerful tool to generate that consistent, reliable, dependable retirement income. Kind of the foundation for your for for your financial picture. And the goal would be to invest as little as is necessary onto that side so you can keep more of your assets growing for other purposes, liquidity, and future financial security on the other side. >> Right. You know, I always appreciate talking these topics through with you, Peter, and I think education is key. I know you value that with your clients,
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but also as people learn more about annuities, that’s the reason why they’ve seen record sales year after year after year consistently as people kind of recognize the value they could provide. Right? >> Look, this generation is retiring with more personal wealth than any previous generation. and yet more doubt and worry and uncertainty about what the future holds because we’re living longer, we’re more active, life is more expensive, and we don’t have those pensions that that
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we used to have. And that’s why I think annuities are seeing those higher and higher record amounts of of deposits and sales year after year here as the baby boomer generation is is entering into retirement, the paychecks behind them, and they’re saying, “Well, I’ve got all this money. I don’t know how long I’m going to need it to last for. What is a reasonable solution to answer that question? And and an annuity is kind of the answer that’s right there. >> Right. Okay. So, again, Peter, if
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somebody would like to sit down with you, talk through annuities and retirement income, which is so important, determine what’s right for them. How can they get a hold of you or learn more? >> Yeah, give me a call 919-30005886. And again, we’ve got that online calculator that is topanuinincome.com. from topanuityinccome.com. It’s going to show you kind of dollar in of deposit versus dollar out of final result. What could you expect and what are the the top offerings that are out
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there? Um but but to customize your your situation, your solution and and to talk through the nuances because annuities can be complicated. um a a they are a vehicle and you know vehicles will get you from point A to point B but like a car or a truck or an SUV or or a seda sedan or a convertible like different bells and whistles, different features and that’s where a lot of people get hung up and and um you don’t want to be surprised especially in something that it does have a long-term time
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commitment. You want to know those things before you get in, not find them out after the fact. So again, Erin, like you said, education very important. If you’d like to know more about annuities in general or an annuity that you might be considering, give me a call 919-3000-5886. 919-30005886. You can also schedule a phone call or a consultation on our website, rashplanning.com. >> All right, Peter, thanks again for your time today. I really appreciate it >> as always. Thank you, Erin.
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Hey folks, Peter Rashan here with Rashan Planning. So glad that you are enjoying the podcast Planning Matters Radio. You know, one of the tools that we’ve put out there that people really seem to appreciate and really are our finding of value is at 919.com. It is your retirement tax bill calculator. If you’ve got any kind of retirement 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
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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 savings. So if you have not yet, go to the website 919retired.com. Run your numbers on the retirement tax bill calculator. >> This has been planning matters radio. >> The content of this radio show is provided forformational purposes only
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and is not a solicitation or recommendation of any investment strategy. You are encouraged to seek investment, tax, or legal advice from an independent professional adviser. Any investments and/or investment strategies mentioned involve risk, including the possible loss of principal. Advisory services offered through Brooks Own Capital Management, a registered investment adviser. Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker
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