Retirement Ready

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to the Retirement Planning Show. My name
is Nicholas Thomas, certified financial planner with the Retirement Planning Group.
Alongside me today I have Christopher McCarthy and Christopher Kopek,
and we're here to discuss some pre and post retirement planning,
mostly on the pre side. If you want to call
our office to talk about your own unique situation, you

(00:21):
can give us a call at five one eight five
eight zero one nine one nine. This is a pre
recorded show, so we're not doing any call ins today,
but again, if you want to call our office anything
spikes your interest, that number is five one eight five
eight zero one nine one nine. And when I mentioned
pre retirement planning, I wanted to bring up annuities. You know,

(00:45):
I think a lot of folks out there have a
bad reputation with annuities, or they have a bad reputation, so, uh,
maybe they're just misunderstood as well. You know, I've got
an article here it says four out of five Americans
can't even properly define an annuity. So maybe it's just
the fact of the unknown that scares them. So we

(01:07):
want to sit down today and kind of describe the
different types of annuities that are available for folks out there.

Speaker 2 (01:17):
I think it's an important topic. Like you were saying earlier,
a lot of people have a bad taste in their mouth,
but they haven't had the opportunity to really educate themselves
on all the different areas that people could really benefit
from them.

Speaker 1 (01:32):
Yeah, and it doesn't have to be you know, your
full retirement account or your full four to oh one
K deferred comp whatever you've accumulated throughout your lifetime.

Speaker 3 (01:40):
You don't have to turn that into an annuity.

Speaker 1 (01:42):
You know, you could take a piece of it and
provide some baseline income, which we talk about on the
show quite a bit. So you want to make sure
you haven't an adequate amount of resources coming in each
month to take care of your baseline expenses, you know,
an annuity might be the appropriate vehicle to do so. So, MacArthur,
you've been doing it for what forty years? Forty years yep,

(02:04):
and you specialized in annuities yep.

Speaker 2 (02:07):
Pretty much my whole career and what I love about
since joining all of us here, we got a great team.
Only about three to five percent of all the investment
management we do are annuity, but we understand that they
have a very important place and if the situation is
right and it's a good fit for a client, we

(02:30):
need to look at it, and that's what we do.

Speaker 1 (02:33):
Yeah, I completely agree with you, and you know, I
think Chris also has seen, you know, a few scenarios
where annuities have worked out well for clients. You know,
your father has been doing them for years, so we
see the back end of these annuities. You know, if
they purchased them back in twenty ten or twenty twelve,
you know, you had those thirteen fourteen years of growth

(02:56):
on the annuity contract and now we're finally turning those
a new He's on to generate income for retirees.

Speaker 4 (03:03):
Yeah, Yeah, there's a lot of ways that they can
help in different situations. You know, Satisfying that baseline income
that we always talk about, and like you were hinting
at earlier, is that it's a it's a portion of
the overall allocation for people, and satisfying you know, your
income in retirement can be done by carving off you know,

(03:27):
your largest asset, which is probably your four to one
K or your whatever that may be that you've been
saving in for your entire career, so you take you know,
twenty five percent of that. See what you can do
and what you know, income can be generated off an
annuity for the remainder of your life to you know,

(03:47):
help supplement social security if you don't have a pension,
and just help that you know, baseline income in retirement.

Speaker 1 (03:56):
Yeah, you need three things in a portfolio, right, guarantees,
you need liquidity, and you need growth right GLG That's
how I like to describe it. But the first G
guarantees you know, the annuity, right, that provides a parachute
for a lot of folks, you know, depending on which

(04:17):
type you choose, and it can also provide guaranteed income. Right,
so as far as investment returns, you can purchase what
are called writers on these annuity contracts, which will provide
a guaranteed growth rate on the contract and then guaranteed
income at a certain point in your life. So if
you're someone that doesn't have a pension, right, you've worked hard,

(04:39):
You've contributed to a four oh one K, but you
don't have any sort of pension. The only real pension
you're going to have is social security once you reach
you know, sixty two or sixty seven or whenever you're
gonna turn it on, an annuity might be an option
for you, right, taking a lump sum from your four
oh one k or you know, twenty five thirty percent
of that value and trying to figure out, you know,

(05:02):
what can that provide me for a monthly income? What
can that provide me, you know, on an annual basis,
so that if something happens to me, my spouse is
taken care of as well, you know, And just pillow
planning is what we call it, right, being able to
sleep at night knowing there's a paycheck coming in next month.

Speaker 2 (05:20):
I think it's very important also to realize when people
look at the back of a one dollar bill and
they look over the pyramid, one of the words is
a newer tie. It's Latin for to pey. So if
you're sitting there and you're receiving a New York state
pension or state and federal or local government pension, federal pension,

(05:42):
those are all forms of annuities, and people don't even
realize they have one. And like you said earlier in
the in our talk here, this is something that just
needs to be looked at. Many people out there do
not have any other guaranteed income stream other than Social Security.

(06:07):
So if you can take all your hard earned money
and look to see it doesn't have to be an
immediate annuity where your money is fosen. There's so many
different setup for annuity. You can have your money fully
invested and still receive a monthly income stream for the

(06:28):
rest of your life and still have your money fully invested.
So it's not worth poo pooing annuities until we have
an opportunity to sit with people educate them on what's
out there so they can make an educated decision if
it's right for them.

Speaker 1 (06:46):
Four out of five Americans do not know what an
annuity is adult Americans, So that's concerning, right. And we
had a seminar recently with an annuity saler and he
was able to describe some different products that might fit.

Speaker 3 (07:06):
For individuals out there.

Speaker 1 (07:08):
And I think it was a very educational seminar that
we had, and it just goes to show, you know,
a lot of people are curious that they want to
understand what these products are. You know, in the fifties
and sixties, pensions started going away, right in the past,
a lot of people thought, you know, I'm gonna work
hard and this company's gonna take care of me when

(07:28):
I go into retirement and continue to pay me a.

Speaker 3 (07:30):
Monthly income stream.

Speaker 1 (07:32):
That wasn't the case after a lot of those pension
those pensions started vanishing. So what did the government do.
We started creating deferred compensation plans. Right, so four to
one k's pre tax accounts that are turning into an issue.
And you heard the Gentleman talk about that on at
that seminar on Wednesday.

Speaker 4 (07:52):
Yep, yeah, yeah, he did a good job. I think
he did a really good job at explaining, you know
how these there's two overall avenues that we're looking at
currently in the annuity space. One is obviously the pension,
generating your own pension, getting guaranteed income for the remainder
of your life. And then the other one was, you know,
putting a belt in suspenders, as my father would say,

(08:15):
on your account. And it's the buffered product, you know,
having a ten or twenty percent downside protection on your money.
And the way he phrased it, you know, when he's
going through and going over, you can get more than
market participation in some of these products. Is it's not
too good to be true. It's too good to be
free and too good to be liquid, you know, so

(08:38):
and too good to be free is the pension product,
which is the you know, guaranteed income for life, and
that's that's you know, a product where you're satisfying income
for the remainder of your life. And if you're getting
into that, you're looking for a pension. And then the
buffered product is just downside protection. So being invested in

(08:58):
you know, an into see like the S and P
five hundred and having either ten to twenty percent downside
for a certain segment of time that you that you're
giving up liquidity on that money for. So it's definitely
something that if people are interested in, you know, there's
options out there for them. And these are fairly new
products even to us. So that's why you know that

(09:22):
informational was not only beneficial for you know, the people
that participated and showed up, but even ourselves.

Speaker 2 (09:28):
You know what I found very impressive, well, the number
of people that were asking questions right after the presentation
was made, not only between the gentlemen from the company
but also your father. Yeah, and the interaction the participation
I was really happy with because you could tell. I

(09:50):
think a lot of people, whatever the perception was about
the annuities, it was different than what they actually said
and learned about. And I thought it was a great evening.
I really did.

Speaker 3 (10:04):
Yeah, and some nice appetizers.

Speaker 1 (10:06):
I think I ate a whole plate of cantalope and
it was a really good presentation. So are these, you know,
annuities right for everyone? No, Right, there's individuals out there
that it's not suitable for, but you know, a majority
of people and I think it is, you know, just
looking at these products and giving them ideas. And I
think Chris brought up a great point also about the fees. Right,

(10:27):
A lot of people think these are super expensive. You know,
it depends on the product that you get involved with. Right.
If you're gonna provide a guaranteed income source for the
rest of your life, you're gonna pay for that. Right.
It's just like the sunroof on your car or having
air conditioner you're ACU working. My truck is currently not working,

(10:47):
so I did not choose that annuity.

Speaker 3 (10:49):
Option with my truck.

Speaker 1 (10:50):
But again, you're gonna pay for those guarantees associate with
the contract. You know, some of those parachute you know,
buffer products, they have lower fees, right because liquidity is
the cost. You know, you can't get in and out
of those as as fast. But again, even like the
gentleman was describing, there are some products that do have
liquidity with those buffer products. So again it's a very

(11:14):
difficult landscape to understand for the basic you know investor
out there. But we can educate you and form you
and show you examples that may benefit you. So again,
if you want to call our office and schedule an
appointment and see if one of these products might fit
your portfolio, you can give us a call at five
one eight five eight zero one nine one nine. Again

(11:37):
that's five one eight five eight zero one nine one nine.

Speaker 3 (11:41):
We also have a website. You can check us out.

Speaker 1 (11:43):
At www dot rpg retire dot com and it's rpg
retire dot com on the web, and uh, and.

Speaker 3 (11:51):
Again just kind of scroll through the website.

Speaker 1 (11:53):
We have a question box on there if you want to,
you know, submit any questions to us. If you're too
scared to pick up the phone and speak to one
of us because we bite, then that's fine as well.
So again five eight five eight zero one nine. Everyone,
we're gonna take a quick break. I got My name
is Nicholas Dumas, certified financial planner with the Retirement Planning Group.

(12:15):
Alongside me Chris and Chris the C and K of
the Retirement Planning Group. So every we're gonna take a
break and we will be back right after this. And
we are back everyone. Thanks for tuning in. Today there's
a retirement planning show. We've got Nico, Chris and Chris
speaking to you through whatever sound system you're listening to

(12:39):
this on. Did you ever see that show?

Speaker 2 (12:43):
Which one?

Speaker 1 (12:43):
No, I don't worry about it. But again there's a
retirement planning show today. We're speaking on annuities. So we
wanted to, you know, bring it up and start describing
the different types of vehicles that are out there for
retirees to start planning their retirement and where that next
paycheck is going to come from, because when you put

(13:05):
that two week notice in, you know that paycheck is
going to stop coming in also, so you need to
make sure you have a plan. No plan is a
plan and it's a bad plan. So again, I think
an annuity might be an option for you.

Speaker 3 (13:19):
So before the.

Speaker 1 (13:20):
Break, we were describing, you know, some different types of annuities,
income anuities versus you know, there's buffer annuity products out
there now as well, which we're seeing a lot of
inflow in. But I want to break down what an
income annuity is, how they work, how they.

Speaker 3 (13:37):
Grow over time, and how income is generated.

Speaker 1 (13:39):
So I know I'm throwing a lot at you McCarthy,
but you know you are the expert, so I'd like
you to go through.

Speaker 2 (13:45):
I certainly wouldn't go that part. All right, Well, I'm
just happy to be here. But like you said, this
very there's a lot of different annuities out there. It
is our job to make sure that if in the
new it's a good fit, what type of annuity is
the best fit. And like you said, I have worked

(14:08):
with annuities pretty much all my forty years in the business,
and there's many different types. The ones that we specialize
in and you're referring to, is an income annuity. It
gives you a very unique ability that you from day
one can fully invest your money. That will always be

(14:31):
the case, and while investing your money, you create an
income based which is an amount that your payout will
be based on based on your age, and it just
goes like you said, earlier. Your money's working for you.
It's invested. You're getting an income stream that from day one,

(14:55):
you build a base minimum income stream with the ability
every year to give yourself a raise. That raise is
because of whether it's a five or six percent simple
roll up, or you have a good year in the
market and you lock up at the higher income based level.

(15:17):
It's it's a lot to take in.

Speaker 1 (15:20):
Yeah, but I think high level. You know, it was
a really good good job describing it. Uh, there's two
values with annuities, folks, right, So Chris was just describing
you know, the income benefit. There's an income benefit, and
there's also.

Speaker 3 (15:34):
The contract value.

Speaker 1 (15:36):
So when you invest, you know, let's say you put
two hundred thousand dollars into one of these annuity products.
You know that two hundred thousand dollars going is going
to be invested. You know, you can choose your asset allocation.
You know, they might require a.

Speaker 3 (15:50):
Minimum amount in fixed income.

Speaker 1 (15:52):
You know, so maybe you can only have eighty percent
in the stock market, but you have to have twenty
percent in some sort of fixed income or bond product.
You know, but you can invest that money and try
to beat the five or six percent simple growth that's
going to be associated with the income base. The purpose
of these contracts, you know, while you hold them and

(16:15):
don't turn on the income, is to try to get
them to grow, you know, and if you can beat
the five or six percent, then like Chris mentioned, you
get a step up, which is great. So that income
benefit will step up to that new contract value if
your investments perform well, and then next year it'll grow
by the five or six percent simple depending on the contract.

(16:36):
So so again you want to try to grow those
two numbers to the highest you can before you turn
the income on. And then from there, depending on your age,
there's going to be a withdrawal amount that's available to you.

Speaker 2 (16:48):
Correct.

Speaker 4 (16:49):
Yeah, and depending on I just wanted to throw into it,
depending on you know, what you're looking to do. If
you're going into like this income product, what will do
with the investments, Like Nico was saying, if they have
like an underlying bond requirement where you have to have
about twenty twenty five percent in the bonds, then we

(17:11):
will just go as aggressive as possible. And the equity
side of it, you know, or will recommend that, you know,
because the bond once you meet that bond allocation, whatever
the requirement is, the goal of the investments is to
beat the five to six percent, like Nico was saying.
So you want to try and you know, outperform what

(17:34):
you're what the guaranteed rate is on the growth to
get those step ups, you know, to continue to outperform
in the contract and lock in like a higher guaranteed
income amount that you'll eventually receive once you start taking
the income.

Speaker 2 (17:50):
I think one of the benefits again, we can't emphasize
this enough. The income annuity we're talking about is for
people that do not have a lot of guaranteed income
each month plan for retirement, this is a beautiful way
to consider setting yourself up for a guaranteed self funded pension.

(18:14):
And this is really where we have found the best fit. Now,
if you're fortunate, you've got strong social security, you have
a strong pension, that's wonderful. Your need or desire to
look at this type of product may not be as
great as someone who just has Social Security at their

(18:39):
only form of guaranteed income. So what we're trying to
do is we're trying to facilitate as many avenues for
an individual or a couple that they can sleep at
night knowing that even with their money fully invested, with

(19:00):
markets ups and down, they have a baseline income already
established in the hope that it can only be increased
in time.

Speaker 1 (19:10):
Yeah, one of the biggest concerns with retirees is running
out of money, right, and these income products are going
to guarantee an income stream for the rest of your life,
you know, maybe not only your life, also maybe also
your spouse's life. You know, maybe when you elect to
annuitize or turn on the income down the line, you

(19:32):
choose some sort of period certain, right, so it's based
on your life plus you know, ten years period certain,
So if something happens to you, you pass away, it's
still going to pay out to your kids or your nephew,
your niece, you know, for the remaining six five, four
years that are left on that ten year period.

Speaker 3 (19:51):
Certain.

Speaker 1 (19:52):
So when you do get to that age where you're
ready to turn on the income, you just retired and
this account's been growing for the last seven or eight years,
you know, and uh, and now you need to make
a decision, right, you get to that age and you decide, hey,
I just want this for my life, you know, I
have these other assets. Maybe I have a life insurance
policy that's going to pay out to my kids, so

(20:13):
the the loss, you know that the inheritance is there
for the for the children. Now you focus on yourself
right and creating an income stream that you're going to
feel comfortable with and and and annuitize that and turn
it on based on you know how old you are
and what that withdrawal benefits going to be. So I

(20:33):
think they're great products.

Speaker 2 (20:35):
And I think this is another strong point to emphasize
because I think part of the reason many people may
have a little bad taste in their mouth about annuity.
This is not an annuity where you give the insurance
company a block of money and then they're going to
tell you you're going to get a guaranteed income per month

(20:57):
for the director your life and you lose act access
to your money. That is an immediate annuity. We are
not talking about them. We're talking about a variable annuity
with an income benefit writer. Your money is available to you,
your money is fully invested. You will have access to

(21:20):
your money in the future with the hope that as
we do better, your money grows, your income base grows,
your income grows. It's a very very attractive avenue for
people that do not have a lot of guaranteed income.

Speaker 1 (21:39):
And we're definitely not saying to just go and buy
one of these products, right.

Speaker 3 (21:42):
They need to be suitable. You need to understand what
you own.

Speaker 1 (21:46):
Right, So if you do purchase an annuity, or if
you have an existing annuity and you're not sure what
it is, or what it's doing, or how it's invested,
or what it's going to provide as far as income
down the line, we'd be more than happy to take
a look at that annuity. So the only thing that
we really need is a statement. You know, a statement
tells a thousand words to us. We're able to see
when it was purchased, if there's surrender charges of associated

(22:09):
with the contract, what the current income amount would be,
and you know, also how it's performed. We're really able
to dive into, you know, how it's done over the
last you know, five ten years, however long ago you
bought it. But again, you know, we just we take
a look at that statement, see what you have. You know,
if it's a non qualified annuity, so a non retirement annuity,

(22:32):
there may be better vehicles or more tax efficient vehicles
for income payout, you know, through a different company. So
so again, we do a lot of work with annuities.
I've seen hundreds of annuity statements and I'm sure you've
seen thousands. So I think we've got the experience here
to understand what you own and try to figure out

(22:52):
the best game plan for you forward.

Speaker 2 (22:54):
I think another very important point you were talking about
suitability if people only realized how much paperwork have to
be submitted for each annuity that is written. This is
not something that anybody can just sell on a whim.
We have a lot of channels that need to be

(23:17):
approved to make sure that we're doing what's right for
the client. So we don't have to worry about the ethics.
But we have to submit all our paperwork to broker dealers,
we have to be in compliance with NA, the SEC,
so on and so forth. This is something that is

(23:38):
a very calculated avenue that need to be explored and
we need to abide by. So it's a very strong contender,
like I said earlier, for people that don't have guaranteed
income other than Social Security.

Speaker 1 (23:58):
We act in a you share capacity, you know, and
if one of these annuities might make sense to you.
We're for you, We're we're gonna bring it up right.
So when we sit down, we have to look at
your situation and bring forward the options that make the
most sense and describe them to you, educate them to you,
and make sure that you feel comfortable in understanding what

(24:20):
you're getting involved in. You know, if someone's just throwing
paperwork in your face, don't work with them. You know,
you want to understand as well. You know a lot
of people say, oh, I didn't you know, I have
no idea with finance. But hey, we're gonna sit down
and we're gonna try to make sure that you do
understand what you're getting involved in and how that relates
to to what we're trying to accomplish. So if you

(24:40):
want to sit down and have a chat, our numbers
five one eight, five eight zero.

Speaker 3 (24:44):
One nine one nine.

Speaker 1 (24:45):
We'd be happy to come out there to wherever you
may be. You know, you can come out as to
your house. We've got multiple office locations, Malta, Syracuse, Albany,
you know you name it, So give us a call.
Five one eight, five eight zero one nine one nine.
We're gonna take another break. We'll be back right after.

Speaker 4 (25:01):
This, all right, and we are back, so we just
you know, hit on the income products. So the next
thing to hit on is the the buffered products, the
Belton suspender products, where they you get a ten or
twenty percent downside protection on your assets. This is something

(25:22):
that is a compliment or can be a compliment to
the other product, and it's where your money is fully
invested in, you know, one of the major indices like
the S and P five hundred, and you can choose,
you know which time frame you're looking to invest your
money in, whether it's a one year, a three year,

(25:42):
or a six year time frame, and then you get
to choose, you know, how much of a protection do
you want on the downside risk, So that's either ten
or twenty percent on the downside and in some cases,
you know, you get more than market participation and so
that's you know, you can outperform the dassy. So the

(26:04):
insurance companies can offer this because you are losing the
liquidity on your money, although there are some products where
your money is completely liquid to you. And let's dive
into it. Mister McCarthy.

Speaker 2 (26:18):
Well, I think it's very very important that we explain
what we mean by liquidity. It's a very important topic
when you're looking at these products. They come in one,
three and six year buckets. Like Chris said, what it
is is you're buying a cycle up time. So in

(26:41):
the one year bucket, if you want to achieve the
potential of that bucket, you have to hold the money
in for the year. Same with the three year, same
as the six year. Now, if we're going to take
a step back and look at liquidity period, fortunate enough
that we can offer these annuities to client that there's

(27:06):
no handcuffs, there's no surrender charge period. We set it
up that they can get in and out of the
product as little or as often as possible. There will
not be any sales chargers. The only thing with these
products is, like every other investment we work with clients,

(27:28):
we have it a fee agreement. Will charge a fee
that will be the only cost to the clients. So
from a liquidity standpoint, can I get in and out
of this product? Yes, in order to achieve the rewards
with each bucket, you have to stay in for the year,

(27:50):
or the three year or the six year. I think
it's very very important that people.

Speaker 1 (27:54):
Understand that are you someone that's scared of the market.
Right These are for folks that, you know, they want
market exposure, but they want protection in case the market
doesn't do well. You know, there's a lot of things happening,
you know, geopolitically, there's bombs flying around right now. Interest

(28:17):
rates are high, inflation slowed, just good. You know, we've
got a really really hot market right now. You know,
the last two years market was up twenty five, twenty five.
You know this year market's up.

Speaker 4 (28:33):
What five, Yeah, yeah, we've bounced back.

Speaker 1 (28:36):
So we've had, you know, two really good years. Twenty
twenty two the market was down, we've come back. Your
account values are probably above where they were beginning of
twenty twenty two. You know, maybe it's time to look
at that for one k or ira or whatever account
you may have, whether it's a non qualified account or
a qualified retirement account, and start taking some of those

(28:58):
gains and getting it into a vehicle that's going to
provide some protection. On the downside, you know, God forbid
the market does drop over the next year, over the
next three years, you know, it's it's not a bad
idea to put some you know, put a parachute on
your account, especially as you get closer to retirement. You know,
are we saying that this product is suitable for everyone. No,

(29:19):
you know, but if you're someone that's nervous or you know,
you think you've you've had a really good run, you've
been one hundred percent equities and you just said, you know,
forget about it, I'm just going to keep it there.
The market is resilient over time. You're getting to a
point now where you're gonna have to start taking income
off your account. You can't afford a twenty percent downswing.
You know, I got a million bucks, it's two hundred
thousand dollars. Say you retire next year and you wanted

(29:40):
to take fifty thousand a year. You're down to seven
hundred and fifty thousand dollars in your account when originally
it had a million, right, and just because of poor
market timing on your exit into retirement, now you're struggling
to make ends meet. So again, I think it makes
sense for the people that are getting close to retirement,
maybe they're four or five years out from her vironment
in the red zone, which we like to call it,

(30:02):
should be doing a lot of planning in the red zone.
And I think this is a vehicle that makes sense
for people that want some protection on their portfolios. You know,
you can get market exposure, like Chris said, you get
even you know, better participation. So some of these products,
if the market does one hundred percent, you're up what
one hundred and ten percent or one hundred and five percent,

(30:23):
So again they give you some upside potential with downside protection.
So I think they're great products.

Speaker 2 (30:31):
You know what I love about working with you guys.
I've learned so much over the last year and four
months i've been affiliated. So I'm a perfect example you
can teach an old dog new trick. We've been very
fortunate and even though the annuity is of only three
to five percent of our overall book of business that

(30:53):
we manage for client, we are finding that this is
having a stronger and stronger present. For example, three years ago,
interest rates were next to zero before inflation started the
skyrocket times like that. The product we're talking about right

(31:16):
now is going to be hotter than pancakes. Because we
didn't have a lot of avenue that we could guarantee
some rate of return for our clients. Now we have
solid income portfolios made up of bonds and equity funds
that we've done very well for clients. Interest rates are

(31:39):
coming back down, There's going to be less choices for
people to go other than the equity market. So what
better way to get into the equity market with downside protection.
I think it's a win win. I think it's a
win win. How people, I don't think people can afford

(32:01):
not to look at that didn't mean you're going to
do it, but we're here to educate, and we'll be
the first one. If you're not a candidate, we'll tell you.

Speaker 4 (32:13):
Yeah, I agree. I think it's I think it makes
a lot of sense for a lot of people to
look in this area. And that's kind of why we're
we're talking about it is because, like McCarthy just said,
ninety percent of our book, you know, ninety to ninety
five percent of what we do is manage assets. So
that's through model allocations that we build in office and

(32:34):
manage you know, rollover iras for clients or individual accounts
and that sort of you know, asset management. But you know,
we kind of see the industry as a whole, you know,
shifting more and more towards these variable annuity products as
they get more and more competitive with you know, asset
management through a fiduciary financial advisor. So utilizing these and

(32:59):
learning more about them is you know, something that since
McCarthy joined US has been you know, very at the
forefront of like what we're trying to do this year.
And having that you know seminar was great and talking
to a lot of these different wholesaler representatives, you know,
learning more and more about you know, how these products
work and how they fit into an overall portfolio. The

(33:22):
more you learn about them, you know, the more they
start to make more and more sense. And I think
it's just informing people more about you know, what's out
there and what's what's going on and you know, these
different market situations and how it can help because like
you said, you know, if if if someone's scared wants
s and P five hundred like returns, yet they're nervous

(33:45):
about you know the downside. Oh man, I don't want
to take a twenty percent hit. I can't do that
over the next five six years. But they got cash
sitting on the sideline that's in you know the bank
where rates are going to come down. You know, your
money market's not going to get you four or five
percent any more. If rates start coming down, you know,
it might come back down to two. Well, that's not
really that competitive anymore. So shifting some of that money

(34:07):
off the sidelines and getting it into a product that
is in the s and P. Five hundred but has
a ten to twenty percent downside eraser, you know, is
is great. And I think to hit on like how
that eraser works is good too. You know, we should
probably dive into that a little bit. And how you
know that first ten or you go into the ten

(34:30):
or the twenty, you know how how the buffer actually
you know works in the product.

Speaker 2 (34:35):
I think it's essential everybody, regardless of what happened, you
have been that thing you're doing, we always want to
outperform inflation. If we are not earning enough, well losing money.
It may not be losing money in a negative or
read on a statement, but we need to outperform at

(34:57):
minimum what inflation. And this give people a great opportunity
to get into a program where they can have downside
risks like you just shared with market returns and liquidity.
I mean, again, what was so heartwarming I think recently

(35:21):
at that seminar was the participation of the audience and
all the questions that were being asked, because I think
a lot of people were turned on in a positive
positive way that annuities are not what they thought they were.
They were much more comprehensive in nature, offered much more

(35:44):
because back in the day, all the really was was
fixed intric annuities. You know, then there was a slow evolution.
What's offered right now is more than I've ever seen
in forty years. Yeah, there's a lot to look at.
There's a lot of scenarios that annuities make sense. Well.

Speaker 4 (36:04):
I think that also goes to like the insurance companies
probably we're listening, you know, over the last thirty to
forty years, they're like, man, we're getting a bad rap.
You know, we got to release some products that make
sense for the everyday investor where it's more competitive with
like an asset management firm like ourselves, Like they needed
to find where they what avenue could they take up

(36:28):
that asset managers are doing for their clients. And you
know what we can do is we can build out
an income model and you know, you know, generate as
much interest and dividends as we possibly can. But we
can't say that, you know, we can guarantee lifetime income
from your account, but these products can now guarantee lifetime
income for your money that you're putting into them, or

(36:49):
guarantee downside protection. You know, we can't guarantee downside protection
in your account and through an asset management, you know,
putting you in a model allocation, whether it's a sixty
forty or seventy thirty, however you're invested. But that's I
think where they found their niche in the word guarantee.
You know, when you tell someone you have downside protection

(37:09):
or self funding a pension and guaranteed income for life.
You know, those two talking points are very attractive for
a lot of you know, every day investors.

Speaker 3 (37:20):
What does everyone want?

Speaker 1 (37:21):
Everyone wants market participation with no risk. So I think
this is definitely a topic that needs to be addressed
with you know, majority of folks out there. But but
again this is the retirement planning show. Our numbers five
one eight, five eight zero one nine one nine. If
you want to sit down and have a chat everyone,
We got to take another break and we'll be back
right after this. And we are back everyone. Thanks for

(37:45):
tuning in today. As the Retirement Planning Group. Nicholas Dumas
here with Chris McCarthy and Christopher Kopek, and on today's show,
we've been discussing annuities, you know, the ins and outs.
You might be tired of listening to us, but we're
going to keep talking anyways, because I think they make
sense for a lot of people out there that are
either looking for an income stream, looking from for some

(38:08):
sort of protection that an insurance company will provide. You know,
these are insurance vehicles right at the end of the day,
so that insurance company is absorbing, you know, either the
first ten or the first twenty percent on these buffered products,
the risks associated with the market loss. So I think, Chris,
do you want to go through that a little bit
more and the downside protection and how that works.

Speaker 4 (38:30):
Yeah, So as far as like you know, the protection
on the in the buffered product, so ten percent or
the twenty percent. You know, you got two options as
far as how much protection you want on your invested assets.
So the ten percent, you know, you say the market's
down fifteen, it's going to erase the first ten of losses,

(38:51):
so your account would be down somewhere around five and
then if you're within the buffer, so markets down eight, whatever,
you'll you're flat. You know your account you know at
anniversary will be flat. And if you're up, great, you're up.
You know you're the market. You've made money over the
last year. And there are you know, caps on the

(39:11):
upside for some of the products, and they're different and
they know, they're varying on how much market upside potentially
you can capture. Uh and that's you know, the downside
to getting into one of the buffer products. But you
know the benefit of the buffer products is avoiding loss.
You know, how much loss can we mitigate in these
downside markets over a period of time. And then the

(39:33):
twenty percent buffer works the same exact way. So the
twenty percent buffer, you know, markets down ten after your
timeframe that you're in the product for, you're flat. You
know the market's down twenty five. You know, congratulations, you're
down five and everyone else is down twenty five. So
it's just it erases, you know. The you got to
think of it as like that's your max amount of

(39:56):
losses you can erase ten or twenty. So however much
protection you want to put on your assets or your investments,
is you know, whichever product you know, we can sit
down and review all the different scenarios and all the
different you know, upside potentials with the different time frames
if it's something that interests you. But yeah, did I

(40:17):
miss anything, McArthur?

Speaker 1 (40:18):
I think people Oh sorry, I think people need to
light a fire, right you need to get moving on
these products. I think they're in a great point right now.
In the past, we've done work with these, you know,
over the last six seven years. You know, these caps
were a lot lower. You know, you looked at a
ten percent downside or fifteen percent downside protection and the

(40:40):
cap was maybe seven percent on the upside for the
most you can get for that year was seven percent
or eight percent.

Speaker 4 (40:46):
You know.

Speaker 1 (40:46):
Now you're looking at over perform or outperforming the indexes
right right up to a certain cap. So I think
some of those are like three hundred percent or something
crazy like that. So so again, these caps are better now
annuity companies are competing to try to win your business,
so they're offering better vehicles to do what you're trying

(41:08):
to accomplish. So I think they are at a good point.
When the FED starts decreasing rates, they might change cap
rates as well, so lighting a fire and getting going.
While these options are available, and while these participation rates
are so high, I think makes a lot of sense.

Speaker 2 (41:26):
I couldn't agree more. I mean there's a lot of
variable that go into what they set as you guys
have explained beautifully. As far as we cannot talk about
all the different setups and a buffer annuity over the radio,
it's just impossible, there's too much to say. It's definitely

(41:50):
something worthwhile. In person. Well, we can look at a monitor,
go over different scenarios, different avenues that are available to you.
It's it's kind of mind by going how many differents
set up that you can have.

Speaker 4 (42:08):
Well, they make it fully customizable to whoever you know
is looking for the product, which is a good thing.
It's not a bad thing, it's a good thing.

Speaker 2 (42:15):
But I'll tell you, I think the most powerful thing
for anybody listening is who wouldn't give up some upside
gain to ensure downside protection?

Speaker 1 (42:29):
Right?

Speaker 2 (42:29):
I think that really is what it comes down to. Like,
Chrissy did a great job. You know, if you're in
the S and P. Five hundred and it's down five
percent and you got a ten percent downside buffer. You
didn't lose any money. You're at zero. Right If the
S and P was down fifteen percent and you got
a ten percent buffer. S and P's down fifteen, but

(42:52):
you're down five, a lot of people would be happy
you're only being down five verse fifteen. So just exciting product.
There's a lot of different avenues. In order for us
to really get into different features, it's really got to
be one on one. We need to see in person,

(43:14):
go over over a monitor. But I know this is
gonna really blow away a lot of people.

Speaker 1 (43:21):
Their tax advantage tax advantaged products as well for non
retirement accounts. Right, So if you take money from the
bank and put it into one of these products, you
can go in and out of indexes without being taxed
on those dollars over the you know, three six or
six years that you hold, you know, your buffered product,
you're deferring all that tax liability. And then you could

(43:44):
take the money at the end of it and in
ten thirty five into a different product and use it
for income if that's something you're looking to do. So
you know, you could do a buffer growth strategy and
then on the back end turn it into some sort
of sort of income stream for the rest of your life.
That's an option as well. So these are very customizable.
There's a lot of options out there. They're insured up

(44:06):
to five hundred thousand dollars by New York State Insurance Fund,
so even if the company were to default, you know,
New York State will step up and covers that first
five hundred thousand dollars per individual investor. So again, they're
great products, and I think a lot of people just
don't know about them, you know, And if you don't know,

(44:27):
then you tend to not move forward. Right. So you
need to know all the ins and outs of a
vehicle before you purchase it, like a truck.

Speaker 3 (44:35):
Or a car.

Speaker 1 (44:36):
But you also need to know all the ins and
outs of a variable annuity or a buffer annuity before
you make that decision as well.

Speaker 2 (44:45):
These are great thing to consider also for legacy planning
estate planning. One thing about annuities, when we went through
the secure AD and they went from taking the inherited
eye arrays that people used to be able to excuse

(45:08):
me stretch over their lifetime, now they have to take
them out over ten years. The non qualified stretch is
still the only lifetime stretch that I'm aware of that
was unaffected. So a lot of people that are leaving
money for their children, her grandchildren. These types of annuities

(45:29):
are excellent for legacy planning. A lot of people that
are doing estate planning.

Speaker 1 (45:35):
Especially if you're unensurable. Yes, so you can't purchase a
life insurance contract. You know, these annuity products might make
sense because you don't have to go through a physical.

Speaker 2 (45:45):
Absolutely, that's a great or a combination they're are. I mean,
there's a lot of different ways that these can be
set up and coordinated that you really can maximize not
only income and investment potential, but also legacy and a
state planning.

Speaker 1 (46:04):
I mean, yeah, let's say if you if you do,
you know, qualify for life insurance as well. So let's
say you're someone that does have a death benefit on
your head or you and your spouse's head that's going
to be paid out to your children when you pass away.
You know, you've done all your state planning work. You
have an irrevocable trust set up or revocable trust, and

(46:25):
that insurance policy is going to get paid out to
that trust. And instead of giving the trustees the right
to access that you know, lump some that gets deposited
into the trust. You have some dictations in there to
where it's going to purchase some sort of lifetime annuity
for your kids, and then it's going to pay them
out a monthly income stream versus you know, receiving a
four or five hundred thousand dollars lump some. You know,

(46:48):
you see this for a lot of families who are struggling.
The kids may be struggling with you know, addiction or
alcoholism or gambling problems. So again, you want to give
them a monthly income stream versus this lump sum of
cash that's going to be placed on their desks.

Speaker 3 (47:05):
So again, I think it's.

Speaker 1 (47:06):
A great estate planning legacy type of play that can
really create some generational wealth or generational income for you.

Speaker 2 (47:14):
No, I couldn't you know, like I said, And I've
been around the block a long time and it's just
amazing to me the evolution of the whole annuity business.
And you know, for people to take the time like
they did at the seminar, and we will have future seminars.

(47:34):
The participation was great and I really loved seeing because
you could tell people were enjoying learning more about it.
And that their perception was not what they thought it was.
And I know we've already had a number of people
that called for appointment and it's wonderful. It's heartwarming because

(47:57):
you're doing a good service and I think it's valuable, right.

Speaker 4 (48:02):
And the thing is for the advisors out there, if
your advisor isn't bringing up these products to you or
at least mentioning them that they're available or out there,
it's probably because they're not licensed to even provide them
for you. So it's you know, the reason that we're
bringing them up is because they've just come into the
light as far as being very competitive now. So it

(48:24):
makes a lot of sense to talk about them and
bring them up and at least explain them more to
people to get them, you know, a better understanding and
feel more comfortable about them. Because if if it makes
a lot of sense for you know, a large majority
of the people that we meet with, then it makes
sense to talk about So that's why, you know, the
seminars make sense, you know, having the wholesalers come in

(48:45):
and explain them to people if need be, just to
get to people to understand that these products do exist.
You know, you can self fund to pension. You can
add downside protection onto your investments. So there's a lot
of different avenues out there that these insurance companies have become,
you know, a lot more competitive in the space of
asset management.

Speaker 1 (49:07):
So we're running up on the end of the show. Here,
is there one more thing you want to say? McCarthy.

Speaker 2 (49:13):
I just think that we pride ourselves so much as educators.
It's our job to educate our clients what's out there,
find out where they are and what their goals are,
and how can we best meet their goals. Nothing is
off the table, including annuities. If it's a good fit,

(49:34):
we're going to look at it. If it's not, we're
not going to waste your time. But I think it's
so important let the client make the decision, and it's
up to us to help them make the most educated decision. Right.

Speaker 1 (49:49):
So we're going to put options in front of you
and you know, discuss who you are and what you're
looking to accomplish. You know, half our job is listening
and then the rest is you know, putting these options
in front of you so you can make an informed
decision on what you're doing with your assets. So everyone
this is This was the Retirement Planning Show. If you
want to call our office numbers five one eight, five

(50:11):
eight zero one nine one nine. Again that's five one eight,
five eight zero one nine one nine. Everyone.

Speaker 3 (50:17):
Thanks for listening today. We'll see you again next time.