Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Good morning to all. Craig Shillig here and this is
Save Money. I'm here every Saturday to talk with our
listeners about financial strategies we use to manage and protect
assets safely in the I've been an insurance agent for
over twenty four years. During that time, I've learned a
few insurance strategies, like using annuities as safe money harbors
(00:24):
or using cash value life insurance to supplement retirement income.
Just a reminder, you can call our office at five
six three three three two two two zero zero if
you'd like to enroll into one of my virtual Medicare
community meetings. I do those via zoom. I give two
(00:48):
every month, or you can email me at Craig at
Craigshillig dot com and that's cr Aig at AI G
S C H I L ll ig dot com. Today,
(01:10):
I want to talk to you guys about income annuities. Now,
this is a certain type of annuity. Now this does
focus on income, so annuities is a generalization. Income annuities
is a specific product to generate income for retirement income. Okay,
(01:34):
Lifetime income annuities can be the perfect solution for many retirees.
These annuity payout income streams that never run dry. Now,
remember these don't work immediately. Like I talked in the
past about is SPIA a single premium immedia annuity would,
(01:55):
so is speA. In insurance calendar time, immediate usually means
thirty to forty five days up to twelve or thirteen months.
That's the definition of immediate and the boring conservative insurance speak.
(02:16):
When I'm talking about income annuities, Like all products, you're
going to need some time for these to fester or
in order for them to produce a hefty bounty for
you down the road, I give it or plan on
a six to ten year time horizon. Now that doesn't
(02:37):
have to be for everybody, and that's not in every case,
but in order for an income annuity to work best
for you, it doesn't hurt if you open the account
and let the money in there fester for about six
to ten years. But again, it depends on the company,
and it does depend on the product. You can get
(02:58):
some that work a little quicker, but again I'm using
this six to ten year time horizon, and there's a
there's a reason for that, just like cash value. Give
it in pain life insurance accessing the cash values and
some of the living benefits isn't instantaneous per se, but
(03:19):
again it does depend on the situation. Again, you need
some time in order for these to flex their muscles
and be ready to react. My office represents several annuity
companies for an income annuity strategy, depending on the type
of goal we're trying to achieve. Maybe you've heard of
(03:39):
American Equity, maybe you've heard of Athene Global. I also
do some annuities, especially income annuities with pen Mutual and
sometimes mass Mutual, just to name a few. Income annuities
quiet the fear of running out of money. Addition, by
(04:01):
supplementing income with annuities, more of a retirees portfolio is
allowed to grow, giving it a chance to last longer.
With lifetime income annuities, retirees can obtain income for their
spending needs as well as leaving a legacy to their
(04:21):
families or favorite beneficiaries. The challenge today is retirement's extended unemployment.
Retirement can now last longer than a retirees' actual working
and saving years, spanning twenty years or more. And these
(04:43):
days I tell people you really got to plan on
thirty days. This longer than projected retirement can create some
real challenges as it relates to keeping assets protected and
to producing lasting retirement income. You've heard me say this before,
that you need more than one bucket of money to
(05:06):
pull income from in retirement. An income annuity can be
one of those buckets, besides having an index anuity bucket
or a cash value life insurance bucket. In the future,
I'll also talk about another type of cash value insurance
bucket known as survivorship, and I'll get into that down
(05:30):
the road. Another way to put this in retirement, every
day is Saturday. And you guys know that, don't you
have more fun on Saturdays when you have cash in
your pocket? Has anyone gone to Whities lately and bought
some ice cream? That twenty dollars bill doesn't go really far.
(05:50):
And if you're buying for six or eight, six or
eight adults, that one hundred dollars bill may not go
that far either. There are three risks that arise from
this longer than life and retirement. They are market risk,
inflation risk, and longevity risk. And you've heard me talk
(06:16):
about these risks before. Market risk is actually a concern
for investors even before retirement, although it continues during retirement
as well. Remember two thousand, two thousand and one, two
thousand and two. You know the time period around nine
to eleven. Most people remember the market panic and the
(06:39):
sleepless nights of two thousand and eight two thousand and nine.
The now then lost approximately fifty percent of its value.
Seemingly overnight savings that took years to build were literally decimated,
leaving many who were retired or quickly approach ring retirement.
Do you have to drastically alter their plants again? They
(07:04):
didn't have another bucket to access monies from market. Risk
can be a huge concern for retire ease as it
could mean the difference between continuing a comfortable lifestyle or
going or going back to work in order to make
up for that lost income. Let's talk about inflation risk.
(07:25):
Those who are living on a fixed income will also
run into inflation risk, the fact that purchasing power will
decrease over time. The value of a retiree's income has
the possibility to decrease as inflation shrinks the purchasing power
of their incomes. What does groceries, gas and housing costs? Today?
(07:54):
Everybody knows their basket of groceries now costs a lot
more than it used to. Let's talk about longevity risk. Today,
people are living longer than ever before. It's estimated that
the average sixty five year old male will live to
age eighty six, while the average sixty five year old
female will live to age eighty nine. And those are
(08:18):
just the averagess. It's not unusual now for you to
you to hear people that are making it to one hundred,
one oh three, sometimes one o five. While one person
might die much younger, another could live to the ripe
old age of one hundred or more. The bottom line
(08:39):
is that by the very nature of people living longer,
their retirement assets and income will also need to be
stretched out over many more years. And in conjunction with
all the other risks like inflation and market volatility, this
(08:59):
isotentially means that longevity can actually magnify or multiply all
the other risks. Longevity is a risk multiplier of all
the other risks in retirement. If you retire at age
sixty five and drop dead at age sixty eight, it
(09:20):
doesn't matter if the market drops four thousand points. It
doesn't matter if you were withdrawing ten percent per year
from your portfolio. It doesn't matter if you forgot to
buy a long term care insurance policy. You didn't live
it long enough for any of this to matter. However,
if you lived age eight or or ninety, all of
(09:43):
those other risks could wipe you out. People greatly underestimate
the time they will spend in retirement, and people aren't
accustomed to spending down a lump sum at retirement versus
getting a regular monthly paycheck throughout their working lives. They
(10:07):
have a very difficult time grasping the decumulation concept, so
they oftentimes make unwise choices when it comes to what
they should do with their retirement funds. My clients that
take a monthly payout versus an annual or semi annual
(10:27):
payout usually usually are able to budget their money over
that twelve month period or time horizon. Now, sometimes my
annual or semi annual clients will call me in say
August or September, because they're trying to see if they
can withdraw more money because when they got that annual check,
(10:51):
they spent it faster than they thought they would. Let's
do an example. A couple both age sixty five at
least one person has a fifty percent chance of living
beyond age ninety two, and one person has a twenty
five percent chance a living beyond age ninety seven. A
(11:17):
female age sixty five has a fifty percent chance of
living beyond age eighty eight, and she has a twenty
five percent chance of living beyond age ninety four. A
male age sixty five has a fifty percent chance of
living beyond age eighty five, and that same male also
(11:39):
has a twenty five percent chance of living beyond age
ninety two. All of these factors can have an effect
on someone's retirement income, health status, your age, your risk tolerance,
your product choice, your desires for who you want to bequest.
(12:00):
Annuities can help to relieve the pressure on your portfolios.
Annuities can provide income while at the same time offering
growth and asset protection, which is especially beneficial in a
poorly performing market. It is also possible to provide a
hedge against longevity risk by using lifetime income annuities. Since
(12:24):
these products literally pay their holders in income for the
remainder of their lives. This tends to take longevity risk
off the table entirely because income can continue regardless of
how long the recipient lives. Everyone thinks that runout of
(12:45):
money is about the day that you run out, when
in fact, it's really about the years prior to that,
when you knew you were going to run out of money,
you just didn't know when using lifetime income annuities can
remove the constant fear of running out of money, providing
retirees with financial peace of mind, a reduction in stress,
(13:10):
and a much larger quality of life overall. Here's an
example of a sixty three year old mail using a
lifetime income benefit. If we take one hundred thousand dollars
of an annuity premium, that would pay that sixty three
year old mail five hundred dollars a month every month
(13:32):
for the remainder of his life. If we took a
quarter million, we put that into a lifetime annuity that
would pay one four hundred and seventy nine dollars a
monthly lifetime income. That's in today's dollars. And again that's
on a sixty three year old. If we took a
(13:53):
half million dollars and put that into an annuity that
would kick out two nine hundred and fifty seven a
month every month for the remainder of his life. If
we use seven hundred and fifty thousand of an annuity premium,
that would pay out lifetime income of four four hundred
(14:14):
and thirty six dollars a month, every single month until death. Now,
if we use the million that's gonna get you almost
six that, I'll give you five nine hundred and fourteen
dollars a monthly lifetime income. And it doesn't matter what
the market does, It doesn't matter what inflation's doing, it
(14:38):
doesn't matter who's in the White House or if we're
going to war. That number would still kick out until death.
Just imagine park on a portion of your retirement savings
into an income annuity. And please remember that these these payments,
they're guaranteed. That's the beauty of annuities. It's a guaranteed payment.
(15:02):
So let's talk about mortality credits. What are mortality credits.
They're the financial reward that increases the longer you live. Therefore,
the more years you spend holding a lifetime income annuity,
the more mortality credits you will be paid. Mortality credits
(15:23):
are based on an actuarial calculation. Buy the insurance company
that they issues the annuity that are based on your
age and your gender, and they add a credit from
the entire risk pool of everyone who buys the same
type of lifetime income nuity when doling out mortality credits.
(15:46):
Because some of the people who buy a lifetime income
nuity will die earlier then expected and will therefore not
collect as much money as the others. If any annuity income,
the insurance company can pay the remainder of those in
the pool a bit more. This often represents a higher
(16:07):
return than many of the other types of traditional income
producing investments that are purchased for retirees, such as we're
talking about dividend paying mutual funds or bonds. If you're
taking interest or dividend income off. Those annuity contracts are
also backed by a guarantee from the issuing insurance company
(16:32):
stating that if their mortality calculations prove to be incorrect
and the average life expectancy of the participant pool no
longer than originally projected, resulting in a cash flow shortfall,
the insurance company will make up the difference, a factor
(16:55):
that is not seen with any other type of investment.
This is what makes some of those guarantees great. This
then places the risk of making good on their promise
directly on the shoulders of the insurance company and not
on the investment itself. This is also why insurance companies
are required to carry a certain amount of reserves in
(17:18):
order to make good on such guarantees. Please remember the
reserve requirements for insurance companies are much higher than your
local bank or credit union. Insurance companies usually must maintain
a ninety percent reserve requirement, whereas banks are usually only
required to keep about fifty to sixty percent in reserves.
(17:41):
So which one do you think is a safer bet,
a CD at a bank or an annuity at an
insurance company? You decide. Annuity contracts are a form of insurance,
and they share an important quality with all that all
other forms of insurance. People don't buy insurance products because
(18:01):
they offer the potential for the greatest financial gain. They
buy insurance products to offset the risk for great financial loss.
Charles Schwab believed this. Charles Schwab said that every stock
investment should be covered by insurance just in case that
(18:24):
stock performance showed up negatively. That's an interesting saying coming
from a wirehouse guy. They only like to buy and
sell stocks and bonds, calls, and puts. Insurance isn't really
in their DNA. Running out of money in the later
(18:44):
stages of retirement is a great financial loss, which can
be prevented with a lifetime income anuity. The ultimate benefit
of insurance in any form is peace of mind. Lifetime
income anuity payout streams never run dry. Investment planning does
not end at retirement time. Retirees should plan to live
(19:06):
to age one hundred. The use of annuities can help
to relieve the pressure on portfolios. They can provide income
and at the same time offer growth and asset protection.
The volatility of market returns, combined with the unpredictability of
life expectancy, makes more traditional spend down plans far too
(19:28):
risky for many retirees. In addition to financial issues, constant
worry about finances can also wreakavoc on the quality of
one's retirement lifetime. Two important questions to ask yourself, what
do you need your money to do? What do you
(19:52):
want your money to do now? Some of my clients
will tell me that they would be sacrificing potential growth
and liquidity if they purchase an annuity. Now. This can
be rectified by providing more in depth detail about how
an income annuity works, or by just simply having them
(20:15):
not put as much money into the annuity as originally planned.
Once clients realize that they will have a base income
with which to cover expenses and the remainder of the
funds still available for other things, they are then ready
to move forward. In several instances, clients come back and
(20:36):
ask if they can add more lifetime income annuities to
their overall financial plan. Let me put this another way.
If someone told an individual decades ago there was a
financial product that could potentially give them positive appreciation in
the years the market was up, but would protect them
(20:58):
against loss in the years the market was down, what
would their reaction have been. If it wasn't hysterical laughter,
it would have at least been complete disbelief. Fortunately, there
is a product like that that does exist today. Do
you believe as strategy exists today that can give you
(21:20):
upside positive growth while at the same time protect you
against any market downturn. If the idea of a financial
product that can protect you against loss while still offering
growth potential excites you, don't just take my word for it,
(21:41):
but think of all you stand to gain by moving
forward the possibility of never having to suffer another loss
due to a declining stock market. Let's use a recent example.
You guys heard a deep Seeker that was pretty hot
the news lately and Navidia both in the headlines. They
(22:06):
deal in artificial intelligence. They're in the AI boom and
advanced AI microchips. Now wouldn't you have loved to get
on the ground floor of those stocks? Do you remember
when the market sunk two weeks ago due to this news?
That was a tough Monday. On Tuesday, everything came back,
but it was a rough Monday that Monday. When you're
(22:30):
in retirement, you don't have time or the investment patience
to deal with these types of situations. No more technology
bubble bursting or global or credit meltdown. Remember again, I've
said this before. No one likes annuities. They like what
(22:50):
annuities do. Don't forget. I give monthly virtual meetings regarding
medicare for two different companies every month. In one meeting,
I will cover Medicare supplements with a standalone a drug plan.
That meeting is usually sponsored by Wellmark. My next couple
(23:11):
dates for Wellmark are going to be February eighteenth, March eighteenth,
April fifteenth, and May tenth. Those are Tuesday mornings at
ten am, and I'll be talking about well Mark. Then
United Healthcare is a sponsor for my other virtual meeting.
(23:32):
I focus on Medicare advantage plans known as Medicare Parts C,
and I cover the benefits of that platform. My next
few dates for United Healthcare is going to be. These
are on Thursdays at ten am. That'll be February twentieth,
(23:53):
March twentieth, April seventeenth, and May twenty second. I don't
those are all the dates I have with me right now,
but it's usually the third week of the month Tuesday
and Thursday morning ten am. And again I do those
on Zoom. You can call our office at five six
(24:16):
three three three two two two zero zero for the
Zoom meeting codes I and additional dates and times. Warrior
also welcome to email me and I'll send you the
Zoom codes. My email address again is Craig at Craigshillig
dot com and that's cr Ai G at cr Ai
(24:43):
G S c h I l l Ig dot com
and I'd be happy to send you the virtual zoomlink,
meeting codes. This is Craig Shillig with safe money,
Good morning to all. Craig Shillig here and this is
Save Money. I'm here every Saturday to talk with our
listeners about financial strategies we use to manage and protect
assets safely in the I've been an insurance agent for
over twenty four years. During that time, I've learned a
few insurance strategies, like using annuities as safe money harbors
(00:24):
or using cash value life insurance to supplement retirement income.
Just a reminder, you can call our office at five
six three three three two two two zero zero if
you'd like to enroll into one of my virtual Medicare
community meetings. I do those via zoom. I give two
(00:48):
every month, or you can email me at Craig at
Craigshillig dot com and that's cr Aig at AI G
S C H I L ll ig dot com. Today,
(01:10):
I want to talk to you guys about income annuities. Now,
this is a certain type of annuity. Now this does
focus on income, so annuities is a generalization. Income annuities
is a specific product to generate income for retirement income. Okay,
(01:34):
Lifetime income annuities can be the perfect solution for many retirees.
These annuity payout income streams that never run dry. Now,
remember these don't work immediately. Like I talked in the
past about is SPIA a single premium immedia annuity would,
(01:55):
so is speA. In insurance calendar time, immediate usually means
thirty to forty five days up to twelve or thirteen months.
That's the definition of immediate and the boring conservative insurance speak.
(02:16):
When I'm talking about income annuities, Like all products, you're
going to need some time for these to fester or
in order for them to produce a hefty bounty for
you down the road, I give it or plan on
a six to ten year time horizon. Now that doesn't
(02:37):
have to be for everybody, and that's not in every case,
but in order for an income annuity to work best
for you, it doesn't hurt if you open the account
and let the money in there fester for about six
to ten years. But again, it depends on the company,
and it does depend on the product. You can get
(02:58):
some that work a little quicker, but again I'm using
this six to ten year time horizon, and there's a
there's a reason for that, just like cash value. Give
it in pain life insurance accessing the cash values and
some of the living benefits isn't instantaneous per se, but
(03:19):
again it does depend on the situation. Again, you need
some time in order for these to flex their muscles
and be ready to react. My office represents several annuity
companies for an income annuity strategy, depending on the type
of goal we're trying to achieve. Maybe you've heard of
(03:39):
American Equity, maybe you've heard of Athene Global. I also
do some annuities, especially income annuities with pen Mutual and
sometimes mass Mutual, just to name a few. Income annuities
quiet the fear of running out of money. Addition, by
(04:01):
supplementing income with annuities, more of a retirees portfolio is
allowed to grow, giving it a chance to last longer.
With lifetime income annuities, retirees can obtain income for their
spending needs as well as leaving a legacy to their
(04:21):
families or favorite beneficiaries. The challenge today is retirement's extended unemployment.
Retirement can now last longer than a retirees' actual working
and saving years, spanning twenty years or more. And these
(04:43):
days I tell people you really got to plan on
thirty days. This longer than projected retirement can create some
real challenges as it relates to keeping assets protected and
to producing lasting retirement income. You've heard me say this before,
that you need more than one bucket of money to
(05:06):
pull income from in retirement. An income annuity can be
one of those buckets, besides having an index anuity bucket
or a cash value life insurance bucket. In the future,
I'll also talk about another type of cash value insurance
bucket known as survivorship, and I'll get into that down
(05:30):
the road. Another way to put this in retirement, every
day is Saturday. And you guys know that, don't you
have more fun on Saturdays when you have cash in
your pocket? Has anyone gone to Whities lately and bought
some ice cream? That twenty dollars bill doesn't go really far.
(05:50):
And if you're buying for six or eight, six or
eight adults, that one hundred dollars bill may not go
that far either. There are three risks that arise from
this longer than life and retirement. They are market risk,
inflation risk, and longevity risk. And you've heard me talk
(06:16):
about these risks before. Market risk is actually a concern
for investors even before retirement, although it continues during retirement
as well. Remember two thousand, two thousand and one, two
thousand and two. You know the time period around nine
to eleven. Most people remember the market panic and the
(06:39):
sleepless nights of two thousand and eight two thousand and nine.
The now then lost approximately fifty percent of its value.
Seemingly overnight savings that took years to build were literally decimated,
leaving many who were retired or quickly approach ring retirement.
Do you have to drastically alter their plants again? They
(07:04):
didn't have another bucket to access monies from market. Risk
can be a huge concern for retire ease as it
could mean the difference between continuing a comfortable lifestyle or
going or going back to work in order to make
up for that lost income. Let's talk about inflation risk.
(07:25):
Those who are living on a fixed income will also
run into inflation risk, the fact that purchasing power will
decrease over time. The value of a retiree's income has
the possibility to decrease as inflation shrinks the purchasing power
of their incomes. What does groceries, gas and housing costs? Today?
(07:54):
Everybody knows their basket of groceries now costs a lot
more than it used to. Let's talk about longevity risk. Today,
people are living longer than ever before. It's estimated that
the average sixty five year old male will live to
age eighty six, while the average sixty five year old
female will live to age eighty nine. And those are
(08:18):
just the averagess. It's not unusual now for you to
you to hear people that are making it to one hundred,
one oh three, sometimes one o five. While one person
might die much younger, another could live to the ripe
old age of one hundred or more. The bottom line
(08:39):
is that by the very nature of people living longer,
their retirement assets and income will also need to be
stretched out over many more years. And in conjunction with
all the other risks like inflation and market volatility, this
(08:59):
isotentially means that longevity can actually magnify or multiply all
the other risks. Longevity is a risk multiplier of all
the other risks in retirement. If you retire at age
sixty five and drop dead at age sixty eight, it
(09:20):
doesn't matter if the market drops four thousand points. It
doesn't matter if you were withdrawing ten percent per year
from your portfolio. It doesn't matter if you forgot to
buy a long term care insurance policy. You didn't live
it long enough for any of this to matter. However,
if you lived age eight or or ninety, all of
(09:43):
those other risks could wipe you out. People greatly underestimate
the time they will spend in retirement, and people aren't
accustomed to spending down a lump sum at retirement versus
getting a regular monthly paycheck throughout their working lives. They
(10:07):
have a very difficult time grasping the decumulation concept, so
they oftentimes make unwise choices when it comes to what
they should do with their retirement funds. My clients that
take a monthly payout versus an annual or semi annual
(10:27):
payout usually usually are able to budget their money over
that twelve month period or time horizon. Now, sometimes my
annual or semi annual clients will call me in say
August or September, because they're trying to see if they
can withdraw more money because when they got that annual check,
(10:51):
they spent it faster than they thought they would. Let's
do an example. A couple both age sixty five at
least one person has a fifty percent chance of living
beyond age ninety two, and one person has a twenty
five percent chance a living beyond age ninety seven. A
(11:17):
female age sixty five has a fifty percent chance of
living beyond age eighty eight, and she has a twenty
five percent chance of living beyond age ninety four. A
male age sixty five has a fifty percent chance of
living beyond age eighty five, and that same male also
(11:39):
has a twenty five percent chance of living beyond age
ninety two. All of these factors can have an effect
on someone's retirement income, health status, your age, your risk tolerance,
your product choice, your desires for who you want to bequest.
(12:00):
Annuities can help to relieve the pressure on your portfolios.
Annuities can provide income while at the same time offering
growth and asset protection, which is especially beneficial in a
poorly performing market. It is also possible to provide a
hedge against longevity risk by using lifetime income annuities. Since
(12:24):
these products literally pay their holders in income for the
remainder of their lives. This tends to take longevity risk
off the table entirely because income can continue regardless of
how long the recipient lives. Everyone thinks that runout of
(12:45):
money is about the day that you run out, when
in fact, it's really about the years prior to that,
when you knew you were going to run out of money,
you just didn't know when using lifetime income annuities can
remove the constant fear of running out of money, providing
retirees with financial peace of mind, a reduction in stress,
(13:10):
and a much larger quality of life overall. Here's an
example of a sixty three year old mail using a
lifetime income benefit. If we take one hundred thousand dollars
of an annuity premium, that would pay that sixty three
year old mail five hundred dollars a month every month
(13:32):
for the remainder of his life. If we took a
quarter million, we put that into a lifetime annuity that
would pay one four hundred and seventy nine dollars a
monthly lifetime income. That's in today's dollars. And again that's
on a sixty three year old. If we took a
(13:53):
half million dollars and put that into an annuity that
would kick out two nine hundred and fifty seven a
month every month for the remainder of his life. If
we use seven hundred and fifty thousand of an annuity premium,
that would pay out lifetime income of four four hundred
(14:14):
and thirty six dollars a month, every single month until death. Now,
if we use the million that's gonna get you almost
six that, I'll give you five nine hundred and fourteen
dollars a monthly lifetime income. And it doesn't matter what
the market does, It doesn't matter what inflation's doing, it
(14:38):
doesn't matter who's in the White House or if we're
going to war. That number would still kick out until death.
Just imagine park on a portion of your retirement savings
into an income annuity. And please remember that these these payments,
they're guaranteed. That's the beauty of annuities. It's a guaranteed payment.
(15:02):
So let's talk about mortality credits. What are mortality credits.
They're the financial reward that increases the longer you live. Therefore,
the more years you spend holding a lifetime income annuity,
the more mortality credits you will be paid. Mortality credits
(15:23):
are based on an actuarial calculation. Buy the insurance company
that they issues the annuity that are based on your
age and your gender, and they add a credit from
the entire risk pool of everyone who buys the same
type of lifetime income nuity when doling out mortality credits.
(15:46):
Because some of the people who buy a lifetime income
nuity will die earlier then expected and will therefore not
collect as much money as the others. If any annuity income,
the insurance company can pay the remainder of those in
the pool a bit more. This often represents a higher
(16:07):
return than many of the other types of traditional income
producing investments that are purchased for retirees, such as we're
talking about dividend paying mutual funds or bonds. If you're
taking interest or dividend income off. Those annuity contracts are
also backed by a guarantee from the issuing insurance company
(16:32):
stating that if their mortality calculations prove to be incorrect
and the average life expectancy of the participant pool no
longer than originally projected, resulting in a cash flow shortfall,
the insurance company will make up the difference, a factor
(16:55):
that is not seen with any other type of investment.
This is what makes some of those guarantees great. This
then places the risk of making good on their promise
directly on the shoulders of the insurance company and not
on the investment itself. This is also why insurance companies
are required to carry a certain amount of reserves in
(17:18):
order to make good on such guarantees. Please remember the
reserve requirements for insurance companies are much higher than your
local bank or credit union. Insurance companies usually must maintain
a ninety percent reserve requirement, whereas banks are usually only
required to keep about fifty to sixty percent in reserves.
(17:41):
So which one do you think is a safer bet,
a CD at a bank or an annuity at an
insurance company? You decide. Annuity contracts are a form of insurance,
and they share an important quality with all that all
other forms of insurance. People don't buy insurance products because
(18:01):
they offer the potential for the greatest financial gain. They
buy insurance products to offset the risk for great financial loss.
Charles Schwab believed this. Charles Schwab said that every stock
investment should be covered by insurance just in case that
(18:24):
stock performance showed up negatively. That's an interesting saying coming
from a wirehouse guy. They only like to buy and
sell stocks and bonds, calls, and puts. Insurance isn't really
in their DNA. Running out of money in the later
(18:44):
stages of retirement is a great financial loss, which can
be prevented with a lifetime income anuity. The ultimate benefit
of insurance in any form is peace of mind. Lifetime
income anuity payout streams never run dry. Investment planning does
not end at retirement time. Retirees should plan to live
(19:06):
to age one hundred. The use of annuities can help
to relieve the pressure on portfolios. They can provide income
and at the same time offer growth and asset protection.
The volatility of market returns, combined with the unpredictability of
life expectancy, makes more traditional spend down plans far too
(19:28):
risky for many retirees. In addition to financial issues, constant
worry about finances can also wreakavoc on the quality of
one's retirement lifetime. Two important questions to ask yourself, what
do you need your money to do? What do you
(19:52):
want your money to do now? Some of my clients
will tell me that they would be sacrificing potential growth
and liquidity if they purchase an annuity. Now. This can
be rectified by providing more in depth detail about how
an income annuity works, or by just simply having them
(20:15):
not put as much money into the annuity as originally planned.
Once clients realize that they will have a base income
with which to cover expenses and the remainder of the
funds still available for other things, they are then ready
to move forward. In several instances, clients come back and
(20:36):
ask if they can add more lifetime income annuities to
their overall financial plan. Let me put this another way.
If someone told an individual decades ago there was a
financial product that could potentially give them positive appreciation in
the years the market was up, but would protect them
(20:58):
against loss in the years the market was down, what
would their reaction have been. If it wasn't hysterical laughter,
it would have at least been complete disbelief. Fortunately, there
is a product like that that does exist today. Do
you believe as strategy exists today that can give you
(21:20):
upside positive growth while at the same time protect you
against any market downturn. If the idea of a financial
product that can protect you against loss while still offering
growth potential excites you, don't just take my word for it,
(21:41):
but think of all you stand to gain by moving
forward the possibility of never having to suffer another loss
due to a declining stock market. Let's use a recent example.
You guys heard a deep Seeker that was pretty hot
the news lately and Navidia both in the headlines. They
(22:06):
deal in artificial intelligence. They're in the AI boom and
advanced AI microchips. Now wouldn't you have loved to get
on the ground floor of those stocks? Do you remember
when the market sunk two weeks ago due to this news?
That was a tough Monday. On Tuesday, everything came back,
but it was a rough Monday that Monday. When you're
(22:30):
in retirement, you don't have time or the investment patience
to deal with these types of situations. No more technology
bubble bursting or global or credit meltdown. Remember again, I've
said this before. No one likes annuities. They like what
(22:50):
annuities do. Don't forget. I give monthly virtual meetings regarding
medicare for two different companies every month. In one meeting,
I will cover Medicare supplements with a standalone a drug plan.
That meeting is usually sponsored by Wellmark. My next couple
(23:11):
dates for Wellmark are going to be February eighteenth, March eighteenth,
April fifteenth, and May tenth. Those are Tuesday mornings at
ten am, and I'll be talking about well Mark. Then
United Healthcare is a sponsor for my other virtual meeting.
(23:32):
I focus on Medicare advantage plans known as Medicare Parts C,
and I cover the benefits of that platform. My next
few dates for United Healthcare is going to be. These
are on Thursdays at ten am. That'll be February twentieth,
(23:53):
March twentieth, April seventeenth, and May twenty second. I don't
those are all the dates I have with me right now,
but it's usually the third week of the month Tuesday
and Thursday morning ten am. And again I do those
on Zoom. You can call our office at five six
(24:16):
three three three two two two zero zero for the
Zoom meeting codes I and additional dates and times. Warrior
also welcome to email me and I'll send you the
Zoom codes. My email address again is Craig at Craigshillig
dot com and that's cr Ai G at cr Ai
(24:43):
G S c h I l l Ig dot com
and I'd be happy to send you the virtual zoomlink,
meeting codes. This is Craig Shillig with safe money,
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