Annuities

Maleeah and CJ scratch the surface of everything you need to know about annuities.

Episode Transcript

(00:00):
This is money in Motion with ClassFinancial, a fun and informative show designed
to help you get answers to allyour retirement questions in one place. Talk
you this morning with our retirement planningprofessionals from Claus Financial, C J.
Claus and Malia Quavis to join us. We'd love to have you. If
you've got a question, I got'sphone, give us call six O eight

(00:20):
three two one thirteen ten. That'ssix O eight three two one thirteen ten.
To get on the air this morning, don great. Can learn more
about Class Financial on their website classfinancial dot com. That's klaas Financial dot
com and the telephone number six Oeight four four two five six three seven.
No charge for theinitially get to noappointment dech Class Financial. It will

(00:42):
be complimentary to you again. They'renumber six O eight four four two five
six three seven. And to geton the air this morning, he's got
to call the station six O eightthree two one thirteen ten. That's six
O eight three two one thirteen ten. As mentioned, joined this week by
C. J. Claus and MaliaQuavis CJA. How are you doing this
morning? I'm doing great? Howare you Sean doing really well? CEJ
and of course we've got Malia alongas well. Malia, how are you

(01:03):
enjoying this beautiful day. It's avery nice day. We're happy to be
here. Yeah, it's happy tohave you along. And we've got great
conversation ahead. We're gonna be talkingabout some of the complexities when it comes
to things as far as different typesof retirement products and of course annuities.
I think a lot of folks havequestions about that. We're going to kind
of go through what they're all about, some of the things you need to

(01:25):
be aware of and kind of alittle bit of an understanding of what they
all involved. Will be doing thatthis morning and talking about that all.
Speaking of great things that we're goingto be doing on the show. We'll
do the Class Quiz Question Week alittle bit later on the program. Your
chance to win a fantastic prize fromour friends at Class Financial this week,
a twenty five dollars gift card toBest Buy could be yours little tip if
you listen closely to the program,Oftentimes the question and answer to the Class

(01:48):
Quiz Question Week come up during theshow. Tell you a little bit later
on in the program about how youcan exactly when that will do that again
later on the program, So payclose attention between now and then. Speaking
of the class quiz question week,before we start this week's conversation on annuities,
let's take a look back at lastweek's program. Get the question and
the answer there as well. Maliah. Yeah, so last week we had
a great conversation focusing on small businessowners and the challenges that they face,

(02:14):
and one of the one of theitems we covered was ways in which to
put away money if you're a businessowner. And we don't try to be
tricky with our questions on here,but this one stumped a lot of people
last week. However, Warren ofMadison correctly answered this question true or false.
A solo four oh one K isavailable to business owners who have employees,

(02:37):
and he correctly answered that is false. A solo four oh one K
is designed for business owners who donot have employees. So if that's something
you want you're intrigued about. Ifyou're a small business owner and you want
to get some more information about thebest ideas for you to sock away money,
call our office and we can giveyou the lowdown. Once again,

(02:59):
that phone number six eight four fourtwo five six three seven. At first
spoy'man not going to cost you athing. At class Financial, it will
be complimentary to you again their numbersix eight four four two five six three
seven. Also can listen back tothis previous show's podcasts, including our conversation
last week, especially if you're abusiness owner. A lot of great information
there. Just head on over toclass financial dot com. That's Klaas Financial

(03:22):
dot com. You can subscribe withthe podcast. Also sign up from the
website for the weekly Market Pulse newsletter. Great weekly email, we'll snapshot of
what's been going on the markets.Again, that available to you at class
financial dot com. So I know, of course when folks start talking about
retirement, you start hearing this termannuity coming up. And we're gonna be
talking a little bit this week aboutwhat that is a little summary of these

(03:43):
projects and help people get a littlebit of education when it comes to their
complexities and c J starting off,what's kind of the background on annuities.
How long have they have they beenhere in the United States? Yeah,
good questions. So annuities, asyou mentioned, Sean, obviously, when
you get into retirement planning, thisconcept of annuities starts to pop up.
As a matter of fact, ifyou're in our industry, you'll often hear

(04:04):
like pensions referred to as a lifetimeannuity income stream, or you'll even here
like companies say, yeah, wehave annuitized revenue, which is very interesting.
What do you mean you have annuitizedrevenue? Often subscription model services of
a business. Think Netflix is anannuitized revenue stream. It's an ongoing,

(04:26):
consistent revenue stream. So this isthe concept of annuities, right, ongoing
revenue stream in the case of retirement, ongoing income stream. But annuities have
a long history in the US,going back to the mid seventeen hundreds.
Believe it or not. One ofthe earliest recorded uses of annuities in the
United States was by the Presbyterian Churchin seventeen twenty. The purpose was to

(04:47):
provide a secure retirement to aging ministersand their families, and was later expanded
to assist widows and orphans. Ineighteen twelve, Pennsylvania Company Insurance was among
the first to begin offering annuities tothe public in the United States. Today,
well recently over one hundred years later, annuity sales had a record year

(05:09):
in twenty twenty two in the UnitedStates, so just last year with sales
of over three hundred and ten billiondollars in annuities. So, as you
can imagine, since we interact withannuities in retirement planning, we thought it
would be helpful to give you aclear explanation of what annuities are and kind
of some things to be aware of. Although individuals in our company are insurance

(05:30):
license and certainly understand the benefits ofannuities and what they can offer, we
do not actually sell insurance based productsto our clients, and so ultimately we
can speak to them in an authoritativeway because of our licensing, but we
do not We do not sell themto our clients. Now, with that
being said, I don't want anybodyto misunderstand me as a kind of like
fee based financial planning firm that doesnot sell products, which we're proud of

(05:55):
that it limits conflicts of interest.Sometimes people can think, oh, so
you're the anti a new company.Often people will come in and be like,
you're also the anti real estate company. You don't want people to invest
in real estate. You want toinvest in stocks and bonds that could not
be further from the truth. Amatter of fact, there can be many
wonderful fits for annuities. A matterof fact, they're going to be incredible

(06:16):
opportunities in real estate that certainly cannotbe accessed in the public markets. So
please don't ever misunderstand. We comeinto this with a pretty open mind,
given that we don't get paid tosell or we don't get paid a commission
to sell any particular product, andtherefore we remain pretty open. If it's
a good opportunity, we will suggestyou consider it. So what is an

(06:38):
annuity? And annuity is a contractbetween you and an insurance company that guarantees
lifetime income in retirement. You paya lump sum or a series of premiums
to an insurer and in turn theyprovide income payments to you in retirement.
You can begin to receive those paymentsright away known as a spa single premium

(07:00):
immediate annuity, or at a laterdate of your choosing known as deferred annuities.
Some annuities can make sense for certainsituations, but truly understanding the products
and the internal charges, of course, is going to become very critical.
So I think number one item wewould say is definitely linked to retirement.

(07:21):
Potentially a benefit to you if you'relooking for a source of consistent income in
retirement, but absolutely something to slowdown and make sure you're aware of,
because when you buy these things,you're typically you know, you're typically going
to leave the money in there fora really long period of time. We're
going to break down and just amoment. Those things to kind of consider
when you if you are thinking aboutthat, and understand before you assign on

(07:42):
the dotted line, so to say, speaking of opportunities, a great opportunity
right now. If you've got aquestion for CJ and Malia, we would
love to have you join us hereon the program six eight three two one
thirteen ten at six eight three twoone thirteen ten CJ. Clossomlik Quavis our
retirement planning professionals. They come tous from Class Financial online Class Financial dot
com and the telephone number six Oeight four four two five six three seven.

(08:03):
No charge for that initial get toknow you appointment to a Class Financial.
It will be complimentary to you againthe number six to eight four four
two five six three seven. So, CJ, what should folks understand before
considering an annuity? Yeah, Ikind of hinted at this already. But
annuities are long term investments specifically designedfor retirement. Remember that word for retirement.

(08:26):
So here's the key. If youput non retirement money, so think
think not ira, not roth ira. So if you just take what we
call taxable money, so this moneyyou've already earned and paid taxes on and
you put it into an annuity,you actually cannot take that growth or that
money out of that annuity until agefifty nine and a half or you will

(08:48):
pay a ten percent penalty on topof the income taxation. So annuities get
complex. You go, wait,wait, wait, I already paid tax
on that money, and I putone hundred grand into an annuity at fifty
and I'm five, and I decidedto change my mind. I want to
do something else. And they go, well, you haven't paid tax on
the gain yet. Open, bythe way, you're not fifty nine and
a half. So you're going topay tax on the gain and a ten

(09:11):
percent penalty. And people go,what in the world is happening? And
they occasionally they'll go, okay,fine, we'll just give me back what
I put in and then you canleave the growth in there. Because that
what I put in, I've alreadypaid taxes on and they go, ah,
there's this concept of LIFEO, lastand first out on an annuity where
you have to take the gain outbefore you can get to the basis.
Long story short, if you're gonnamove towards these annuities, you've got to

(09:33):
really be aware of the benefits,yes, but also the limitations, the
restrictions, and so if you areyounger than age fifty, you should most
likely be cautious with putting a lotof money into the annuity unless you're very
clear that you can't touch that growthuntil fifty nine and a half, or
unless you're just putting retirement money intoan annuity, which is a whole different

(09:56):
discussion. Really important things to considerand to be aware of. Us.
We talked this morning with j Classand Malia Quaevis. They are our retirement
planning professionals from Class Financial online,Class Financial dot com that's Klaas Financial dot
com. I mentioned, of courselistening to the podcast, subscribing online as
well as getting that signed up forthe weekly market paulse newsletter. Didn't mention

(10:16):
that you can learn a little bitmore about Class Financial on their website.
There's separate divisions. Also, getto know the team at Class Financial all
online Class Financial dot Com. That'sKlaas Financial dot Com. Telphon over for
the office right here in Madison.Six O eight four four two five six
three seven. No charge for theinitial gets to Know you appointment at Class
Financial. It will be complimentary toyou. Again their number six O eight

(10:37):
four four two five six three seven. And to get on the air this
morning, it's the regular studio numbersix O three two one thirteen ten.
That's three two one thirteen ten.So, Malia, what are the different
types of annuities that are out therethat are being offered? Yeah, so
c Jerry hinted at these, Sothere's and again we're trying to break down
something that's very complex into just afew minutes here, So do your own

(11:00):
research as well. But two basictypes of annuities would be deferred annuities and
an immediate annuity. So deferred annuitiesthose are considered your begin You begin in
the accumulation phase, so the ownerspaying a premium. As CJ mentioned,
you're putting in after tax money intothe annuity, and then you're choosing from
available investment options. So during thisphase, earnings typically accumulate on a tax

(11:26):
deferred basis. That's why people areattracted to these. Owner has the flexibility
to start the distribution or income phaselater, often coinciding with their desired retirement
date. So it's kind of likea a holding pot and then you make
the decision when you want to startthem. And within the deferred annuity category,

(11:46):
there's two different types. There's fixedannuities and those offer a fixed rate
of return for a specified period oftime. It could be three years,
five years, or above. Youcan select the time period might be right
for you based on your investment horizonand retirement income needs. So I would
say a lot of people think aboutfixed annuities similar to CDs. They have

(12:09):
a guaranteed interest rate and that's thatmakes them attractive to some people. But
the more complex different annuities is definitelythe variable annuities and those underlying those insurance
products. There are investment options thatparticipate in the market, so the value

(12:30):
of the annuity contract will fluctuate basedon the performance, just like the market
brings forth every day for us ofthose underlying investment options. So the thing
about variable annuities to be very veryclear on is there's a lot of different
writers that can be put on them. They're usually optional living benefit writers.

(12:50):
Those cost extra. Everything has acost to it, and they can provide
guaranteed lifetime income regardless of how theannuities invest The annuity in estments perform.
However, you need to read thefine print because sometimes those can be exhausted
as well. You have to reallyunderstand what you're getting yourself into. So
those are the two different types ofdeferred annuities, fixed and variable. Then

(13:13):
we have what's called an immediate annuityagain a CJ mentioned, which refers to
a single payment that you're basically puttinginto this contract and it can go directly
into the distribution phase, meaning Okay, I've got one hundred thousand dollars,
I put it into this contract andthen I'm going to have it literally pay
income benefit within thirty days or soonthereafter. So that's funded by that lump

(13:39):
sum payment. So sometimes people lookat the spears as we call them,
as a consideration if they don't havepension income, which many people don't.
This can give people, you know, that peace of mind that I know
I'm going to get this deposit everysingle month as an income string. Interesting
stuff as always from our retirement planningprofessionals maliq Us and C. Jack Lass.

(14:01):
Of course they come to us fromClass Financial. Great website, Class
financial dot com. That's Klaas Financialdot com. Learn more about Class Financial
online. You can also subscribe tothe podcast and the weekly market paulse newsletter
all at the website. Obviously,mornings can be a little crazy sometimes dropping
off the kids, grandkids at school, picking up some coffee, those kind
of things. Maybe a miss partof the program. You can always listen

(14:22):
back, also share the podcast.Just handing over to class financial dot com.
That's Klaas Financial dot com. Thetelephone number for the office here in
Madison six O eight four four twofive six three seven, No charge for
that. Initially get to know yourappointment det Class Financial. It will be
complementary to you. Again the numbersix O eight four four two five six
three seven. And if you havea question for CJM. Melia, we'd

(14:45):
love to have you join us thismorning. I gotta do is give us
call six O eight three two onethirteen ten. That's six O eight three
two one thirteen ten. We haven'ttalked fees, yet we're going to get
to those and so much more aswell as your call as Money in Motion
with Class Financial continues next right herethirteen ten WIBA. This is Money in

(15:05):
Motion with Class Financial, a funand informative show designed to help you get
answers to all your retirement questions inone place. And the phone lines are
open here at the station six Oeight three two one thirteen ten. That's
three two one thirteen ten. Ifyou have a question for our retirement planning
professionals from Claus Financial, CJ.Class and Malia Quavis love to have you

(15:26):
join us this morning again the numbersix eight three two one thirteen ten.
The website for Class Financial. It'san easy one Class Financial dot com that's
spelled klaas Financial dot com and theirtelephone number six O eight four four two
five six three seven. No chargefor that initial get to know you appointment
to at Class Financial. It iscomplementary to you again. They're number six

(15:46):
O eight four four two five sixthree seven. We are talking about annuities
this week, and I'm guessing thatthere's probably is with everything. Nothing nothing
in life is free, and there'sobviously going to be some fees and things
like that, what do we needto understand then when what might we find
when it comes to fees within anannuity CJ. So I'm actually going to

(16:06):
talk about that today. We'll bringhim back. So, yeah, deep
within them. And sometimes these arereally good questions you need to ask if
this is something you're considering. Sothere can be some disadvantages with annuities again,
high fees and limited liquidity. Soagain, these products are often complex,
especially the variable annuities, and theycan be hard to understand even if

(16:30):
you're well educated. So we reallysay buyer beware. Doesn't mean you shouldn't,
but you should take your time understandingwhat you're getting into. So for
starters, almost all annuities have commissions, so it shouldn't be a shock.
This is where fees come in,and those can be anywhere from one to
ten percent of the total value ofthe contract, depending on the annuity type.
So again we're not against people gettingpaid, nothing wrong with that,

(16:53):
but you really need to understand thatwhat you're getting it needs to be worth
worth it for you in the longterm, long term for your retirement situation,
and understand that you are paying fees. So the more complex the annuity,
often the higher the commission. Moresimple and straightforward the contract, usually

(17:14):
the lower the commission. So what'sfunny is you don't see this. You
write a check perhaps for one hundredthousand dollars, you don't see that commission
come directly out of there. Butyou should be aware that there's an incentive
to that person selling it. Sothat's where we kind of question sometimes whether
that's the best move for a clientor not, because perhaps a person selling

(17:38):
it to you has some other conceptof why it's the right one for you.
So the two things we want youto look out for for sure are
surrender charges. So surrender charges,what that really means is if you decide
to pull your money out of anannuity within the first several years after you
buy it. Let's say you figure, you know, I need that money.

(18:00):
I'm not thinking I want to takeit on a yearly basis, I
just need it all back. Thenyou're gonna pay quite a penalty. And
those surrender charges typically run about sevenpercent of your account value if you leave
after one year, and the feegenerally declines by one percentage point a year
until it gets to zero after yearseven. Or eight if it's a longer

(18:22):
annuities. So we have seen,believe it or not, annuities that have
hefty year surrender charges, up toeven twenty percent in that first year.
So we're just like, ah,be careful, and CJ can mention after
I'm done with this, he canmention. Just a quick synopsis of years
ago, we dealt with a clientwho was very young that got put into

(18:42):
annuities and how horrible those fees wereas they tried to extract it back out
because it wasn't the right move forthem. The second thing we want you
to understand is there's generally high annualfees. If you move money into a
variable annuity, you'll also encounter highannual fences. So you'll have the annual
insurance charge that could run one anda quarter percent, annual investment management fees

(19:07):
which could range from another half percentto more than two percent, and then
there's fees for insurance writers and thatcould add another six tenths of a percent.
So if you add them all up, you could be paying two to
three percent or more just to havethe annuity in place. And what we
see lots of times is these contractsget heavy with these writers on them,

(19:30):
and many times you're never even goingto use all the different writers that the
person has nicely put on for you. So we really want you to know
what you're getting into before you signon the dotted line. Talking this morning
with our retirement planning professionals C.J. Clawson Willie Acquavius. If you've
got a question, love to haveyou join us this morning. Six O
eight three two one thirteen ten.That's six O eight three two one thirteen

(19:51):
ten and Chris checks in. Chris, welcome to the program. You're on
the air with C. J.Lawson Willie Aquavius of Claus Financial Hill.
Listening to that last part, Ithink I have my answer. I don't
know if I want to pay allthe fees, but I am fifty nine
and three quarters, I guess,and I have money to put into something.

(20:12):
I'm not going to retire probably tillfifty seven. And I was speaking,
you know, should I put moneyinto an annuity now or should I
put money into some of the highyielding cbs that are out there? Great
question, Great question, Chris.I don't know, meaning I shouldn't sound

(20:36):
so cavalier. We would obviously haveto sit down and just kind of understand
your overall objectives and risk tolerance andwhat you're trying to accomplish. But but
certainly your question is a good one. You're you're over that fifty nine and
a half threshold that we talked about. You're looking for something to kind of
supplement, you know, your futureretirement at sixty seven, and so certainly
an annuity could be one of thoseone of those can iterations. Now,

(21:00):
as Malia just got done talking about, the question is what kind of an
annuity? We're breaking them up intokind of really big broad categories of variable
and fixed annuities and deferred versus versusimmediate. But truth be told, there's
actually even more subcategories to that.There's equity indexed annuities. There's there's variable
annuities with income writers that create lifetimeincome. There's there's many different variations of

(21:25):
these things. And so you wouldjust want to sit down with somebody who
hopefully has a limited number of conflictsof interest with you to talk through is
this truly what I should do?Or you kind of hit the nail on
the head, Chris, Or shouldI just put it into a high yielding
CD and maybe ladder out some CDsfor two or three years and try to,
you know, get five five anda half percent there. So unfortunately

(21:47):
we can't answer it because I justdon't know your big picture finances are risk
tolerance. But you are on theright track asking really good questions. It
is a great question. It's greatto know that that is on your mind
and definitely a good time to starta conversation as we're talking this morning with
our retirement planning professionals from Class Financial, CJ, Class and Malia Quavis.
The website class Financial dot com.That's Klaas Financial dot com. The telephone

(22:08):
number six O eight four four twofive six three seven. No charge for
the initial gets to know you appointmenttech Claws Financial. It will be complimentary
to you again the number six Oeight four four two five six three seven.
We're to our conversation with CJ andMalia and you as well. We're
going to talk about what happens ifyou pass away? Doesn't it do any
makes sense? What's the what arethe details? What I need to know?
We get some of the important stuffnext as Money in Motion with Class

(22:30):
Financial continues right here on thirteen tenWI VA. This is Money in Motion
with Class Financial, a fun andinformative show designed to help you get answers
to all your retirement questions in oneplace. Talking with our retirement claning professionals
from Class Financial, CJ Class andMalia Quavis. The website Claus financial dot

(22:55):
com. That's Klaas Financial dot com. I will say if you are if
you are hungry and you see thewebsite, you will suddenly definitely be craving
apple pies again. Yes, upat Claus Financial dot com telephone number six
or eight four four two five sixthree seven. No charts that initially get
to know your appointment to a ClassFinancial. It is complimentary to you.

(23:17):
Again. They're number six or eightfour four two five six three seven talking
with our retirement planning professionals, MaliaQuavis and c J. Class And a
couple of minutes we'll be doing theClaus Quiz question week chance to win a
twenty five dollars gift card two BestBuy. Talking this morning about annuities and
I think one of the questions,folks, is we talk each and every
week always that tax question kind ofit starts lingering in people's minds. What

(23:37):
about taxes and annuities, and whatabout things like deferred growth what happens there
CEJ Yeah, so the tax rulescan vary based on the type of annuity
and the type of money that youend up putting into an annuity. So
again we're trying to cram a bunchof content down into you know, what
ends up being about fifteen minutes ofairtime that we talked through here. But

(24:00):
feel free to call into the officeyou have any additional clarifying questions, or
talk to your financial advisor. Butyou can buy an annuity with funds from
an IRA. Let's say, soyou could transfer an IRA, so retirement
money in an IRA, SABE,Schwab, fidelity whatever, into an IRA
with an annuity or into an annuity. So think of it this way,

(24:21):
IRA, ROTH, IRA, Individualtaxable. Those are account registration categories that
the IRS controls. Annuity is aproduct, and so an annuity. It
would be the equivalent of me sayinglike I put my IRA money into an
a CD or I put my IRAmoney into a mutual fund. The annuity
is the product that you're putting itinto. So you can certainly use retirement

(24:45):
money and if you do that,then all the normal retirement account rules apply,
right, so I put my moneyin, I can't draw it out
till fifty nine and a half withouta penalty. And then when I pull
money out of that IRA, it'sincome taxable all of it because I haven't
paid tax on any of it.The only thing is there's another layer of
complexity when you put your IRA moneyinto an annuity, because the annuity product
itself can have a required holding periodwhere you put money in and then it

(25:10):
has to stay in there for atleast five or ten years before you avoid
the product level penalties. Now whereit gets trickier is if you use non
retirement money. Think of this asjust that after tax money that Malia was
talking about earlier. If you putthat money in there, well, then
as we talked about, it defersthe growth. Whereas if you put that
money in to say a brokerage accountwith Fidelity or Schwab, it doesn't defer

(25:33):
all that growth as it grows,you get at ten ninety nine to pay
some tax on it. Even ifyou're not using the money inside of an
annuity. The beauty can be thatyou defer the growth on that taxable money
that you put in their original orI should say that that after tax money
that you put in there originally,so it grows tax deferred. But you
just need to be aware that whenyou pull that money out, unless you

(25:56):
annuitize, when you pull the moneyout, it is lifot treatment last in,
first out, So when that moneycomes out, you must first pull
out the growth, and that growthgets taxed at ordinary income tax rates.
Okay, so that's the key hereis you're converting what would have been potentially
somewhat capital gains tax rates into anordinary income tax rate. Now, again

(26:21):
a lot of complexity because if youannuitize and turn on a lifetime income stream,
then there's something called an exclusion ratio, which allows you to take out
part part basis in part gain YadA, YadA, YadA. I guess what
I'm trying to say is make sureyou talk to somebody who knows what they're
talking about here, who can reallywalk you through the finer details, and
just know we're not warning you againstusing them. They can be spectacular for

(26:48):
people who are worried about longevity risk. Longevity risk is living too long and
not having enough money, so annuitiescan be a great solution for addressing longevity
risk when you don't have a largepension or social Security income, but you
just want to make sure you slowdown before you put a bunch of money
in. I'm going to talk alittle bit about when they do make sense
and some things to think about therewith C. J. Claus and Malia

(27:11):
Quamas, our retirement planning professionals fromClaus Financial. I mentioned the website class
financial dot com that's Klaas Financial dotcom and a telephone number six to eight
four four two five six three seven. No charge for that initial get to
no reappointment to a class financial.It will be complimentary to you again the
number six eight four four two fivesix three seven. So let's talk about
when an annuity may make sense andwhat would happen then to the money if

(27:33):
if I were to pass away.Yeah, so we've hinted at this and
what we would say is annuity iscan make a lot of sense for people
who are worried about that longevity risk. So again that is the Hey,
everybody in my family lived beyond ageone hundred and some of them ran out
of money, you know, beforethey ran out of life, and so
I don't want that to happen youknow, should I consider an annuity.

(27:55):
The answer to be absolutely, that'sa great consideration for somebody like that.
Additionally, people who don't have largepensions from their employers. So for those
of you who are listening who areworking with the State of Wisconsin in any
capacity, you all know that youhave that WRS ETF pension WRS by the
way, it's just the acronym forWisconsin Retirement System and then ETFs Employee Trust

(28:18):
funds if you want to know.But that pension is spectacular, and that
pension is a form of an annuity. It addresses your longevity risk because once
you retire and turn on that incomestream, depending upon the way that you
claim it, it becomes a lifetimeincome for you and maybe even your spouse.
By the way, so you getthe idea. If I'm working for
the State of Wisconsin and I've goteighty thousand a year coming in from my

(28:41):
pension after i retire as a teacheror a nurse, and then I've got
another twenty thirty thousand coming in fromSocial Security, well I'm not a prime
candidate for buying an annuity, mI because I already have two annuities through
Social Security and the state of Wisconsin. Conversely, however, if I worked
for myself my whole life, I'mself employed and I get later on in

(29:03):
life and I realize I've put allmy money back into my business, and
then I go to sell it andI don't get as much as I thought,
and I just have a low SocialSecurity benefit and no pensions. Well,
gosh, if you have longevity inyour family, there may be a
real consideration for putting some money intoan annuity. And finally, if you
become the beneficiary of an annuity,this would be the time that I would

(29:29):
really say pause big time, becauseif you don't know what it is that
you're doing without annuity, after youinherit it, there can be irrevocable tax
damages that impact you in the yearthat you inherit those annuities, because most
often what people will say is like, I don't know, just give me
the money. And unfortunately, evenwhen it's non retirement money inside of those

(29:52):
annuities, there's no what's called stepup in the basis, and therefore,
if you just distribute your portion,you can really get walloped with some taxes
there, so really seek out wisecounsel. If you end up inheriting an
annuity. So many important things tobe considering, and of course we talk
about planning and taking these things slowand understanding everything that you're doing as it's

(30:15):
getting done. That's the importance ofhaving guidance. As we talk with C.
J. Class Emilia Quaevis of ClassFinancial, don't forget we chat each
and every Thursday morning at eight o'clock. If you miss any part of the
program, you could always listen backonline. The podcast available at class Financial
dot com. That's klaas financial dotcom. You can learn more about Claus
Financial on that website as well.Their telephone number six so eight four four

(30:37):
two five six three seven. Don'tforget, it's no charge. Here's that
initial gets no you appointment tech ClassFinancial. It will be complimentary to you.
Again. The number for the officesix to eight four four two five
six three seven. Go on tohold out at that telephon number as well,
because it's time now for the ClassQuiz question the week. It works
like this, just a moment,I'll ask you the claus quiz question leak.
You will then have thirty minutes fromthe end of today's program to call
the Class Financial office right here inMadison at six SO eight four four two

(31:00):
five six three seven. If youare the first car with correct answer,
you win this week's prize, whichis a twenty five dollars gift card two
Best Buy. This week's claus Quizquestion week is this true or false?
If you take money out of anannuity product prior to the age of fifty
nine and a half, will youhave to pay a penalty of ten percent?

(31:21):
True or false? Telephone number sixSO eight four four two five six
three seven, first call it.Correct answer win. That's twenty five dollars
gift card too Best Buy. Don'tforget that it is Class Financial's office right
here in Madison as well. Nocharge for the initial gets, no apployment
at Class Financial. It will becomplimentary to you again the number six to
eight four four two five six threeseven sej Malia. It's always informative,
always great chatting with you guys.You enjoy this most beautiful day. Thanks

(31:45):
HUNS. News comes your way nextright here on thirteen ten w IBA.
This is Money in Motion with ClassFinancial Asset Advisors, LLC, a registered
investment advisor registered with the SEC.The content of this show is for informational
purposes only, and should not beconsidered individual investment advice. Class Financial does

(32:09):
not offer tax or legal advice.Any opinion offered during the course of this
show is the opinion of that particularinvestment advisor representative, and not necessarily the
opinion of Class Financial.