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Can You Buy an Annuity at Any Age?

Stan Haithcock
May 1, 2023
Can You Buy an Annuity at Any Age?

Can you buy an annuity at any age? That's the burning question. The answer is yes, but the real question is why? Should you buy one just because you can buy one at any age? If you're 90 years old, why do you need an annuity? Why do you need to transfer risk? You've already beaten it. Or if you're two years old, why do you need one? So, the answer is, yes, you can. Some products have age limits, but overall, you can buy one. But that's not the real question. The question is, do you need one? We're going to go through where they fit and give some examples for old and young people, but that doesn't mean they all need one. Everything is contractually guaranteed and a risk transfer, so it comes down to your specific situation, and we'll cover all that.

Let's talk age, and let's talk annuities. The question is, can you buy an annuity at any age? Why would someone really old want to buy an annuity? Why would someone really young want to buy an annuity? Why would anyone want to buy an annuity? We're going to cover that as well.

Annuities are transfer of risk products, and they're contracts. Let me give you a couple of examples of old and young people who buy annuities. Most people don't need annuities, and you don't need an annuity if you have a life expectancy of 30, 40, or 50 years. You probably should have your money in the stock market, and that's just Stan The Annuity Man's opinion. I know what I'm talking about because I used to be on the other side of the stock market working for the major firms, so I understand markets and things like that. I had a client call, and he's in his 80s, and he just got his first great-grandson. And he said, "I want to do something for him that's unique." And I have something that I came up with called the legacy income monster, which is a joint lifetime income annuity with the grandfather and the grandson or children. And what it does is it creates a lifetime income stream for both lives because the income stream payments are based on your life expectancy at the time of the payment, and the primary pricing mechanism is that two-year-old, right? But it was interesting how he did it. He put a lump sum in, and we did a cost of living adjustment increase on it to increase every year. But the bottom line is that he left a legacy of lifetime income for his grandson, joint life, which was pretty cool. So, in that situation, not all carriers will do that, but we found some that did. And so we did a joint life income stream with a very, very young person.

Do most people say 40 and below need an annuity? In most cases, no, they do not. When you need an annuity, you need to solve for something I've created, an acronym called PILL. P is for Principal protection, I is for Income for life, L is for Legacy, and the other L is for Long-term care and confinement care. Those are the four primary places you should seek to solve with an annuity. If you don't need to solve for that, you don't need an annuity. If you need market growth, buy stocks, ETFs, mutual funds, etc. The other thing is to ask two questions. I've come up with two questions that simplify the whole buying process. What do you want the money to contractually do, and when do you want those contractual guarantees to start? And from those two answers, we can say, "Okay, you need this type of annuity," and we can run the quotes for you. If you want to talk to us, you can book a time to discuss your situation. Old or young, it doesn't come down to that. It comes down to do you need an annuity transfer of risk contract, and if so, what type?

Let's talk about the types of annuities and the age ranges that people would be buying if they needed that type of annuity. Qualified Longevity Annuity Contracts, QLACs, are really for people who have traditional IRAs and are pointing toward retirement because it's a future income product. Same with Deferred Income Annuities and Immediate Annuities, which are lifetime income products. Typically, the people that buy those are in their 50s and up and going into their 60s and 70s, looking for lifetime income and pensions. Those are pension-type products. Most people looking for pensions are older, going toward retirement, or can see the finish line for retirement. So that's the age range. Young people, I don't see a fit for them. I have a lot of 40-somethings and 30-somethings call me and talk about annuities, and they've heard some sales pitch. And I literally have to tell them, "Hey, you've got 30, 40 years of life expectancy. You really don't need an annuity. Put your money in the stock market. You can afford the risk and afford the ups and downs." I'm in my mid-50s, and at this age, you start thinking, "Okay, the finish line's somewhere down the road, and I can't keep taking all this risk. And maybe I need to transfer risk." And maybe that's where you're at as well. But for young people, annuities are not a good thing. For older people, it all comes down to suitability and appropriateness. But regardless of your age, 50 and over, if you don't need to transfer risk, you don't need annuities. In most cases, most people are looking for an annuity transfer risk solution for income, for lifetime income, to fill that gap, and that's where it fits.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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