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John Lenz: Annuity Insider Strategies for Rising Rates & Inflation

Stan Haithcock
August 2, 2022
John Lenz: Annuity Insider Strategies for Rising Rates & Inflation

About Fun With Annuities Episode #120

When I started calling John Lenz the “Annuity Architect” a while back, I couldn’t have picked a better description of this mad-smart superstar.  First of all, John has the best baritone voice of all time.  He could easily be a national radio or TV voice, and he has to be the one to give my eulogy when The Annuity Man personal jet hits the mountain.  Now that will be a sad day for the annuity world!

John jumped right in with some very unique SPIA (Single Premium Immediate Annuity) observations that blew me away.  Only he can do that to my annuity filled brain, and his take on inflation adjusted annuities was also a two-by-four of new facts to my big head.  John is one of a few people that I actually consult with for new and fresh ideas.  That’s how good he is.

Then John totally blew my mind with his MYGA (Multi-Year Guarantee Annuity) strategy for this current rising interest rate world.  He called them ROP MYGAs.  ROP stands for Return Of Premium.  The strategy he laid out was fantastic, but I appropriately renamed ROP MYGAs to PIVOT RATE ANNUITIES (PRAs).  The bottom line is that there are some MYGAs that allow you to pivot during the middle of the contract to lock in a higher rate.  That’s pretty darn close to a “having your cake…” contractual strategy.  PRAs are the new play.

We then dug in and analyzed whether it makes sense to turn annuity income on now or defer to a future start date.  As I always say, annuities are math.  Annuities are contracts.  You always buy annuities for their contractual guarantees (“Will Do”), not what they might do.  John’s detailed analysis on this topic was ridiculously good and insightful.

John made a hard annuity pivot to MVAs (Market Value Adjustments), and how to easily understand these contractual items found in a lot of deferred annuities.  Of course, I renamed MVAs to a better acronym called IRV.  IRV stands for Interest Rate Variable or Volatility (your choice).  Don’t worry, I’m trademarking these marketing genius ideas.

The podcast finished up talking about the Secure 2.0 act coming out of DC, and the best way to “stretch” an annuity strategy.  John also combined his ideas on this with thoughts on Roth IRAs as well.  Talk about a fire hose of annuity gold information.

Every time John Lenz comes on my Fun With Annuities podcast, it’s a home run.  This time, it was a walk-off home run for sure.  Enjoy.

"A lot of people get a little bit antsy about that, ‘what if I die early?’ why don’t I hear anybody complaining about, ‘what if I pay into social security my whole life then die at 66.’ Was that a bad deal? No, because you don’t need social security anymore. Cause you’re dead!" —  John Lenz

Brief Bio on Co-host: John Lenz

This week’s celebrity co-host is an annuity rock star who has seen it all with 40 years in the business. John Lenz is the founder and President of the Lenz Financial Group, a Simplicity Group company, and full-service brokerage agency which distributes life, annuity, and long-term care insurance products to insurance professionals and financial advisors. They provide complete back-office support to experienced advisors in life insurance, estate planning, and financial planning. LFG is also a principal member of the Insurance Designers of America.

He wants to ensure people have a good buying experience and get what THEY need. So, his goal is to make sure financial professionals have the tools to make that happen. This guy is plugged into the markets, and there is no one better to tell us what’s new and what we need to pay attention to.

In this episode, The Annuity Man® and John Lenz discuss:

  • How inflation affected annuities
  • Return On Premium MYGA’s
  • The cost of not having a pivot feature
  • Advantages of a guaranteed base

Key Takeaways:

  • The rise in interest rates has been a positive for the annuity space in general. SPIAs have responded nicely where the Single Premium Immediate Annuity is now buying more robust monthly income.
  • A better name for ROPs or Return On Premium is Pivot MYGA since it gives you the option to pivot, which means to take your money and go to another company with a higher rate.
  • Suppose interest rates go up and you want to go out of your annuity, and you don’t have this return on premium feature. In that case, you’ll pay a penalty to the insurance company because they’ll have to liquidate the investments that they purchased with your money at a loss in addition to the surrender charge.
  • You’ll be able to invest your portfolio for long-term growth if you have a guaranteed base.

Fun With Annuities® Podcast is hosted by America’s Annuity Agent®, Stan The Annuity Man®, and a Celebrity Co-Host. Hear facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Stan and his guests dive deep into topics such as annuities, finance, retirement, and so much more. It’s fun learning the facts and seeing if they’ll fit your personal retirement lifestyle. Thanks for being here!

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