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Annuities Explained by Age (TAM Classic)

Stan Haithcock
June 9, 2024
Annuities Explained by Age (TAM Classic)

Hi there. Stan The Annuity Man, America's annuity agent. I'm passionate about annuities, but I'm also passionate about why you should own an annuity. One thing I'm even more passionate about is the age at which you need to purchase an annuity. What's the right age? When's too young? When's too old? When's the right? When's the porridge just right for an annuity, Stan The Annuity Man? Well, I will go through age ranges, and if the age ranges don't fit my parameters of being a fiduciary, I will start yelling. But there are some ages that now get calls, and they're like, "Well, this guy told me I should buy an annuity." Or an older person getting pitched an annuity that is not appropriate for them. We're going to go through all of that right now.

‌18-34 Years Old

‌All right, so let's look at the first age group, ages 18 to 34. Now, first of all, 18 to 34-year-olds should never, ever, ever, ever buy an annuity of any type. I don't care if the agent or advisor needs to make a car, home, or child support payment. It doesn't warrant an 18 to 34-year-old buying an annuity period. You have so much life expectancy ahead of you that you need growth. You can afford markets going up and down and up and down and hiccup and hiccup and hiccup.

‌You can afford that to happen. You do not need to lock up your money for income for life. You do not need an Index Annuity at 18 to 34 years old. By the way, I know we have a lot of young people watching this because I'm darn vibrant and just energetic as Stan The Annuity Man, and I appreciate you following me and reading this stuff because it is informative. You have to admit that. But you do not need an annuity.

‌If you're 18 to 34 and someone pitches you an annuity, punch them in the face. No, don't do that. If you did, you can spend time in prison because it's worth it. If you're an agent advisor out there and pitching it to young people, you should be ashamed of yourself. That is ridiculous. Here's the reason why: 18 to 34-year-olds. Just listen. Lean in. You need market growth. You need money to have market growth potential and unlimited upside, and no annuity on the planet provides unlimited upside.

‌Yes, even you Variable Annuity people know there are limited choices with annuities. You're going to have limited choices or limitations on the upside. If you're 18 to 34, you do not need those limitations.

‌Hey, one more thing. For the 18 to 34 age group, one of the biggest reasons you want to avoid buying an annuity like a Deferred Annuity, like an Index Annuity, is because the IRS has a little rule. It's called the 59-and-a-half rule, and what does that mean, Stan The Annuity Man, America's annuity agent?

‌That means if you're 18 to 34 or in that age range or too young to buy an annuity and you buy this Index Annuity that the person said is good, you're going to get market upside with no downside, which is a lie, and you take money out of that before your age 59 and a half, there is a 10% IRS penalty because you're taking it out before age 59 and a half. Have I made myself clear? Thank you. Let's talk about ages 35-49, right before you reach 50.

‌18-34 Years Old

‌Even for these people, I will tell you that you should not buy an annuity, period. You still have a long-life expectancy. You still can weather the storm of market growth and market volatility. Do not buy an annuity if you're in your 30s and 40s, absolutely early 40s. Going back to that 59-and-a-half rule, if you purchase a Deferred Annuity, like a Multi-Year Guarantee Annuity or a Fixed Index Annuity, if you take money out before you're 59-a-half, there's a 10% IRS penalty on that money you're taking out. Many agents and advisors don't even know that rule, and they should know that rule if they're selling anything.

‌35-49 Years Old

35 to 49-ish, that range, it's a push. You really, really, really should not buy an annuity of any type. The only way you're probably going to fall into an annuity is if you inherit an annuity. I've done a lot of videos on inheriting an annuity and the rules of inheriting an annuity. I would advise you that if you're in that situation where somebody, mom, dad, aunt, or whatever, left you an annuity, you're the beneficiary of that, and you need to set a time to talk with me. Go to The Annuity Man and set up a time that works for you. You can book a call with us, and we will go through the details of what you've inherited, and I'll walk you through the choices so you can make an informed choice.

‌You got to be careful who you're asking out there because there are going to be people trying to flip you and sell you stuff and do all kinds of things, but when you inherit an annuity in that age range, whether it's 18 to 49, you need to talk to me. The other kind of asterisk that I'll put out there for these youngsters and annuities is that there are structured settlements that happen when people are in accidents, and a judge hits the gavel and says, "You know what? There's a lawsuit involved. It's a legal process." They get an annuity for that young person because they were in an accident, etc.

‌That's not what I'm talking about. Even though people say, "Well, I have a niece who got an annuity because she was in an accident." That's called a structured settlement. That's fine. That's when it's part of a legal process to take care of the injured person, but that person didn't decide to buy the annuity. They didn't even make a decision to get in the accident. It is what it is. The other tiny little asterisk that I'm going to put out there is that I have maybe five clients that fit into this, and that's the reason it's important to talk to me; these are super-duper-uber wealthy entrepreneurs.

‌I mean, uber-wealthy entrepreneurs. Many are in their early 40s or maybe early 50s when they've first called. I remember saying, "You're too young." And they're saying, "Well, I read this article that you wrote a long time ago, Stan The Annuity Man, about there are some states that can protect your assets from bad lawsuits or things like that, hit-and-run type lawsuits where people are trying to get after your money and annuities will protect that."

‌In specific situations, those might fit, but for the 99% of you under that age range, they don't. If you're the person out there making 10, 15, or 20 million, and you make more money doing your business, and you want to protect what you have and protect it from creditors, annuities could fit. Looking at those two age ranges, 49 and below, I don't see annuities being appropriate and suitable because you need market growth.

‌50-64 Years Old

‌The next age range is 50 to 64. You're 50 years old, or you're up to 64 years old. At this point in time, for anyone over 50, it's okay to start looking into annuities. I would encourage you to go to The Annuity Man and get my books. You can download them for free and under no obligation.

‌I have a Fund With Annuities podcast where I talk about annuities. I have celebrity guests on there who also talk about investments and other things. Get educated.

‌Once you're in your 50s, you need to start getting educated about annuities because if you're not going toward retirement soon, you're thinking about it or trying to plan for it. 50 to 64, you need to start thinking, "Do I want to transfer risk? What does my lifetime income look like? What does my income floor look like? Do I want to protect some principal right here as I get closer to the finish line?"

‌Everyone's finish line of work is different. I got a call the other day, and the gentleman was 50. I said, "Your kind of young for an annuity of any type." He says, "Yeah, but I'm retiring at age 54, 55." First of all, kudos to you, but second of all, let's start looking at it. I explained the 59-and-a-half rule, meaning we have to be careful not to take money out of a Deferred Annuity like a MYGA or an Indexed Annuity and incur that IRS penalty. You can get around that, and that's the reason you got to talk to me.

‌If you're doing an annuitization-type product, you can get around that penalty, but once again, I will ask a bunch of questions. What do you want the money to contractually do? When do you want those contractual guarantees to start? I'm going to tell you the PILL acronym, Principal Protection, Income for Life, Legacy, and Long-Term Care. We'll look at your situation and maybe start looking at annuities from a laddering approach because you're in your 50s. The bottom line is that once you hit 50, we probably need to start looking at it.

‌65+ Years Old

‌The last category is the 65-and-older. 10,000 Baby Boomers are hitting age 65 every single day. That doesn't mean you need to buy an annuity, but it does mean that everyone will try to sell you one. I'm going to tell you that right now. You have to be very careful. I got a call the other day. A gentleman was actually in his late 70s, and someone was trying to sell him a 10-year surrender Indexed Annuity.

‌That's not an appropriate and suitable recommendation in most cases. When I looked at it, it was not. When you get older, you need to have a shorter maturity, if possible, which makes total sense. So, be very careful out there. If you're 65 and older, you should look at annuity types for at least lifetime income to combine with social security or from a principal protection standpoint because you don't want to lose money. You're in chapter two of your life, and you want to go live and focus on lifestyle.

‌In conclusion, about the ages 50 and up. I'll synopsize it very quickly. Under 50, probably not. If you want to talk to me about it, give me your specific situation, and have us say no personally to you. We'll do that. Or if it's something that's really outside the box, then we can talk about it. When you're above 50 and beyond, start looking at it. You should start getting educated on the annuity types available, what they do, and the contractual guarantees for your specific situation.

‌Hey, I encourage you to go to The Annuity Man, and run quotes 24/7 365 using the best annuity calculators on the planet. You can also download my six annuity owner's manuals for free and book a one-on-one call with us. We will dig into your specific situation and confidentially put together a customized plan for you. I'll see you on the next Stan the Annuity Man YouTube video.

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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