Annuities: The Best Offense for Diminished Capacity Retirement Planning

Hi there, Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Today's topic is a good one, and it's a bit sensitive. You know I’m sensitive, right? You know that. We’re talking about how annuities are the best offense and strategy against diminished capacity when planning for retirement. So, what is diminished capacity? You know what it is. Don’t act like you don’t. You know—when you're not firing on all cylinders, and you start forgetting things. Things happen, even to me, Stan, the annuity man.

Why Annuities Help

We should look at it from a planning standpoint. If we know this will happen, how do annuities help and smooth things out for you, your family, and your loved ones? We're going to talk about this tough topic, and you need to listen. This is reality, and it will happen to all of us. If we live long enough, one of us will face diminished capacity. But let’s not get into that until we hear some uplifting music.

The Master of the Universe

I know what you’re thinking: “Stan, wait a minute. I’m a master of the universe. I trade stocks, ETFs, and crypto. I know what I’m doing. I’m locked in.” Yeah, like the old athlete trying to play professionally when they can no longer perform at their peak. All of us will eventually face a time when we're not as sharp with names or we forget things. That’s just life. It’s part of the deal. Life...and death, but that’s life. This happens to everyone.

For all you masters of the universe—those Gordon Gekkos and Elon Musk types—who think you don’t need annuities, let me tell you something: You’re not always going to be firing on all cylinders. Annuities are contracts, and if you set them up for lifetime income—guaranteed income—they’ll keep paying you as long as you're breathing, even if you forget that the payments are coming in.

Why Annuities Matter

Why is that important? It’s crucial, especially for all of you masters of the universe, male and female. Your spouse likely couldn’t care less about markets, volatility, indexes, or crypto. They don’t care. They just want to see the kids and grandkids. They want to live that life. They want to travel and enjoy the fruits of their labor. After putting up with you all this time, they want to live that life.

A lot of annuity strategies, like income flooring—which is the income coming into your bank account every month regardless of market conditions—are what your spouse needs. This income keeps coming in, no matter who’s in office. By the way, you already own the best inflation annuity on the planet: Social Security. Don’t believe it? Check the increase, player. It’s going to be there.

The Importance of Guaranteed Income

But let’s get back to guaranteed income. This is the dividend income or annuity lifetime income that hits your bank account every month as long as you’re alive. You can structure this so that 100% of unused money goes to your listed beneficiaries, not the evil annuity company.

When you reach diminished capacity, having that guaranteed turnkey income stream hitting your bank account every month becomes vital. And if you're married, the payments continue uninterrupted as long as you live and your spouse lives. If you die, the money still keeps coming.

Retirement Phases

I was doing a podcast—one of the best on the planet, of course. It’s called "Fun With Annuities." You can check it out on all major podcast platforms, and we even have a YouTube channel. I had a great guest named Steve Parrish, and he talked about retirement phases. He’s come up with three phases, and I want you to think about them. They’re easy to remember, make sense of, and apply to all of us.

Here are the phases:

1. Go-Go
2. Slow-Go
3. No-Go

Let’s go over them. "Go-Go" is where you’re at right now. You’re firing on all cylinders. Your IQ is off the charts, and you’ve forgotten more than anyone will ever know. You’re good. But as you transition, eventually you’ll move into the “slow-go” phase.

The Slow-Go Phase

In the slow-go phase, your eight-cylinder car only runs on four cylinders. You’re not as physically fit as you used to be, and mentally, you’re not as sharp as you once were. But that’s just life. As you phase into slow-go, you need to consider securing that lifetime income stream. Or if you're more focused on principal protection, you might want to look into Multi-Year Guaranteed Annuities or Indexed Annuities.

The No-Go Phase

When you get to the "no-go" phase, you know what I’m talking about. It's like Michael Jordan using a cane to walk. You can’t jump the way you used to. You're not as mobile, and while you might not see the end, you can see the finish line. This is where you need those contractual guarantees.

Annuities Solve for PILL

Annuities are contractually guaranteed transfer of risk products that solve for four things. I’ve coined the acronym PILL:

• P stands for Principal Protection
• I stands for Income for Life
• L stands for Legacy
• L stands for Long-Term Care/Confinement Care

As you transition from slow-go to no-go, you’ll want to start thinking about these guarantees. Annuities help transfer the risk to solve these four needs.

The Pension-less World

In a pension-less world, where less than 9% of private companies offer pensions (it’s actually down to 7%), annuities are the only product that can provide a lifetime income stream regardless of mental capacity. You don’t want to reach the point where someone has to buy your annuity as your durable power of attorney because you can’t make the decision yourself. Be proactive.

Be Proactive in Your Planning

You’ve been proactive your whole life. You’ve planned, saved, scrimped, invested, and weathered market ups and downs. You’ve seen it all. You know what’s coming, and you know you might want to take some of your profits off the table and plan for the slow-go and no-go years as you transition from the go-go phase.

The Importance of Research

The interesting thing is that there’s very little research on this topic. Steve Parrish is a groundbreaker in this field, and I think he’s onto something. Remember, annuities are transfer-risk products. At some point, you don’t want to shoulder all the risk yourself—you want to transfer it, but maybe not all at once. You might want to do it gradually, over time.

Conclusion

I know this is a tough topic, and it’s hard to talk about, especially for you A-personality types. Having these conversations with family, friends, and lawyers is hard. But you need to be proactive. Set everything up while you're still firing on all cylinders, so when the time comes, everything is in place.

Most of you started with nothing and built something incredible for your family. Now it’s time to plan for the future. Maybe you’ll live to 115, and perhaps you're the medical miracle out there, but it’s better to be prepared. Think ahead and set up an appointment with us to strategize how we can put guarantees in place to take care of you as you diminish over time and to take care of your family.

Taking Action

This is a tough one, but it’s necessary. Are we all going to have diminished capacity? Yes. One out of one of us. But let’s do what we’ve done with everything else—attack it, plan for it, and put things in place that will take care of you and your family. Go to The Annuity Man, set an appointment with us, and we’ll create a customized plan together. You can get quotes using my retirement calculators anytime. Download my books for free and explore all the educational resources available. We want you as a client, but you’ll decide on your terms at your own pace.

Thank you for joining me today, and I’ll see you on the next Stan The Annuity Man blog.