Annuity Monthly Payment Calculator: Don’t blow through your retirement funds!
Don't Spend It All
Get an annuity for what it will do, not what it might do. When I say don't blow through your retirement income, I'm saying don't blow through your retirement savings or funds.
I got a comment on one of my videos that said, "annuities are good for people that are bad with having too much money to their disposition because they will blow through their retirement pension money if they see that big phat," P-H-A-T, "account. And sometimes, when they have a fixed monthly income, they know how to manage all their expenses and live within their means. I know it's just this crazy psychology in some people. I've seen people that blow a million dollars in retirement very stupidly. Still, they live within their means and respect their purchasing power with their government's Social Security check," which is an annuity check.
It makes me think of people that win the lottery, and they blow through that money because it's this lump sum. But when you have a pension payment, Social Security, if you have a pension payment from your employer, if you work for the government or you're one of the lucky few in the private sector that has a pension payment, or if you have a lifetime income stream annuity, you have that money hitting your bank account every single month. And what it does is it kind of handcuffs you a little bit. It handcuffs you to be a little bit more prudent with your money because you have to budget that monthly income amount instead of that big huge lump sum.
You don't want to blow through all your money
People always say, "I'd never buy an annuity because I could do better with investments. I could do better in the markets. I could do better with stocks and bonds and crypto." Of course, you can. I mean, annuities, there are many different types. They're transfer of risk products, and most people use annuities, different types, for either transferring the risk to protect their principle or transferring their risk for a lifetime income stream. And what this viewer is saying is that people probably need to at least put in that guaranteed lifetime income stream amount, that income floor as I call it, so that they can live the life they want. They can budget around that guaranteed monthly income amount that's coming in.
What's your income? It's your Social Security, which, by the way, is an annuity. If you hate annuities, you're a hypocrite because you already own one. It's called Social Security. So you have annuities, Social Security, the best inflation annuity on the planet that's coming in, pension, rental income, dividend income. And then, if you have an outside annuity through The Annuity Man, that I quote all carriers for the highest contractual guarantee, that's your income floor coming in.
The only thing in the back of your head is, "Wait a minute, what about inflation? Annuities can address inflation by increasing the amount of income on an ongoing basis contractually, but annuity companies don't give that away. Typically, they lower that initial payment, ballpark 30%, or 35% if you want to put that increase in. And that includes index annuities that people out there that are the bad chicken dinner seminar are saying, "Hey, buy this index annuity. It increases your income stream every single year." Annuity companies don't give that away. The price is in, so you have to figure out the break-even point for that.
In my opinion, the best way to address inflation is to reverse engineer the quote to solve the specific monthly income amount you need. So, let's say you have $4,000 a month coming in, and all of a sudden, you sit down with your spouse and say, "Wait a minute, we're spending $4,250. We need another $250 a month." You can use my site and run a reverse engineer quote solving for the $250 a month, meaning that we're going to quote all carriers for the carrier that provides and contractually guarantees that $250 a month but requires you to put in the least amount of money.
The reverse engineer quote is a good way to go. With our proprietary calculators, you can do that with SPIAs, with DIAs, with QLACs, et cetera. In other words, you can say, "I want to put in this lump sum. How much is that going to create? Well, I need to solve for this contractually guaranteed income amount," say inflation, and you can do the reverse engineer. But the bottom line is, I think if that income floor is in place, you're going to be a better investor. If you know that income floor is coming in every month, then the non-annuity assets in stocks and bonds, crypto and ETFs, and all that stuff, you're going to manage that. Or your master of the universe managing that for you will do a better job because they don't have to peel off those gains.
The 4% Rule
Now, what I'm referring to there is that I think it's an outdated rule, which is the 4% rule. "Well, keep all your money in the market, and we just peel off the gains and the 4%." Well, that's great in the bull market, but when a choppy market, that's not good, and we've been there before. I know that people have forgotten it, and many of the advisors out there, I have cowboy boots older than they are. They've never seen a down market. But markets are going to be choppy historically. They never go straight up, even though that seems like what will happen.
Many people can't handle lump sums. And if you have that lump sum, you at least need to put in that income floor for your life, and preferably for you and your spouse's life, so that as long as you're breathing, you're going to get that guaranteed income amount that's going to hit your bank account every single month.
All right, we've solved the issue of you blowing through your retirement funds and putting in that guaranteed income floor. But what about those wayward kids? What about those wandering ambiguities you have spawned off that haven't seen a dollar they can't spend? What will happen when your Learjet hits the mountain, and will they get this lump sum? Are they going to get that lump sum? Hmm. Good question.
With annuities, you can contractually handcuff, "lovingly handcuff," as they say, your beneficiaries, your kids. I love my two daughters to death but I don't want them to helicopter into my funeral and then drive off in a Lamborghini that they paid in cash. No lump sum. I will handcuff them using contractually guaranteed annuity payments that you can also do for your kids. So, if you have that situation where you want to make sure that your kids are going to get the money, but you don't want them to get the lump sum, so they helicopter in and Lamborghini out, then we can come up with a customized plan so that they won't blow through your money.
So we've solved two problems here. You're not going to blow through your money because we've created this lifetime income floor guaranteed for the rest of your life and your spouse's life. But we've also solved your wandering ambiguity kids, or whoever you're leaving the money to, you can handcuff them and guaranteed lifetime income payments instead of the lump sum.
The bottom line, the conclusion to all of this, is you don't want to blow through all your money, whether it's you or your family. Whether you're alive or dead and your family gets the money, you can structure it using annuities so that that income stream's going to hit every single month as long as you're breathing or as long as your kids are breathing, so that they can have a pension income guarantee.
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.