Do Rich People Buy Annuities?
Don't we hate rich people? Are you rich? I mean, are you the evil rich? I think we all are kind of when they start collecting taxes. So, the question is, do rich people buy annuities? Yes, some do, and some don't. It comes down to if they want to transfer risk. Now, the reason a lot of rich people are rich is because they're smart. Smart people like to transfer risk, and annuities are contracts that allow you to transfer risk. That doesn't mean that every rich person, one percenter, high roller dude, or dudette out there needs to buy one. But the answer is yes, they do buy them, and I'll give you some examples in this blog of the people that do and the types of annuities they buy. So, hang in there with me. This'll be a fun one because we're going to talk about those evil one-percenters, and you're probably sitting out there, some of you're going, I am the 1%. I like that. You've made it. You've busted your butt, made some money, and are doing your little annuity educational research to see if you, yes, you the rich person, or you out there that thinks they're not rich, but they are. Do you need an annuity? Let's figure that out.
Let's talk about rich people. Why in the heck would they buy annuities? Well, rich people like Principal Protection. Rich people like providing a legacy to their beneficiaries. Rich people like transferring the risk for long-term care. Rich people like guaranteed income streams coming in, and rich people like protecting their money from frivolous lawsuits and creditors. You know what? Not just rich people like that. The rest of us like that too. Nod your head. You like that too. But that's why they buy them. One of the things that's interesting is an example. One of the places I live in is Florida, and another place I spend a lot of time in is Texas. Both of those in their state law protect annuity owners from frivolous lawsuits, creditors, etc. There are some rules. You can't be a criminal and make money, then put the money in the annuity. You can't do that. What it's for is the person that's worked hard, bought an annuity, and then some idiot from left field sues you frivolously for your money. If you have your money in an annuity or a non-IRA account, they cannot get to it in many states. So, a lot of rich people use annuities to protect themselves in the litigious world that we live in from those people.
They also buy it for lifetime income streams. Many people are buying annuities for their spouse and their kids or grandkids. One of the things that I see a lot in the state of Florida, Texas, and other states for rich people, is that they like buying the Multi-Year Guarantee Annuities because in a non-IRA account, the interest grows and compounds tax deferred. Most rich and normal people don't want to pay taxes. If you want to pay more taxes, then pay more taxes. But don't yell at me for not paying more taxes. I digress. The point is that it's where a lot of them use it. You say, "Well, Stan, the interest rates are really low." Of course, they're low. Low compared to what? Right now, the United States still has the highest interest rates even though Jimmy Carter's not in office, and we are not seeing eight to 10% rates. We might not ever see that again. But rich people come to me, and they say, "You know what? I've got all this money. I don't want to lose a penny. I don't want to pay any annual fees. I want an interest rate and don't want to pay taxes on the interest." So, you say, "Well, Stan, why wouldn't they buy a CD?" Well, CDs are fantastic products, FDIC insured, etc. But in a non-IRA account, you have to pay taxes on the interest annually. Most people that really don't like paying taxes, I.e., rich people, do not want to do that. So that's where the Multi-Year Guarantee Annuities fit.
I had a guy call me the other day. He was a futurist trader or something, a futurist corn trader. I don't even understand that. Anyway, it makes a boatload of money. He's so rich. I mean, he's a multi, multi, multi, multi-millionaire. Why would he buy an annuity? He called me and said, "Hey, I do my thing. I'm a corn futures trader, but my wife could give a rip about corn futures. I want to buy an Immediate Annuity or a Deferred Income Annuity, starting at a future date so that the income stream will be there when I'm gone. Because she won't obviously take over my corn futures business, trading business." Here's a guy, ultrarich, who doesn't need an annuity, but he was using the transfer risk aspect and the guarantees for his spouse, and she was very, very happy because all she gave a crap about was seeing the kids and grandkids. So, the question is, do rich people buy annuities? Not all of them, but more and more do buy because they understand that they're contracts and understand their transfer of risk. They understand they can protect themselves from creditors in a lot of situations. To me, that fits everybody, not just the rich, because everyone needs an income floor and transfer risk. Everyone's looking for long-term care and confinement care situations. Everyone wants Principal Protection. Everyone doesn't want to pay more taxes. Everyone is the same as those evil rich people. So, stop throwing stuff at their yachts as it comes by. But that's the answer to the question.
Okay, rich people, future rich people, want to be rich people. We made it to the end of the video. Remember I just talked about the MYGAs, where the evil rich put their money, so they don't have to pay taxes on interest? They push the tax puck down the ice. I did a video on MYGAs, best MYGA rates. We dig into that deeper. Check it out and hit the subscribe button because a new video from Stan The Annuity Man hits the airwaves every other day and will be on the internet forever. Also, if you ever want quotes or to talk to someone, even me, book a call with us, and you'll have a 30 min uninterrupted session. See you next time.
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