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Financial Advice for Seniors About Annuities

Stan Haithcock
December 11, 2023
Financial Advice for Seniors About Annuities

What we're talking about today is very important. It's talking to your parents about annuities and financial advice for seniors, and it's kind of involving that hard conversation as they cognitively start losing it a little bit. It's not good.

‌It's a tough subject, but we're going to have a little bit of fun because I can't not have fun. We're going to cover how to go about it and whether an annuity fits your parents or someone in your family that you think might need a contractual guarantee as they go into that second or third stage of their life where they're not as sharp as they used to be, as they say. And I've got some personal stories about that that I can share with you.

‌Making Things Turnkey

‌So, my dad passed away a couple of years ago, and my mom is doing pretty well. She's in her 80s, and we're starting to have these conversations about getting things more turnkey. We set up her bill paying so that all the bills we can pay are done electronically, and she doesn't have to write checks. We actually had a conversation the other day, and you might've had this with your parents, uncles, or whoever you're dealing with.

‌I set my mom up on Uber. I really don't want my mom driving. She's 81. I don't feel comfortable with that, especially at night, because she doesn't have great vision. And I said, "Let's just set you up for Uber." Of course, she doesn't think she can afford it. Of course, she can because I'm taking care of my mom, but we even set her up for Uber.

‌Client Example

‌But when we talk about society's aging, this is an interesting time and a great story, and this is what drove me to do this blog. A client of mine called up and said the following, and it was a hammer shot to me because I didn't really think about it until he said it. He goes, "Stan, I want to buy the annuity now because I feel like in five years, my cognitive ability is not going to be there for me to make this type of decision. So, I want to make sure that that income stream is in place in case something happens to me or in case I'm not as sharp as I used to be." And I said to him, I said, "Just stop. That is powerful." And I applauded him for taking that proactive step because that's hard. It's hard to look reality in the face. We're all going to have to do that eventually unless our Lear jet hits the mountain, right? But the point is, he was doing it proactively for himself. And maybe you're thinking that out there. Perhaps that's what you're thinking: hey, we're getting up in years, and our parents or my parents or whoever lost some cognitive ability to make those decisions. Maybe we should put something in place from the standpoint of a lifetime income stream now if that makes sense.

‌Fiduciary Duty

‌In the annuity industry, my job as a fiduciary is putting your best interests ahead of anyone else's. That should be a no-brainer and should be done involuntarily by advisors. But the fact that we have to say you must be a fiduciary is a little scary. I mean, that's what we do. We try to take care of people. If you're not up to speed or, your cylinders aren't firing, your elevator's not going to the top floor, you're not all there.

‌I can refuse to sell you the annuity. And there's a lot of times, I'd say 10, 15 times a year, and I'm the number one agent in the country. We do a lot. We have a lot of clients in all 50 states. Sometimes, I tell people I just don't feel comfortable with you understanding the concepts that I'm telling you, you understanding the benefits and the limitations of the policy, etc. And I have to turn it down because that person is not aware enough or on it enough to make that decision. And I have to make that decision. I have a responsibility and can be held liable as an agent and an advisor for selling to someone who shouldn't be making a financial decision.

‌One of the things that probably is in your head is, let's say, you are that son or daughter and your parents. I'm getting these calls more and more. The parents are here, and someone's trying to sell them X, and their question is, what do they really need? What should we put in place from a current lifestyle standpoint and also a legacy standpoint?

‌So, the kids are saying, and you're probably saying, "I don't want mom or dad to lose any money. I want to make sure that whatever's left goes to the beneficiary." It's probably you or you and your brother and sister, whatever you want to make sure that they're not being taken advantage of, but yet lifestyle's in play.

‌Crucial Conversations

‌Those are conversations you need to have with them. And they're tough because, as you know, if you have, all of our parents are, they were our parents. I mean, it is kind of flipping the switch of you now being the reasonable and rational one and the grownup and them not being the reasonable and rational one and kind of being the child.

‌It's a weird thing that we're all going through, and with people living longer, it's something that we all will have to think about, talk about, and have those conversations with parents. If your parents or significant family member that you're thinking about, aunts and uncles, and we do those too, a lot of those where the aunt and uncle have someone else within the family helping them. If they can't make that cognitive decision, then you will have to be the durable power of attorney over that account to sign that paperwork. That's how it's done.

‌If we get to that stage, there will have to be elder care lawyers involved to make sure that all of the I's are dotted and the T's are crossed. Put that in the back of your head. And I would encourage you, if you're at that time where you're thinking about this, I would find an elder care lawyer that specializes just in that in your specific area and talk to them. Because even if me and you decide that this is right for your parent or uncle or aunt or mom or dad, even if me and you decide it, I'm going to encourage you to have that third-party lawyer be part of that conversation as we get to the finish line of putting that strategy in place.

‌Okay, so let's wrap up the financial advice for seniors about annuities. One of the things that I would encourage you to do is make sure that you're looking into the situation, seeing what they're buying, seeing what they're being pitched. If they're going to the bad chicken dinner seminars, make sure they're not signing products for the long term.

‌The Two Questions

‌I got a call the other day, and one of the sons was mad because his mom, who was, I believe, 75 or 76, someone sold her a 10-year surrender charge product. That's crazy! You shouldn't be signing a 10-year surrender charge product when you're 75, in my opinion. So, you want to make sure with your parents to ask the two questions I always ask. What do you want the money to contractually do? And when do you want those contractual guarantees to start? Just add at the end for your parents and your significant family member you're trying to take care of. Then, we will quote all carriers using our calculators to find the best contractual guarantee.

‌But I think most of the time you're trying to set up an income stream, a lifetime income stream, or a period certain income stream to make sure that your parents or loved ones are getting their bills paid and they have enough money to live life at the last few years of their life. But definitely, if they can't make a decision on their own, if they're not capable of really making a big financial decision.

‌So, with that, tough subject, right? Nod your head, it's a tough subject, but it's something that we all need to be proactive about. And it's hard because your parents, aunts, and uncles are the people you used to look up to, and now you're trying to care for them. But you have to be proactive about it because, unfortunately, some salespeople out there want to sell them something, and they'll sell it to anybody.

‌There are not many of them, but there are enough out there that we need to be concerned about. The annuity industry is undoubtedly aware that the AARP is doing an excellent job of sending spies into bad chicken dinner seminars. There's a lot of oversight, not enough, but a lot. But you also need to be the main person with that oversight.

‌I encourage you to go to my site, and you can schedule a call with me or one of my team members. There's just a handful of people that I trust on my team that work for me, that are employees of mine, that are familiar with these situations, that can help you walk through this slowly and methodically to make sure that you're doing the right thing, you're making the right decision, and all the parties, like lawyers and CPAs, need to be involved to coordinate that decision that you're contemplating and that probably should be made.

‌I have done another video called Best Annuities for Seniors. Not that all seniors need annuities, but that video covers the ones that I think are more pro-consumer for our aging population. 10,000 baby boomers are hitting retirement age every single day. This situation needs to be addressed, and there needs to be some clarity and transparency on what products are the best, not just what's best for the agent, right, or the highest commission product, but what's actually best for that consumer.

So, with that, I encourage you to book a call with us, and I'll see you on the next Stan The Annuity Man blog.

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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