Is It a Good Time to Buy an Annuity?: Shootin' It Straight With Stan
Welcome to Shooting It Straight with Stan. I am your host, Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Today's topic is a good one and a question that I always get, so let's address that now.
Is it a good time to buy an annuity? Now, that's a loaded sales question. Most salespeople are an automatic yes, "Yes, it's a great time to buy an annuity. My annuity, the one I like." But it's bigger than that. Now, let's put the foundation in place. You already own one called Social Security, the best inflation annuity on the planet. So, the question really is, do you need another one? If you have a pension in place from your company, do you need a third one?
What Are You Trying to Solve For?
Is it a good time to buy an annuity? The answer to that is, do you need to transfer risk? Do you need contractual guarantees? Do you need to solve for principal protection, income for life, legacy, or long-term care? That acronym is PILL. I'll do it again: principal protection, income for life, legacy, or long-term care. Do you need to contractually solve for that? Do you need contractual guarantees? If the answer is yes, then it might be a good time to buy an annuity. It has nothing to do with the carriers out there, the products offered in the bad chicken dinner seminar, and the invitation to the steak dinner thing. It has nothing to do with that. It has nothing to do with Boog Powell and the Dutch Boy haircut. Miss Yellen. Boog Powell from the Baltimore Orioles. But that's what I call it, Boog Powell, Chairman Powell. It has nothing to do with what they're doing. It has nothing to do with anything. It has to do with what you're trying to solve for.
Is it a good time to buy an annuity? Is it a good time for more income for you, guaranteed in addition to Social Security in your pension or dividend stocks, rental houses, or whatever you have, is it a good time for more income? Is it a good time to protect the principal and just get an interest payment off of that? Like a CD, treasury, or MYGA, Multi-Year Guarantee Annuity?
Long Term Care
Is it a good time to put in legacy guarantees for your family when you pass, especially if you can't qualify for life insurance? There are annuities that have legacy provisions. Is it a good time to solve for long-term care and transfer that risk for long-term care? And there are many different types of long-term care. This is what's called asset-based long-term care, which means money doesn't go down the rabbit hole if you don't use it, but it's there. Is it a good time for that? Is it a good time to buy an annuity if you are trying to set something up for your spouse who doesn't care about investments, but you want to take care of them because they've been putting up with your rear end for such a long time, and they deserve it?
Is it a good time to buy an annuity for kids when you want to lovingly handcuff them so they won't get the lump sum and buy a helicopter and a Lamborghini to go to your funeral and they can be making payments on it instead with an annuity structure? That's what I call lovingly handcuffing your beneficiaries, which I do to my family and my lovely daughters. They're going to live well, but they're not going to get lump sums.
Is it a good time to buy an annuity just because interest rates are at perceived highs? No, because unless you need to solve for something contractually, then you shouldn't buy an annuity. Is it a good time to buy an annuity right now, but you don't need principal protection income for life, legacy, or long-term care? The answer is no.
Is it a good time to buy an annuity if I need market growth? No. Never buy an annuity for market growth, regardless of what you hear. Those aren't market growth products. When you buy an annuity, you're buying a contract; we call them policies. When you get the policy in the mail, it's a contract. You're buying the contractual guarantees and owning an annuity for what it will do, not what it might do. Is it a good time to buy an annuity if someone says you'll get an upfront bonus? No, you're smarter than that. There are a hundred pennies in the dollar. There's no philanthropist at annuity companies.
The upfront bonus is just part of the overall contractual guarantee when we quote all carriers for the highest contractual guarantee, period. And the way that we filter the products is we ask two questions. What do you want the money to contractually do? And when do you want those contractual guarantees to start? From those two answers, I either tell you, "You don't need an annuity." Which I will tell you, or "This type of annuity will provide the contractual guarantees that you're looking for." And then we'll shop all carriers for it.
Is it a good time to buy an annuity if someone says they can get you 8%, 9%, or 10%? No, because what they're talking about is an Income Rider roll-up. That's not the actual yield.
Market Upside With No Downside
Is it a good time to buy an annuity if someone says they can get you market upside with no downside? No, because you're not that dumb. If there was such a product market upside with no downside or principal protection with market participation, then that's all Goldman Sachs would buy. That's all JP Morgan would buy. So, if someone's pitching that Index Annuity sales pitch to you, walk away. Is it a good time to buy an annuity for that market growth? No. Stay in the market. Buy stocks, bonds, ETFs, mutual funds, crypto, whatever you want to do. But annuities aren't put on the planet for market growth. Ever. Period. And I know because I worked for Morgan long ago, as well as UBS, Paine Webber, and Dean Witter. And when I came out to the annuity space, I was like, "Wait a minute, why are people selling this as market stuff? It's not market stuff." I'm the contrarian out here, but I'm right, and the industry knows I'm right.
Is it a good time to buy an annuity if your brother or friend bought one and they're just raving about it? No, because I guarantee they don't know what they purchased. Is it a good time to buy an annuity if it sounds too good to be true? No, because it is too good to be true if it sounds too good to be true.
The Time to Buy
The bottom line is the time to buy an annuity is when you want contractual guarantees. The time to buy an annuity is when you want to transfer risk. The time to buy an annuity is when you want to pivot to chapter two of your life to go live your life, put an income floor in place, protect the principal, etc. The time to buy an annuity is when you don't want to look at markets anymore, or you don't want to worry about them. You can have money in the markets, but you put enough money into contractual guarantees so that it doesn't matter, and you're a better investor because of it. That's the time to buy an annuity.
But here's what's interesting, and I'll close with this. You already own Social Security, the best inflation annuity on the planet, but you might be the person who doesn't need an annuity at all. And that's okay. If you said, "Stan, I want to do principal protection, but I'm just going to buy CDs and treasury." Great, knock yourself out. Bonds, municipal bonds, whatever. Now, do annuities have that product? Yeah, Multi-Year Guaranteed Annuities have a guaranteed interest rate. I mean, there are products out there. But you buy annuities for the contractual guarantees. You buy them for what they will do, not what they might do. There's never a perfect time to buy. You cannot time it. There is no arbitrage or sweet spot, and you won't beat the annuity company. Life insurance companies have the big buildings for a reason and the logos on the plane for a reason, and now sponsoring sports stadiums for a reason. Life insurance companies know when we'll die, and they price things accordingly. That's why.
There's never a perfect time to buy an annuity. Ever. The time to buy an annuity is when you want to transfer risk. Just remember that. And that might not be you. That might not ever be you. But if it is you and you want to explore it, go to my site. Listen, you never have to talk to us. If you want to talk to us, that's fine. Schedule a call. We'll call you right on the dot at the time you tell us to call. If you want to buy one, we can facilitate that. I have the best staff on the planet. Are we perfect? No, but boy, are we good. Really good. Based out of Las Vegas, Nevada, with an office in Florida as well. And I go back and forth between desert and jungle.
But don't fall for this is the time, or don't fall for someone saying, "You got to sign because this bonus is going away." Or "You got to do this because..." No, no, no. There's no urgency to buy an annuity. The urgency is for you to understand what you're buying. The urgency is for you to go to a site like mine and listen to my Fun With Annuities podcast with guests, or to read the books that I've written, and I give away for free on each topic, to watch the videos on this, and to interact with us in a non-salesy fashion. No pressure. Just talking. Wouldn't that be refreshing? It is when you deal with us.
So hey, thanks for joining me. That's Shooting It Straight with Stan in a very cool fashion. I wasn't yelling. I think the caffeine's worn off a little bit. I need more caffeine. That's okay, I'll get some in me for the next time. And next time I'll see you, soon. My name is Stan The Annuity Man. Take care.
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.