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Is Social Security an Annuity?

Stan Haithcock
July 13, 2023
Is Social Security an Annuity?

Hey, Stan The Annuity Man, America's annuity agent. Yes, I am licensed in all 50 states, and that means I'm licensed in your state. So, the question of the day is, Social Security, those payments you love or getting ready to love if they're coming down the road, is that an annuity? Short answer, yes. The long answer, which I'm getting ready to go into, will be very intense, informative, and you're going to walk away going, "Do I really hate all annuities? Do I? No, I can't because I love my Social Security." Here we go.

People have been emailing the heck out of me about all this logo gear stuff I wear. First of all, The Annuity Man logo on my shirt and hat is self-explanatory. And I know you're saying, "Wait a minute, there can't be more." Of course, there's more. I got the Annuity Man logo on my Adidas pants. And you know what? Here's the good part. People always say, "Well, you just wear that for videos." Let me tell you something. If you're Bill Gates or Warren Buffett, and you call me and say, "Hey, I want to buy an annuity from The Annuity Man, America's annuity agent." What do I show up in? The Annuity Man gear. This is what I wear. This is how I roll. I'm digressing a bit, but people are tripping because there have been so many videos. I release one video daily, and they're like, "Wait a minute, you got new shirts and pants and new hats?" Yeah, you're right. I do. I'm obsessed with that. But let's get back on topic.

What Is an Annuity?

"Is social security and annuity?" You're dang right it's an annuity. Why is it an annuity? Let's look at what an annuity is. Annuities were put on the planet in Roman times to create payments for the dutiful Roman soldiers and their families because they were laying it on the line for the empire or the emperor. So, what is that? An annuity, annua means payment in Latin, and it is a lifetime income stream. You can't outlive it.

Inflation, Inflation, Inflation

You don't know the ROI until you die, return on investment. So, what is social security? It's a lifetime income stream that you can never outlive. Now that we've established that both annuities for lifetime income are the same as Social Security for lifetime income, let's dig in further on the differences in how they work, even though they work the same, but primarily we're going to talk about inflation. Inflation, inflation, inflation, inflation, inflation, inflation, inflation. Everybody's saying, "Hey, what am I going to do with inflation?" I don't know. First of all, we don't know when it will hit. There's an argument for deflation, but I'm not going to get into the weeds of those economics courses that all of us wanted to skip in college, and many of us did. Inflation is the grill in the room, and inflation is what separates, say, a Single Premium Immediate Annuity, which is the same kind of format as Social Security.

With Social Security, our beloved politicians who are all-knowing, smart, and honest, and they have your best interest at hand when they want to increase your Social Security payments; they just vote on it. They're like, "You want to raise the income stream for all these voters out there?" And the guy's like, "Yeah, we're not paying for it. We'll just print some more money." That's how they do it. So, when Social Security income is raised, it's just like a political whim. Just a voter checklist, "Okay, let's do that," not with annuity companies. Annuity companies have the big buildings for a reason. They do not give anything away. There's no philanthropist at an annuity company going, "You know what? I want to give money away. I want to give it away just like the politicians in DC." No.

Here's something to think about. An annuity without a Cost-of-Living Adjustment increase with the same exact annuity with a Cost-of-Living Adjustment increase; there will be a gap. You already own the best inflation annuity on the planet. What is it? Repeat after me? Social Security. You already own it. So, is Social Security an annuity? Yes, not only is it an annuity, but it's also the best inflation annuity on the planet. Now, let's get a little bit more in the weeds.

Life Expectancy

Life expectancy, if you don't know, that's when the actuaries that are in the room, they're real smart, and they predict when you're going to die, and they're pretty good at it. The reason life insurance companies have the big buildings is that they know when you're going to die. Property and casualty companies don't have the big bindings because they don't know when the hurricane will hit or when the tornado will hit. Nod your head. So, what's life expectancy got to do with this? It drives the train for pricing on both your Social Security payments, which is an annuity, and your annuity. What does that mean? The older you are, the higher the payments. Why? Because your life expectancy is less, there'll be fewer payments. The reverse is also true. The younger you are, the higher the payments. Why? Because your life expectancy is more, which means there are going to be more payments. Does that make sense? I think I said that right, but you know what I'm talking about.

Transfer of Risk Products

Let's look at Social Security. Everyone's like, "Well, I'm going to wait till 70 to turn it on because I'm going to get a higher payment." Why? Because you're older. So, if you say, "Well, I'm going to wait to turn on my annuity until age 70," are the payments going to be higher? Yes. Why? Because you're older. It's about life expectancy. Now, both Social Security, which is an annuity, nod your head, and annuities are transfer of risk products. You're transferring the risk to, in the case of Social Security, the government to pay you for the rest of your life, regardless of how long you live. That's fantastic.

What does an annuity do? It transfers the risk to the annuity company to pay you for the rest of your life, regardless of how long you live. That's fantastic too. The Claims Paying Ability of the annuity company is key. You've got to look at the rating services AM Best, Standard & Poor's, Moody's, and Fitch, as well as the Claims Paying Ability. And if you're dealing with The Annuity Man and running quotes with us and working with us, I'll tell you, if you don't need to buy a company. I represent pretty much every single carrier on the planet, all the big ones. All the ones you love. We'll quote everybody. But with Social Security Claims Paying Ability, who's it coming down to? The debt-ridden government, but I don't think that's an issue. I know the tinfoil hat people out there are saying, "It is an issue. The government's going downhill, and, well, it's in our key." Okay, maybe, but I doubt it. People that get Social Security payments are called voters. I think that's pretty safe money. They're going to tax the rest of us to get the money to pay for that Social Security, so it comes down to life expectancy. The older you are, the higher the payment. Get it? Good.


We've been talking about Social Security going crazy. I've been all energetic about it. I don't know why, but this is important. I've done another video called Are Annuities Safe for Retirement? You might want to check that one out because, as you know, I do multiple videos a week which is incredibly insane from an edutainment standpoint. I'm America's annuity agent, licensed in all 50 states, including yours, so if you need anything, go to our site.

I think we pounded into the table this whole, is Social Security an annuity? The answer is a pound the table, yes. Nobody on the planet can argue with me factually and beat me on that, and you know that. Nod your head. Now, I'm Mr. Content out here, and I'm America's annuity agent. I do multiple videos a week. I do multiple blogs a week on my site, and I do podcasts weekly as well. So, guess what? I'm educating you out there. But if you want to see quotes, you can go to my site and use the best annuity calculators on the planet. We have the best annuity calculators to find the best quotes for you, period, so do that. Thanks for joining me, and I will see you on the next blog.

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