Laddering Strategies Using Our SPIA Calculator
Today I’m discussing how to use my SPIA Calculator and some laddering strategies that could work for your specific situation.
I'm proud of a lot of things with theannuityman.com. I'm proud that we're a pro-consumer site; I’m proud that we're direct-to-consumer. I'm proud that we represent almost every carrier out there; I’m proud that we only promote the contractual guarantees of the policy, no hypotheticals, theoretical, projections, back-tested, unicorns chasing the butterfly nonsense. Please buy the contractual guarantees. But when you want to run an immediate annuity quote, our site is so simplistic.
Intro to SPIA Calculators
Today we're talking about the SPIA Calculator, a Single Premium Immediate Annuity. By the way, that's the oldest annuity type on the planet. It was put on the planet in Roman times as a pension gift for the dutiful Roman soldiers and their families, a lifetime income, and has been sold in this country for hundreds of years. It's very pro-consumer, with no annual fees, no moving parts, and no market attachments. It is a straight transfer risk pension. If you want to create your pension, a Single Premium Immediate Annuity is the most efficient way to do it when you want income to start. So when you go to the page, you’ll see some basic things you need to put in.
Before we start with all this, all the information is confidential. It's not shared, period. We don't do any of that. It's confidential. And when you run the quote, you're going to see the quote pop up on the screen immediately, and you're also going to get an email with that quote that you can access at a later day to put in an archive, put in a file. But you're going to put in your name; you’re going to put in your email address, and please, if you don't put in the right email address, it's not going to go to an email. So don't be a conspiracy theorist. We're not going to bombard you with emails; we want to send you the quote. So put in that, and then you're going to go to the next round of questions, and it's going to be basic stuff like your date of birth. Once again, you have to put in your actual date of birth because life expectancy, which drives the pricing train, is priced to the day.
I mean, we need to know that exact date of birth, and if it's joint life, dates of birth. You’re going to put in male and female. Here's the cool part, everything else is self-explanatory as you put the quote in and the information. One of the other things they'll ask is, do you want income to start in 30 days, or do you want to start in a year—et cetera? So you choose all that, and we're then going to quote all carriers, and you're going to get two quotes. You're going to get a life only or joint life only, or a life with a cash refund or joint life with a cash refund.
Now, we can send you many different types and quote parameters, but those are the two primary ones that can show you the available guarantees. Then you schedule a call with me, and we start digging in and doing more quotes from there, customized quotes if you want to see something different.
Life Only, Joint Only
Let's talk about life only, joint life. Life only and joint life only means that when you die, or if it's joint life only when the second spouse dies, money goes poof, money goes away. And most people, unfortunately, think that's the only way to structure these. It's not. Life with a cash refund and joint-life with a cash refund means that you're going to get a lifetime income stream life only, or life with a cash refund, or as long as you and your spouse are breathing, the second spouse, joint-life with a cash refund. But when you die, whatever's left in the account goes to the listed beneficiaries of the policy. The evil annuity company doesn't keep a penny, even though they're on the hook to pay as long as you breathe. All right?
Running a SPIA Quote
So the other thing, and this is what I'm excited about, and we've done a lot of work on this to get it right for you, the consumer. There are two ways that you can run the quote. The first way is, "Hey, Stan The Annuity Man®. I have 100,000, or 50,000, or 300,000, or 400,000. I have a lump sum, and I got the structure in place," whether it's single life or joint-life, whatever, "I want to see what $300,000 or 400,000," whatever the money amount of money is, lump sum, "what that will create." That's one way to quote it. But the other way to quote it, which is cool, really cool, is, "I want this specific amount of money per month for the rest of my life. I want to reverse engineer the quote." That's what I call reverse engineering. "Instead of the lump sum, I want $1,750 or $2,275 monthly. I want to see how much money it will take to guarantee that."
So you have two choices to run your immediate annuity quote, either lump sum or reverse engineer. Either way, we’ll quote almost all carriers for the highest contractual guarantee for your specific situation. So, you will have two choices: "I know how much money I have." That's one choice. And then the second choice is, "I know how much monthly income I want." Please choose one or two, choose one of them, run the quote, and go back and do the other. But those are the two choices, and that's it from the standpoint of lifetime income. You either have a lump sum that you want to quote, or you want to have a specific monthly income hit your bank account; how much money does that take? And then, our calculators will quote almost every carrier to find the highest contractual guarantee for your specific situation.
A couple of things about immediate annuities: understand that life expectancy drives the pricing when you take the payment. Interest rates play a secondary role. Interest rates play a secondary role, so don't come to me and say, "Well, I'm waiting for the 10 Year Treasury to raise before I buy." If you do that, you must factor in the payments you’ll miss while waiting for that mythical rise in interest rates. And who knows where interest rates are going to go? Nobody does. You don't know. I don't know. No one knows. They could go up; they could go down. You need to quote for the highest contractual guarantee now, and if that number makes sense, then fantastic. I mean, it is what it is. I wish I could tell you there's a sweet spot to buy it, but there's not a sweet spot from the standpoint of interest rates. Because again, life expectancy, and if it's joint-life, it's life expectancies at the time you take the payment.
Now, understand this, and just getting out of the lane a little bit, Deferred Income Annuities are Single Premium Immediate Annuities that you defer past 13 months. So if your start dates are past that, you can also put that in. Use the DIA Quote Calculator for laddering strategies. Now, one other thing, you can buy all the annuities at one time and ladder the start dates, or you could buy the annuities at future dates or combine the two. The bottom line is it's a customized plan, and what I want you to do is use the calculators. Just go in there, use them, mess around with some numbers and put numbers in reverse quotes.
Once you get all of that foundational information in place and run the quotes, schedule a call with me. I'll look at the quotes you've run, ask you some questions about your specific situation, and then we can drill down and put a customized plan together or tell you that you've already done it with the quotes you've run.
The bottom line is there's never an urgency to buy an annuity. The urgency is for you to understand it fully, fully understand the quotes, understand that life expectancy drives the pricing train, and then let's get on the phone and have a one-on-one conversation and put together a customized lifetime income plan for you.
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.