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Retirement Expert Rant: What I Love About MYGAs

Stan Haithcock
July 1, 2024
Retirement Expert Rant: What I Love About MYGAs

Hi, I am Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Today's topic is what I love about MYGAs, Multi-Year Guarantee Annuities. Yes, I'm wearing the "I Heart Annuity Haters" shirt today. People love it. Well, a lot of people say, "I hate all the annuities, Stan. I hate them because this guy said it in a print ad." Come on, man. That's crazy talk. Annuities are great. They're transfer-risk products, but we won't get into all those details. Let's get right into it.

‌Getting back to the "I hate all annuities" mantra that I hear, that drives me crazy. Do you hate all CDs? Of course, you don't. CDs protect your principal. They give you an annual interest rate. Multi-Year Guarantee Annuities do the same thing. They guarantee an interest rate for a specific period of time.

‌Simple Is Good

‌I love Multi-Year Guarantee Annuities. I sell more than anybody on the planet. Why? Because they're simple. Simple is good. If you can explain it to a nine-year-old, that's good. No offense to nine-year-olds. Multi-Year Guarantee Annuities currently should be the best-selling annuity type on the planet. Why? Because people want to protect their principal. It's a volatile time. It's volatile in politics; it's volatile economically, and you've got to protect your money.

‌With over 10,000 baby boomers retiring every day and hitting age 65, many want to transfer risk. A lot of people just want to protect their principal. A lot of people want to hit bunt singles—baseball analogy.

In essence, Multi-Year Guarantee Annuities are bunt singles. They're simple. You're not even swinging for the fences. You're not even trying to get a double or a triple. You just want to get on base. You want to protect the principal. You don't want to pay annual fees. You want to know exactly what the contractual guarantees are. You want to have them short term and you want to have full control over your asset.

‌That's a Multi-Year Guarantee Annuity. What separates it from the CD is that the interest grows tax-deferred in a non-IRA account. Period. That's it. That's fantastic. That doesn't make it better than CDs, but that is a great thing.

‌Let's say your goal is to protect the principal, not pay any fees, get a guaranteed interest rate, and not pay taxes on the interest in a non-IRA account. That's Multi-Year Guarantee Annuities. Period.

‌Live MYGA Feed

‌Now, the Annuity Man, the top seller of these babies, go to The Annuity Man, and you can shop 24/7/365 using our MYGA feed. It's live. It's updated. It's techie stuff. I'm not the techie guy, but I have techie people working for me, and we have everything coming in from all carriers. You can pull up your state, you can pull up the duration you're interested in, and bang, you're going to see the yield of maturities from the top down to the bottom. It's going to have all carriers, all ratings, et cetera.

‌Laddering Strategy

‌Now, another reason that I like Multi-Year Guarantee Annuities is people say, "Well, what do you think, Stan? Do you think interest rates are going to go higher? Going to go low?" I don't know. And nobody does. Nobody knows. One thing we're doing is laddering strategies with Multi-Year Guarantee Annuities. Let me explain how that works.

‌Let's just say you have $300,000 in a non-qualified account and want to protect the principal, not pay any fees, and get a guaranteed annual interest rate. What I'm going to tell you to do is buy a three-year, four-year, or five-year MYGA, or a two-year or three-year and a five-year, whatever. We're going to mix up the durations.

‌Why? Because nobody knows what's going to happen with interest rates. They're going to go either up or down. Who knows? But if they go up, then as the latter parts mature, we will transfer them, non-taxable event, to a higher yielding Multi-Year Guarantee Annuity.

‌One of the reasons that you don't know about it, and you're saying, "Wait a minute, Stan The Annuity man, America's annuity agent. Why am I just hearing about Multi-Year Guarantee Annuities? Why doesn't my advisor or my agent show me that? Why are they trying to jam an Index or Variable Annuity down my throat?" It's because the commissions that are paid with Multi-Year Guarantee Annuities are very, very low when compared to those other products. That doesn't make Multi-Year Guarantee Annuities better. But when agents need a car payment, they're going to sell you something with a high commission.

‌That doesn't mean you need to buy it. Multi-Year Guarantee Annuities are simple. To me, that's the best thing you can do when buying an annuity. Buy simplicity. And Multi-Year Guarantee Annuities are about as simple as it gets.

‌It’s a Guarantee

‌The other thing I like about them is that compared to an index annuity, there is nothing wrong with Index Annuities, but Index Annuities, the return on an annual basis based on a call option, has no guarantee. The guarantee is you're just not going to lose any money. With a Multi-Year Guarantee Annuity, you're guaranteed that you're not going to lose any money, and you're also guaranteed an annual interest rate that is contractual. Annuities are contracts. You're transferring the risk to protect the principal and get a guaranteed interest rate with Multi-Year Guarantee Annuities.

‌I've written a book on it that you can download for free. I do blogs and videos on it. I talk about Multi-Year Guarantee Annuities on my Fun With Annuities podcast, which I encourage you to check out. But I'm pounding the table right here. If you're trying to protect the principal and you're a CD buyer, or you have been a CD buyer, or you're kind of a bond buyer, and you want a guaranteed coupon, Multi-Year Guarantee Annuities have to be in your portfolio.

‌Keep Control

‌One of the things that drives me crazy is that people say, "I've never bought an annuity standard because when I'm done, the evil annuity company keeps the money." First of all, that's dumb. I can't even believe people say that to this day, but they do. Even financial journalists do. What they're talking about is a life-only Single Premium Immediate Annuity. Great. Who cares? There are 30 ways to structure that policy, and the evil annuity company doesn't have to keep the money.

‌With Multi-Year Guarantee Annuities, you control the asset 100%. Does the evil annuity company keep a penny ever with Multi-Year Guarantee Annuities? No, absolutely not under any circumstance.

‌Client Example

‌I had a call the other day. A guy has multiple—that's kind of a duplicitous way to say it—multiple Multi-Year Guarantee Annuities. He has many of them, but he wanted to take one and say, "You know what? I kind of want a lifetime income guarantee."

‌Great. So, here's what we did. Because with Multi-Year Guarantee Annuities, you can transfer that to another Multi-Year Guarantee Annuity, an Immediate Annuity, a Deferred Annuity, or an Index Annuity, whatever you want, whatever the goal is. Remember the two questions. What do you want the money to contractually do? And when do you want those contractual guarantees to start?

‌After that, at the end of the duration of the Multi-Year Guarantee Annuity, this gentleman wanted lifetime income. Great. So, what we did with the carrier that he's currently at with the MYGA, we called him and said, "Run the quote. Run the Immediate Annuity quote internally. Let me see what that is." Then, I went out and quoted every other Immediate Annuity carrier for the highest contractual guarantee. We found a double A-plus carrier that had the highest contractual guarantee.

‌What did we do? At the end of the duration, the surrender charge time period, we transferred, 1035 exchange, IRS approved, that's the section of the IRS code if you're bored and want to read it, from the MYGA to the SPIA. So, he went from principal protection with a guaranteed interest rate to a lifetime income stream. Why? Because that's what he wanted. That's what he wanted the money to do. His goals had changed, so he protected the principal. It was a three-year MYGA. After the three years, we transferred it to a lifetime income stream, and we set it up not only for his life but his spouse's life as well.

‌Bottom line, Multi-Year Guarantee Annuities are flexible, you control the asset, and at the end of the term, if you call me up and say, "Hey, Stan, I don't want to do this anymore. Just send me the check," we can do that as well. You run the show.

‌So, Multi-Year Guarantee Annuities. If you don't own them, you need to consider it. You need to consider how to protect your principle in volatile markets with part of your portfolio. MYGAs are the way to go.

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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