Retirement Planning: Do You Even Need an Annuity (PILL & 2 Questions)
What are we talking about today? Retirement planning. Do you even need an annuity? I know you're saying, "What? What did you say? You're Stan the Annuity Man® and licensed in all 50 states. You're America's annuity agent®, and you even have the audacity to throw out the question in the back of my mind: do I even need an annuity?" Yes. Why? Because it's the facts. It's the brutal facts. Not everybody needs an annuity or an additional annuity because you already have one; it's called Social Security. That's a lifetime income stream that everyone has. But do you even need another? Do you need one? "There are so many different types of annuities, Stan. I don't even know. How do I figure out from a retirement planning standpoint if I need an annuity?" I am so glad you asked that question because I will cover that in detail.
2 Questions When Looking at Annuities
We're talking about retirement planning. How do we even know if you need an annuity? Good question. I have two questions I ask every person who inquires about an annuity and schedules a call with me. Those two questions are, number one, what do you want the money to contractually do? Keyword, contractually, annuities are contracts. You don't buy them for the hypothetical, theoretical, projected, back-tested unicorn chasing the butterfly return scenario. Second question, when do you want those contractual guarantees to start? It's really that simple. I've made it so simple for the annuity industry and every single annuity agent out there; thank you very much. You should be using me and not them anyway, but the point is that's how simple it is. What do you want the money to contractually do? When do you want those contractual guarantees to start?
From those two answers, I can tell you if A, you don't need an annuity and you're dreaming, and you're not in Realityville, or B, yes, you probably need to look at the annuities and this is the type that will provide the highest contractual guarantees for you. Now, some people say, "Never buy an annuity," and they're grouping all annuities into one. That's like saying, "Never go to a restaurant. Never buy a truck. Never buy shoes." That's how crazy that is. When there's, "Never buy an annuity. I'd rather die than no annuity," and you already own one because it's social security, so you're already a hypocrite. If you are looking for contractual guarantees, then annuities might fit.
In addition to the two questions that solve everything, I've also come up with an acronym called PILL. P stands for Principal Protection, I stands for income for life, L stands for legacy, and the other L stands for long-term care and confinement care. In retirement planning, and you're talking about planning for retirement, you need to ask yourself the two questions, and if you do not need to contractually solve for one or more of those items in the PILL, you do not need an annuity. Are we clear?
There are sales pitches out there that include the lousy chicken dinner seminars and the high-end steak dinner seminars. When you go to the steak dinner seminar and eat a $90 steak, the person's up there saying, "You should really buy this, market upside with no downside, blah, blah, blah," just swallow the food, not the pitch. There's not a one size fits all product in the annuity world. In my opinion, Stan the Annuity Man, America's annuity agent that has been doing this forever, I have cowboy boots older than most people trying to sell you an annuity. I really do. I'm an old dude. I know I don't look old, but I am. Been doing this for a long time, forgotten more than most of those people have ever learned. But the point is most people out there are trying to sell annuity types, some types for growth, and market growth. Listen to me, and I need you to lean in. I need the industry to lean in. If agents are reading this, which you shouldn't be, as it's a consumer blog, lean in. Never ever, ever, ever, ever, ever, ever, ever, ever buy an annuity of any type for hopeful market growth. I know I just shot down many of those sales pitches you've heard, but let's go through those growth-type products.
Index Annuities are CDs-type products. Yes, you'll eat better in some years, but the average return is a CD-type return. That's fine because it's a principal-protected product. Variable Annuities, I have no problem with that, and I don't sell them because I don't sell anything that has the potential to go down. Still, all Variable Annuities, not some, all Variable Annuities have limitations on those mutual funds and separate accounts that you can choose. In my opinion, Stan The Annuity Man, America's annuity agent that used to work for Dean Whitter, Morgan Stanley, Payne Weber, and UBS, I've been on that side of the ledger, so I know what I'm talking about when it comes to market products. You should never have restrictions on growth. Are we clear?
Then the newest one, this buffer product, a copay product too good to be true product, and once again, it's not a market product. If you want market returns, you will have to take the risk and go into market non-annuity products to get that. Remember, in retirement planning, which is what we're talking about today, do you even need an annuity? It comes down to the two questions. What do you want the money to contractually do? When do you want this contractual guarantee to start? And then looking at the PILL acronym, Principal Protection, Income for life, Legacy, Long-term care, and confinement care.
Which Annuity Is Best?
There's not an annuity that's better than the other. There's not a carrier that offers one better than the other. Yes, I represent almost all carriers, and I've apologized to those carriers for not saying, "This one's the best." No. These are commodity products like buying a plane ticket. You shop all carriers for the highest contractual guarantee period. You can visit our annuity calculators if you don't want to talk to me or think I'm too energetic. You can run SPIA quotes, median annuity quotes, Deferred Income Annuity quotes, Qualified Longevity Annuity Contract quotes, and Income Rider quotes. You can run them yourself. You can even request an Index Annuity quote, and we'll dive into that for you as well and show you the best ones from the standpoint of renewal rates, and I'll have that conversation with you. I also encourage you to book a call with me, and we can discuss any questions you may have.
The bottom line from a retirement planning standpoint, annuities do have a place. With a demographic tidal wave of Baby Boomers, some say 10,000 a day, some say 12,000 a day are turning 65, that's a demographic tidal wave of people that need contractual guarantees, that need to protect the principal, that need a lifetime income stream in addition to Social Security, or they need to leave a legacy, or they need long-term care, confinement care type coverage. That's just a fact. In the annuity industry, horrific marketers as a whole, I'm out here screaming into a hurricane and marketing the annuity category correctly as contractual guarantees. The annuity industry's going to benefit because of the demographic tidal wave of people. Again, from a retirement planning standpoint, which is what we're talking about. If you're looking at retirement planning and being serious about retirement planning, you have to seriously consider contractual guarantees with annuities. Otherwise, you're not serious, and you let these earworm crap messages of "I hate all annuities" get into your head for whatever reason. That's crazy.
Clear out all the noise, clear out all the advertisements you hear, and if you go to your local advisor or your brother-in-law that's managed your money and go, "I'd never buy an annuity," they're crazy. They have invalidated their expertise if they say, "Don't ever buy an annuity." That's insane. You know that, and I know that. Let's rationally and pragmatically look at these policies from a contractual guarantee standpoint. Let's shop all carriers for the highest contractual guarantee. Let's look at them rationally and contractually to see if they fit for you.
I encourage you to take a look at the Stan The Annuity Man YouTube channel. We have lots of educational content on there. One video in particular talks about how the application process works if you want to become a client or if you're thinking about how does this work from the application process standpoint? But please go there, do your research, call me, and set a time with me. It's 30 minutes. I'm not going to sell you. I'm going to listen to you, I'll recommend things for you to consider, and then I'll leave you alone to decide on your terms and timeframe.
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.