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Retirement Tips: 3 Ways to Have Money Hit Your Bank Account

Stan Haithcock
May 23, 2024
Retirement Tips: 3 Ways to Have Money Hit Your Bank Account

Hi, I'm Stan The Annuity Man, America's Annuity Agent, licensed in all 50 states, including yours. Today, we will talk about three ways to have money hit your bank account, which we all would like. I call that the income floor, which is the guaranteed income floor. Social Security, pension, annuities, rental income, etc., the money that will always hit. That's what we're going to talk about today.

But before that, I'd encourage you to visit The Annuity Man. Get all of my books for free under no obligation so you'll understand all things annuity, the contractual guarantees, the good, the bad, the limitations, and the benefits. I would also encourage you to go there and schedule a call with my team. I have a great staff that's supporting me. If you're asking yourself, how does he do that? I've got some really good people surrounding me. So, let's get down to business.

I forgot to tell you, shameless plug. We have the best proprietary calculators on the planet, and you can use them at your leisure or have us run the numbers for you. It's really your call. But I wanted to mention that to you before we get started.

Multi-Year Guarantee Annuities

All right. Let's discuss the three ways money can hit your bank account. The first way is using a Fixed-Rate Annuity. In the industry, they're called Multi-Year Guarantee Annuities. It's the industry version of a CD, a Certificate of Deposit. I'm assuming most of you know what that is. This is a way to have money hitting your bank account, but you never touch the principal. A lot of people love that. My mom loves that in St. Augustine, Florida. She never wants to touch the principal. She just wants to peel off the interest. You can do that with Multi-Year Guarantee Annuities. Not all of them, but most of them will allow you to do that.

These products are issued by life insurance companies and approved at the state level. But most states have this product. But for example, you put $100,000 into this three-year product at 3%. You can peel off $3,000 a year that will hit your bank account. If you decide to do it monthly, you can do it that way. Or you can just have it all hit one time annually. But you never touch the principal. That is one way to peel off the interest and have money hit your bank account. A lot of people like that.

Fixed Index Annuities

You can also do that with Fixed Index Annuities, whatever that credited amount is. You can also peel off whatever credited interest is on the Index Annuity, and it also hits your bank account. Again, not all annuity companies are uniform, and it's like herding cats. So, you'd have to come to me and say, "Hey Stan, this is what I want. I don't want to lose a penny. I don't want to touch my principal and I want to peel off any interest into my bank account." I'll shop for the best carriers for you and find those policies to discuss them.

Income Rider

An Income Rider is the other way to have money hitting your bank account. An Income Rider is an attached benefit to a policy, typically an Index Annuity or Variable Annuity. How an Income Rider works is that it's a separate calculation. The pricing is primarily based on your life expectancy at the time you take the payment. The older you are, the higher the payment. But the good news about Income Riders is that it's a transfer of risk to the annuity company to pay you. Or if you set it up joint with a spouse or partner, joint life, to pay you or someone that you love an income stream for the rest of your lives, regardless of how long you live. Hey, that's a good thing. There's no ROI until you die.

Until then, it's a transfer of risk. But with Income Riders, you can structure them so that you have that monthly income stream hitting your bank account just like your pension, just like your Social Security. In essence, an Income Rider is a personal pension, but you can defer it as far out as 15 or 20 years with some of them. Most people are deferring anywhere from five to seven to 10 years. It depends on your specific situation and when you want that income to start. The great part about Income Riders is that you can determine when that income stream will start. And you can change it typically with most companies, you can change that start date. So, if you wait and defer it longer, you will be older, which means the payments will be higher. And the reverse is true. If you start the income stream when you're younger, the income will be lower because you have a longer life expectancy.

Oh, by the way, I have written a book on Income Riders. We just talked about that. Go to The Annuity Man and you can download it for free. I've also written a book on Multi-Year Guarantee Annuities and Index Annuities.

Annuitized Products

The third way for income or money to hit your bank account every single month is through annuitized products with annuities. These are Single Premium Immediate Annuities, Deferred Income Annuities, and Qualified Longevity Annuity Contracts. From a structuring standpoint, they're pretty much the same thing. There are no moving parts, there are no market attachments, and there are no annual fees.

Single Premium Immediate Annuity

They're transfer of risk pension products. Immediate Annuities are the granddaddy of all of them. In other words, the Deferred Income Annuities and the Qualified Longevity Annuity Contracts pretty much came from the Immediate Annuity side because Single Premium Immediate Annuities were developed and designed and introduced in Roman times as a pension gift to the dutiful Roman soldiers and their families. It has been sold in this country for hundreds and hundreds of years and still is the best highest contractual guarantee pro-customer product out there if you want income to start right now. 30 days up to a year. That's a Single Premium Immediate Annuity. The pricing of that income stream is primarily based on your life expectancy at the time you take the payment, with interest rates playing a secondary role. The older you are, the higher the payment.

Deferred Income Annuity

A Deferred Income Annuity is really the cousin of the Immediate Annuity. The difference between an Immediate Annuity and a Deferred Income Annuity, SPIA and DIA, as they say in the industry. A Deferred Income Annuity, the income can start as soon as 13 months, as far out as 30 to 40 years. You can defer that far out with a Deferred Income Annuity. Once again, there are no annual fees, no moving parts, and no market attachments. It's a straight transfer of risk pension product. The older you are, the higher the payment. Social Security, which is an annuity you already own, is a Deferred Income Annuity. The older you are, the higher the payment. It works the same way.

Qualified Longevity Annuity Contract

This leads us to the third type, what I call the annuitized, creating payments and annuity products that will have money hit your bank account every single month. That's a Qualified Longevity Annuity Contract called a QLAC.

Yes, I've written a book on it, and you can download it for free. QLACs were developed in 2014 to put in your traditional IRA and some employer plans. Not all, they should be all, but not all. But your traditional IRAs. Most people are using Qualified Longevity Annuity Contracts in their traditional IRAs. The good news about QLACs, as we call them, is that you can defer as far out as age 85 in your IRA. You don't have to go that far. It is not a Roth IRA but a traditional IRA. You can also set it up so that your spouse or partner receives that lifetime income benefit for as long as they live.

So, you can use your traditional IRA to set up a joint lifetime income stream, and you can defer it as far out as age 85. It doesn't have to be that; it can be anytime you want. 72, 74, 75, whatever. Many people think that QLACs have to be deferred to age 85. They do not. However, a QLAC is a Deferred Income Annuity. A Deferred Income Annuity is an Immediate Annuity. They have the same structure, just different places you can use them. Obviously, you cannot use a QLAC in a Roth IRA. But those are also ways to have money hitting your account every single month.

All right. Let's go over those three ways that money can hit your account. Multi-Year Guarantee Annuities. Which is the annuity industry version of a CD that peels off the interest. You can do the same thing with Index Annuities. Number two, Income Riders. These are attached benefits to Variable and Indexed Annuities for future personal pension income needs. By the way, you can design it and customize it. When we talk, that's what we'll do. And then the third way are the annuitized products: Single Premium Immediate Annuities, Deferred Income Annuities, and Qualified Longevity Annuity Contracts.

That said, that doesn't mean you need to buy an annuity. What that means is you need to get my books and talk with us one-on-one so we can have a good conversation to make sure that an annuity fits your specific situation.

Just remember this, with any annuity purchase you ask and answer 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, our conversations begin. I start quoting all carriers to find the best contractual guarantees for your specific situation. And you get to make the decision to buy or not to buy on your terms and on your timeframe.

Thank you for joining me today. I encourage you to visit The Annuity Man. Go there, learn, educate yourself, and understand that annuities are contracts. They're not investments, in my opinion; they're contracts. So, you need to understand that contractual guarantee before you pull any triggers and place any money. See you on the following Stan The Annuity Man blog.

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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