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Retirement Tips: How to Talk Annuities With a Spouse

Stan Haithcock
May 9, 2024
Retirement Tips: How to Talk Annuities With a Spouse

Hi there, Stan The Annuity Man, America's annuity agent licensed in all 50 states. Top agent out here. I would love to speak with you about annuities. If you have a question, visit The Annuity Man, and schedule a call.

Today's topic is interesting: how to talk to your spouse or partner about annuities and how to start telling them about contractual guarantees because most people, when you hear the word annuity, it either equals hate or it's a curse word. I mean, they've heard nothing but bad things about annuities. I don't know how that is because annuities have a monopoly on lifetime income. How do you have a monopoly on such a great thing? People don't like them just by hearing the word, but somehow, the industry has allowed that to happen, which is interesting. I guess business schools will be studying that forever. How do you have a monopoly and not just drive that home?

If you're reading this blog, you're obviously doing your due diligence and homework and trying to learn about annuities. Also, go to The Annuity Man to get my books. I've written six owner's manuals on annuities that you can download for free, and that'll help the conversation with the spouse because they can read them, too. But I will talk to you today about how to start talking about annuities. Not that your spouse or partner doesn't care about money, but many people have a bad connotation when they hear the word annuity, and there are ways to talk about it and educate them on why you're even looking at it. Because you might be out there, your spouse or partner walks by and asks, "Why would you ever think about an annuity?" Well, I'm going to tell you why right now.

Lifetime Income

Talking annuities with a spouse, that's tough, right? It is like you'd rather speak to them about the kids or something. It'd be a lot easier. But I think the first thing that needs to be said is it's kind of a lifestyle change for many people who are into my content. They're thinking, "Okay, I'm reaching this age that I really don't want to do markets as much anymore. I want guarantees. I want more income." First, I would say, "Listen, we need lifetime income. We need an income floor." In addition to Social Security, remind them that that's an annuity or a pension if you're so lucky or if you've got dividend income, whatever's coming in monthly. Most spouses, male or female, think, "Income would be good. Income's always good because it equates to lifestyle."

So, that's the first thing that I would talk about. Annuities are the most unappreciated products on the planet because, as I said earlier, they're the only product on the planet that provides a lifetime income stream. You can literally look at your spouse and say, "Hey, when I die, I'm going to set up this annuity so that the income continues for the rest of your life. And when you die, we'll structure so that whatever money is left over goes to the kids." That's, in essence, an annuity transfer of risk lifetime income stream. And whether you want that income to start right now or sometime in the future, those of you who are planning on a retirement income stream in the future can say, "Hey, I'm going to set this up so that income stream is going to start when I retire. And if something happens to me, it will be for your life. If something happens to both of us, money goes to the annuity company, but I will structure another pension for us."

Protecting the Principal

That's the primary discussion that you need to have. The other discussion you might want to have is if you don't want to lose any money and fully protect the principal; there are two products you can peel interest off and not touch the principal. One's a Multi-Year Guarantee Annuity, which is a Fixed Rate Annuity, the annuity industry version of a CD. The other one is the most overhyped product on the planet, but it's also a CD product called a Fixed Index Annuity. It's not a market product. I know it's sold like that, but they both protect your principal. They both have no annual fees if you don't attach any riders, and they both can create a contractual interest rate that you can peel off.

The first steps are principal protection and lifetime income. Principal protection can, obviously, be locked in for as long as you want, whether it's three years, five years, seven years, or ten years. Lifetime income can start as soon as 30 days after the policy is issued, and you can defer it up to 40 years.

Put a Plan Together

So, the discussion should be, let's put a plan together, partner, spouse, let's put a plan together that can be principal protection in combination with lifetime income, or it can be just lifetime income. Explain to them that you want to set it up so that as long as both of you are alive and one of you is alive, the income will remain consistent, unchanged, and uninterrupted. But you can also structure it so that that hard-earned money that you really worked hard to put away, 100% of it will go to somebody in your family, and the evil annuity company will not keep a penny even though you're transferring the risk to that annuity company to pay you and you and your spouse for the rest of your lives regardless of how long you live.

My Example

In my relationship, my wife and I have been married for over 30 years, and she is a brilliant lady, a school administrator, does a lot of things, is very dynamic, has a master's degree, and everything. Still, she really doesn't care about stocks, bonds, retirement plans, or anything. It is just not of interest to her. It's not a passion. If it were something she was interested in, she'd be very good at it because she's very, very smart, but she's not interested in anything like that. And she trusts me with that. But she also has made it very, very clear to me that when I pass, she wants to make sure that she knows the exact amount of money that we have and where it is, and she also wants to know about the income stream that's being set up now when that happens.

And obviously, we have a trust just like you probably do as well, but when we have those discussions, I can look her in the eye and say, "Okay, here's the amount of money we have. Here's what's principle protected. We're not going to lose a penny, so when you see the nightly news that the world's burning down, you know that everything's okay with that portion of the money that we have in principle protected products. And then, by the way, here's the amount of money that you're going to get in your lifetime income stream when we're alive and when I die." And for her, that's all she really needs to know. She loves that idea. She doesn't look at return on investment or ROI numbers. All she cares about is whether she can see her kids and future grandkids. Can she maintain her lifestyle and live comfortably when I'm gone or when I decide to retire and we're traveling and doing those things?

The Two Questions

That's all she cares about. And in many relationships, there's one person that's really into the finances, and one person's not. It can be male or female. It's not sexist either way, but that's the conversation. You have got to be talking about the contractual guarantees and have them weigh in on what do they want, what do they want the money to do? Remember the two questions that I only ask. I've narrowed this whole annuity thing and stripped it down to two questions, and everyone's using it now, thank goodness. Number one, what do you want the money to contractually do? And number two, when do you want those contractual guarantees to start? Ask that to your spouse or partner, ask that to your family members that you want to be involved in the decision. Have them answer that and then connect with me, and we'll put together that customized plan.

For those of you out there going, "I don't want to talk to my spouse," that's a bigger problem. That's a bigger issue that I can't deal with and don't want to deal with. But when you talk to your spouse about annuities, make sure you just break it down into the contractual guarantees. I would encourage you to visit The Annuity Man and get those books. You can download them for free, and then both of you can read them. You'll have a good understanding of how these products work: the good, the bad, the limitations, the benefits. That's the first step. I have a podcast called Fun With Annuities. Yes, it is fun. And those typically last 40 to 50 minutes. Sometimes, I have guests, and sometimes I don't, but I talk about the details of how these products work.

Then, you can go to The Annuity Man and run quotes; you don't have to talk to anybody. Or, if you want to talk with us, you can schedule a time. Then, you, your spouse, your partner, and my team can get on the line and have some good conversations about how these work and if they make sense. I know you're probably getting pitched by a lot of people. Everybody and their brother are trying to sell you an annuity. If you walk into the bank, they're trying to sell you an annuity, and your broker's trying to sell you an annuity. Every time you see an ad on the TV, they try to sell you an annuity. It's complicated, and it's complex.

Unfortunately, it needs to be simple. And it really is if you ask those two questions: What do you want the money to contractually do, and when do you want those contractual guarantees to start? But I encourage you to connect with us. Let's have that conversation. No pressure, no sales pitches, just my team listening and putting together a plan, and then us talking and providing you enough information to make an informed decision on your terms and on your timeframe. And with that, I'll 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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