Reverse Engineer Annuities for Inflation: Shootin' It Straight With Stan
Welcome to Shooting It Straight with Stan. I am your host, Stan The Annuity Man, undisputed America's annuity agent in the flesh, wearing a warmup suit with a red baseball cap with Stan The Annuity Man logo on it because that's what I do.
Today's topic is Reverse Engineer Annuities for Inflation. This is a big one because there are a lot of bad sales pitches out there, especially in the index market, index annuity market, where they have the index annuity that is just for inflation, which is garbage. There's not an annuity company in the world that has that product. And if that's being pitched, all the annuity company is doing, and there's nothing wrong with this, it's just good business and math, is they're just severely and drastically lowering the initial payment to make up for any potential increase. And mathematically, in most cases, it doesn't make sense. And if you think logically, if it sounds too good to be true, it is every single time.
Buy the Highest Contractual Guarantee
But everyone is so fixated with inflation. Oh my God, Stan. What are we going to do with inflation? Here's the way to do it. First of all, when you're buying lifetime income, you don't, in my opinion, as America's annuity agent, when you attach COLAs or buy the dream of things increasing with the product you buy. All you're doing is building another wing at the life insurance company that issues annuities. Buy the highest contractual guarantee available. In other words, if you said, Stan, we need lifetime income to start in six years, me and the wife, me and the husband. Okay, great, let's solve for that. At least tell me the lump sum amount you're considering placing or the actual income amount, and we'll reverse engineer the quote to solve for that. And that's how to go about doing it.
You already own the best inflation annuity on the planet. You didn't know it. Yeah, you do. Social Security. Easy for me to say. Social Security is the best inflation annuity on the planet because our friends in DC just raises the payments. There's no actuarial thing to it. "Well, we're just going to raise the payments." Why? Because you vote, and people who get Social Security vote, and that's why they do it. But it's an excellent inflation annuity, so you can't say you hate all annuities.
Inflation Is Customizable, and Personal
But when I say reverse engineer for inflation, first of all, let's talk about inflation rationally and pragmatically. I love how the media talks about inflation. They talk about inflation, like saying all restaurants are bad. "I think inflation's going to affect everybody." No, inflation is customizable and personal. Let me give you an example. My two lovely daughters are out of the house and growing and doing their thing and trying to grow up, which means that we're not buying a lot of milk and cereal, and I'm not taking them to dance classes, etc. We're not spending a lot more on groceries, and we're not spending a lot more on gas. So, inflation is hitting my wife and I, the lovely Christine of 35 years, differently than other people.
Same thing with you. You can't watch CNBC and Fox Business and go, man, that inflation will be tough because most of you can afford to buy the eggs. You can afford to get the full tank of gas. You can afford to go to the store and get groceries, even though it's higher, but yes, you can. So, stop acting poor. You're not poor, most of you.
How to Use Annuities for Inflation
If you're watching this video, you probably aren't. You are in the top 5% of all earners or retirees out there because you're looking to maximize your retirement. After all, you're watching Stan The Annuity Man. But here's how to use annuities for inflation. Let's say you have $7,000 coming in every month, Social Security, dividend stocks, rental income, etc. And two years from now, inflation will hit your specific situation, and you will need $7,500. Then what we do is we solve for $500. At that time, we run a reverse engineer quote on my site. You put in, hey, I want $500 a month, and we quote all carriers to find the carrier highly rated that will use the least amount of money to create that contractual guarantee. That's how you do it.
And to me, the perfect way to do it is to wait. As Mel Gibson said in Braveheart, as the British are running at them and they're in a line, and he's like, hold, hold, hold, hold, hold. And then all of a sudden, he says, let's go. And then they stab everybody. Even the horses which was kind of scary. The point is, hold until you need to fill that income gap for inflation. Don't be proactive. Don't throw darts at it. But if you want to throw darts at it, if you say, Stan, I don't care what you say, and you've got that red baseball cap on, and I just want to solve for it in the future. Okay, then, let's buy income that starts at a future date.
I'll give you an example. If you have an IRA, you could buy QLAC, a Qualified Longevity Annuity Contract, and you could take the $200,000 limit at the time of this taping. You could say, okay, I'm going to buy $50,000 for income to start at age 75 and $50,000 for income to start at age 80, and then $50,000 income to start at age 82, and then the other $50,000 for income to start at age 85. Now, you're still throwing darts at inflation and at what you might need, but that's a way to do it for all you proactive box checking OCDers out there who need to get it done and have the spreadsheet look good to you. I get that.
I'm kind of one of those people. My wife is definitely one of those people, but I would rather you keep your powder dry until you need to fill the gap and then buy the Immediate Annuity at that time. That's the way to do it. It's not Cost of Living Adjustment riders attached to SPIAs, DIAs, and QLACs. It's not Index Annuities with the promise, hope, dream, and the unicorn chasing the butterfly of when the index increases. "It will increase your income, sir, and look at these projections. I mean, 30 years from now, you'll be Gordon Gecko." All of that's nonsense. Never buy, never, ever, ever buy potential hypothetical, theoretical, if you'd have owned it ten years ago, nonsense back tested numbers. Please don't. All you're doing is buying the agent a car. Please do not do that. Have them show the contractual guarantees, or better yet, use us. We're the top seller of annuities on the planet in America, and we sell contractual guarantees. We don't look at those hypotheticals and theoreticals. Typically, there's a long break-even point to reach the number you could have gotten without the potential increase.
Give you an example. When you go to take Social Security, there are arguments. The internet is just full of all answers, right? I don't know which one's right or wrong. But if you wait till 70, it's going to be this. If you take it at 65, it will be lower because you'll be younger, and it's life expectancy based. But if you wait till 70 instead of taking it at age 65, if you're pragmatic and mathematical, you're going to factor in those 60 payments that you missed and how long it will take to make that up because you waited. And typically, it's a long time. So, the argument is time, value of money, a bird in the hand worth two in the bush; however you want to put it, there's no perfect answer. And there's no perfect solution for inflation.
The 4% Rule
Now, you can throw tips at me, and I bonds at me. You can throw all that, but still, there's nothing perfect out there. You're better off looking at your situation as unique and adding up the income floor of income that's coming in, Social Security, pension, rental income, dividend income, etc., and then filling the gap. What I do not want you to do, and what needs to go away is the 4% rule of the money manager saying, "Hey, forget annuities. I'll just manage the money, and we'll just peel off the growth." Hey, great, Gordon Gecko, until the next downturn, and then all that planning goes out the window.
Solve for the Contractual Goal
So, when it comes to inflation, you need to think about reverse engineering for inflation. And yes, I am an annuity engineer. I should put that on my card. No, I hate people that do that. Annuity engineer or senior retirement specialist, what is that? I think it's illegal to do that. But reverse engineer, use as little amount of money as humanly possible to solve for the contractual goal. As I said, you can go to our site, and you can run those quotes. You can either say, okay, what is this lump sum pay that we have in our mind to use? Or, we have this specific dollar amount we're trying to solve for. How much money would it take?
And listen, I always tell people, let's use as little amount of money as humanly possible in the annuity strategy to solve for the goal. I know the annuity sales gods are looking down upon me, going, Stan, do not say that very loud. No, I'm saying it really loud because that's the way to go about this, is to reverse engineer, especially when it comes to inflation.
Last thing and let me close with this. Please stop obsessing about inflation. Please stop trying to find the product that solves for it because someone's going to sell it to you, and it doesn't exist. Please stop going down the rabbit hole when, if you really look at your monetary situation, it's not going to really affect you. Please stop. We all know who it's going to affect. It's going to affect the bottom end of society. The people that haven't accumulated a lot of money, they're going to get hurt. The people watching this video aren't going to get hurt. It's going to be an annoyance. Inflation for people who have money, and yes, I'm talking to you, is an annoyance. That's all it is. It's a fly around our heads. We're spending more on gas. We're spending more on eggs. Great, okay. Is it going to affect your lifestyle? No, it's not.
And for you multimillionaires out there that call me about, I'm worried about inflation, losing sleep about inflation, you need to chill out because you're wasting time. Go live your life. You have enough money. Inflation's going to come, it's going to go, and it won't affect you. It's going to affect you on the margins. You know that. Nod your head. But if you do want to solve for it, let's reverse engineer and solve for it at that time, or buy lifetime income starting at future dates. That's the way to do it. We hope we can help you with that. My name is Stan The Annuity Man. See you next time.
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