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There’s NO Annuity Sweet Spot to Purchase: Shootin' It Straight With Stan

Stan Haithcock
April 17, 2024
There’s NO Annuity Sweet Spot to Purchase: Shootin' It Straight With Stan

Welcome to Shootin' It Straight With Stan. I'm your host, Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Today's topic is a very, very important one, not only for the consumer but also for the annuity industry. The topic is: there is no sweet spot for annuity purchases. There's no perfect time to buy one. I know I've just shot down a bunch of sales pitches out there, "You need to buy it now because the upfront bonus is going away. You need to buy now because of interest rates. You need to buy now!"

‌Annuity Types

‌Clear my throat. No, that's not true. Annuities are contracts. There are many types of annuities out there, period. Single Premium Immediate Annuities, Deferred Income Annuities, Qualified Longevity Annuity Contracts, traditional Fixed Annuities, Variable Annuities, Index Annuities, RILAs, buffers, charitable gift, etc. All should be purchased for their contractual guarantees. All should be analyzed for what they will do, not what they might do, not the hypothetical theoretical backtested unicorns chasing the butterfly nonsense that's being pitched. If it sounds too good to be true, it is every single time.

‌That includes backtested returns. That includes upfront bonuses. All of that is nonsense. It's just part of the contractual guarantee. I always tell people, "An upfront bonus is fine. It's just part of the contractual guarantee." Do we quote those? Yeah. When you do an Income Rider quote on my site, we will quote all Index Annuities with Income Riders with and without bonuses. We don't care because it's part of the overall contractual guarantee. It doesn't matter to us because it's all about the number. You buy the number, period, which brings us back to the topic, there is no sweet spot.

‌Annuities Are Contracts

‌You can't time it. I know you think you can. I know that you've been told in the markets that you can. And by the way, in the markets you can, but annuities aren't market products. You buy annuities for the contractual guarantees. You're not buying market returns. You're not buying potential. You're buying contractual guarantees. You own it for what it will do, not what it might do, which separates annuities from investments. In my opinion, Stan The Annuity Man, America's annuity agent, that is not in dispute. I am the dude out here laying the groundwork for how these annuity contracts should be looked upon and analyzed for purchase.

Annuities aren't investments. They are contracts. Why do I say that? When you buy one, regardless of the type, you'll get a policy in the mail. It's going to look eerily similar to a contract. That's because it is a contract. So, you're buying it for the contractual guarantees.

‌Now, I know all you interest rate bugs out there, all you market timers, all you people that trade butterfly spreads, condor spreads, options, and futures, and Bitcoin and all you masters of the universe are saying, "That just can't be true. I will tell you right now, son, if I got in the annuity game, I'd figure out how to time it." No, no, you would not. I'd rather you do a full analysis of your navel, of your belly button, as they say in the South, and it would be more fruitful.

‌Annuities, because they're contractually guaranteed products, the time to buy them is when the contractual guarantees make sense to you when they fit that gap for principal protection, income for life, legacy, and long-term care. Those are the four things that annuities primarily and contractually solve for. Again, P stands for principal protection. I stands for income for life. L stands for legacy, and the other L stands for long-term care. To go a step further, if you go to The Annuity Man and schedule a call with us, we're going to ask two questions. What do you want the money to contractually do and when do you want those contractual guarantees to start?

‌Contractual. We're not saying, "What type of return would make you happy, sir? What's a reasonable rate of return?" Never ever, ever, ever are we going to do that, and you should never buy anything with the word annuity attached to that. There's no timing. I always tell people, "The bell doesn't ring at the top or the bottom. Whether it's markets or bonds, I don't care what you're doing. Same thing with annuities."

‌We just went through a period where, at the time of this blog, interest rates are at a perceived high level. Look at the date. And many people, "I'm just going to wait until the Fed raises it again. I'm going to wait to buy my income annuity until the FED raises it again." Some of the dumbest things I have ever heard and some of the worst decisions were based on timing dreams that clients and potential clients were talking about. We're like, "No, no, no. You can't beat the annuity company. You just can't, especially lifetime income."

‌Life Expectancy

‌I'll give you an example. "I'm going to wait to buy this lifetime income product until interest rates go up." Hey, player, interest rates play a secondary pricing role. The primary pricing role with lifetime income annuity types. There are four to be argued with right now, primarily based on your life expectancy at the time you take the payment or life expectancies if you set it up jointly at the time you take the payment, which means that the annuity company knows when you will die. The older you are when you take the payment, the higher the payment. Sound eerily familiar? Yeah, the other annuity that all of you own with Social Security numbers is Social Security.

‌It's higher at age 70 than it is at 65. Does that mean you wait till 70? Maybe, but I laugh at people who say, "You have to wait till 70." No, you don't. You factor in the payments you would miss and how long it would take for those to see if it makes sense for you. If you don't need the money, wait till 70, but if a bird in the hand is worth two in the bush, as they say in the South, I love that statement. I'm not sure. You know what I'm talking about, though.

‌Interest Rates

‌Again, there's no sweet spot. None. You can't make an argument that there is. And if you say, "Well, I bought this, and then I looked ..." Hindsight's 20/20. "Well, I bought this, and interest rates were here, and then they went down." Well, good for you. No one knows where interest rates are going. People always ask me, "Stan, where's interest rates going?" Hey, if I knew that, player, I wouldn't be talking to you. I'd be on my Learjet with The Annuity Man logo on the tail, trading interest rate futures. Nobody knows.

‌Nobody knows when the bell will ring at the top or the bottom. Nobody can time it, especially with annuities. Now, as all of you baby boomers, there are 11,000 of you turning 65 every single day. And you're coming from market-type investments, mutual funds, stocks, bonds, ETFs, or whatever. There is an element of timing that can be applied. Still, you're never going to talk to the people who really can time it because they're running their own money or they're running a hedge fund. Still, the point is, there's arguments that investments can be timed up to a point with research analysis, historical, etc.

‌Don't Overanalyze It

‌With annuities, those are contracts. You don't time contracts. Please don't try to time it. Please don't try to overanalyze it. Please don't try to look at historical blah, blah, blah because annuity companies and life insurance companies that issue annuities are looking at your age range for lifetime income. If they hit capacity, they will lower that guarantee not to attract you. If they need your age, they will raise the guarantee to attract you. Try to figure out that sweet spot, player.

‌As for the principal protection products like Multi-Year Guarantee Annuities, who knows? If you like the guarantee, fine. If you think the interest rates are high, lock it in longer for a longer duration. If you think that they'll be volatile, lock it in shorter. But there's no timing it. If you don't know, then ladder it. What I want you to take away from this incredibly factual and fun edutainment of annuities is not to time it. Look at annuities as contractual guarantees. Look for what they will do, not what they might do, and make your decision on those contractual guarantees. If those contractual guarantees are fair in your opinion, they fit in your portfolio to complement everything else that you have.

‌It's really that simple. So, there is no sweet spot. I hate to tell you. That's a T-shirt. Annuity purchase sweet spot then put a big void sign over it. Think of that; put that in the back of your head. That's what I want you to remember. There's one more thing I want you to remember. My name is Stan The Annuity Man. Go to The Annuity Man for all things annuity 24/7, 365. We will not bug you, but you can access the best team in the world by booking a call with us. You can run quotes with our proprietary calculators to your heart's desire 24/7, 365. And with that, that's Shootin' It Straight With Stan. I'll see you next time.

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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