What You Should Know About Lifetime Income - Retirement Expert Rant
Do You Hate Lifetime Income?
Read the t-shirt; I heart lifetime income, that's what we're going to talk about today. Did you know that annuities are the only product on the planet that can contractually guarantee lifetime income? You do now. I love it when people say; I hate all annuities. Do you hate your pension? Do you hate Social Security? Both of those have are annuities. Both of those provide a lifetime income stream. Do you hate lifetime income? Do you hate income that you can never outlive? Of course, you don't. If that's the case, then don't be a hypocrite. Cancel your social security, cancel your pension if you have one because if you keep making those payments, you're a hypocrite.
Annuities are the only product on the planet that can provide lifetime income; it’s that simple; it started in Roman times.
Annuities started in Roman times as a pension payment to the dutiful Roman soldiers and their families for laying their lives on the line. It was a lifetime income stream. Until this day, that same type of Single Premium Immediate Annuity pension product is sold to people that want a lifetime income stream. I think less than nine percent of private companies still offer a pension. Yes, if you work for the government, you will get a pension. Still, nobody has a pension and a lifetime income stream anymore, so what happens with annuities? You should be looking at them if you want a guaranteed income floor that you and your spouse can never outlive.
What’s My Return on Investment?
Some people will say, what's the ROI on that? What’s the return? I don't know that until you die, up until that point, it's a pure transfer of risk. Understand that lifetime income is the monopoly that only the annuity industry has. I wear this t-shirt, and I run around the airport going, Hey, hey, hey, read my t-shirt, because lifetime income is something that everybody needs, but for some reason, the annuity industry is not promoting that. Now people sometimes say that they hate all annuities. You can't hate all annuities and then hate lifetime income, and there's not a person on the planet that hates lifetime income. I don't know of anybody who says, you know what? That's the Social Security lifetime income stream which, by the way, is the best inflation annuity on the planet?
I don't see many people saying they hate annuities, and I don't want that payment out of principle. Are you turning down your social security payment? Are you turning down the pension payment you're so fortunate to get? Of course, you're not. People would never ask, what's my return on investment on social security? They never asked that. Why? Because they want the payment, why do you ask it on lifetime income stream annuity types? That's the primary benefit proposition that annuities, as a category offer.
Understand that lifetime income with annuities is primarily based on your life expectancy when making payments.
Yes, some annuities don’t provide lifetime income, like Variable Annuities and Index Annuities and Multi-Year Guaranteed Annuity contracts. But most people are looking at annuities for lifetime income as part of the guaranteed lifetime income floor, so what's the guaranteed lifetime income for Stan, the Annuity Man®, America's annuity agent®? That's a pension if you're so fortunate, that's the social security annuity that you already have, that's the dividends that are coming in, that's rental income, that's the money that's hitting your bank account every single day or every single month.
Where Do Annuities Fit In?
However, you have it structured, so where do annuities fit in? It's part of that income floor. I got a call the other day; the guys said, well, I need $2000 extra a month; great, we'll reverse engineer an Immediate Annuity quote to contractually solve that, so you can never outlive that amount. A lot of people will say, well, lifetime income is high. Stan, but what about inflation? Nobody knows what's going to happen with that. You can't say I'm not going to buy an annuity because it doesn't address inflation. Listen, you already own the best inflation and annuity on the planet; Social Security.
You can attach a cost of living adjustment increase to an annuity, to a pinch, and type annuity for lifetime income; annuity companies will do® that. They'll lower the payment, but you can attach that increase. You can customize your lifetime income stream. You can customize your annuity. You can customize it to do exactly what you want to do; you can have it pay for your life, you can have it pay for your spouse's life, you can have whatever money is left over, go to the beneficiaries of the policy. The evil annuity company does not keep a penny. Understand that lifetime income with annuities is primarily based on your life expectancy when making payments. It's life expectancy-based, not interest rate-based.
What About Interest Rates?
Okay, so if you come to me and say, I'm not going to buy because interest rates are low, you don't get it. You don't understand it, and I haven't done my job. You need to understand that it's life expectancy-based. You're transferring the risk to the annuity company to pay you for the rest of your life, period. If you're older, the payments will be higher; the payments will be lower if you're younger. Interest rates play a secondary pricing role with lifetime income. Yes, if interest rates ratcheted way up, would it affect the pricing? Yes, it would, but you have to figure out your time to time interest rates how long it would take to make up for when you're trying to buy the annuity.
Let me give you an example; Social Security is a great example. People say, well, I'm going to wait till 70 to make the payment because the payments are higher; why? Because you're older, so if you're 65 and you take them, you're younger and the payments are going to be lower, but you have to factor in those payments during those five years though 65, 5 times 12, 60 months of payments you're missing to wait to age 70 to get the higher payment.
The same thought process applies to an Immediate Annuity lifetime income guarantee. The great part about annuities and lifetime income is that it doesn't have to start immediately. Products like Deferred Income Annuities, Qualified Longevity Annuity Contracts, and income riders can guarantee a lifetime income stream starting at a future date. You tell us when that's going to happen. If you said to me, "Hey Stan, The Annuity Man, I want income to start in 7 years; I want to know to the penny what that's going to be." I can do that; I can shop all carriers with Deferred Income Annuities, Qualify Longevity Annuity Contracts and income riders, and find the highest contractual guarantee income stream for you or you and your spouse or partner starting seven years from now or ten years from now or five years from now, etc. It's customizable.
Creating a Lifetime Income Stream
With creating a lifetime income stream, you can tell us when you want the income to start, you can tell us what account you want to use, you can tell us how much money you want to solve for every month, and we could do a reverse-engineered quote. You're the driver of the lifetime income annuity train; you control the lifetime income. Just tell us how much lifetime income you need; we’ll tell you how much money it'll take based upon your life expectancy when you take the pain.
Are we clear that annuities are the only product in the financial world that can provide a lifetime income stream? Don't hit me with some 30-year bond crap. If there's a medical miracle, and you can live to 125, the product will pay. The annuity company is on the hook, and if we choose the right company, the highly rated companies to back up those claims, you're sitting pretty. That income will hit regardless of what happens. As long as you're breathing, you will get the income, and that's a good deal.
I'm not done; there are a couple more things. Lifetime income products annuities can be held in IRA accounts non-IRA accounts. The guarantees are the same, just the taxation of that income is different based upon that account type. But I'm going to give you a good idea. Let's talk about legacy using lifetime income, let's talk about legacy using annuities, let's talk about leaving a legacy, a true legacy. I got a call the other day, the gentleman was in his 80s and wanted to buy a Single Premium Immediate Annuity, but he wanted it to be joint with his grandson, who I think just turned five. I want you to stop and think about what I just said. He wanted a joint lifetime income payment on his life and the five-year-old's life.
We set it up, so when he passes away, the 80-year-old passes away, that five-year-old will continue to get a lifetime income stream regardless of how long he lives. I call that the legacy income monster because that's what it is. You're talking about leaving a legacy; it doesn't have to be a grandchild like that; it could be a 50-year-old child. Single-Premium Immediate Annuities, Deferred Income Annuities, any lifetime income annuity product, you can structure it and customize it so that a spouse or non-spouse can be a joint annuitant on that policy. That's food for thought; walk around with that one for a second.
Now, you want to leave a legacy income. When most people call me, they say, Stan, I've got all this money or this lump sum. I don't want my kids to get the lump sum; the legacy income monster strategy you put them on the policy as an income recipient with you is an easy way to what I call lovingly handcuff your beneficiaries. Because if they call me up after you die and say, I hated that old geezer, send me the money. I contractually cannot do that. They will get a lifetime income stream, which is a good thing.
Understand this when people say, I hate annuities, laugh at them, scoff at them like the immature, uninformed, uneducated people. Let them know that lifetime income equals annuities and annuities equal lifetime income. Everybody on the planet already has the best inflation lifetime income annuity period, and that's social security. What I'm saying is you might want to consider adding another lifetime income stream
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.