What's the real deal about the retirement income gap? I keep reading this, and I keep seeing these titles. What does all of that mean? How does it apply to me? And how do annuities fit into that retirement income gap? We're going to get to all of that today.
So, people are always sending me these articles. Average retirement income, what's the average needed retirement income? What's the average income that I should have at retirement? I don't know who's writing this or who's getting paid to write this because I'm going to tell you, none of that matters. Who cares? It's all about you. It's customizable.
When we talk about retirement income gaps, we look at it from a couple of angles. Do you need income to start now, and would you want to plan for that contractually? Or do you need income to start later down the road? Do you need to plan for that contractually and know what that income amount's going to be? Income now and income later goes into the income floor. What's the income floor? The income floor is that amount of money that will hit your bank account every month, regardless of who's in office, who's controlling congress, or who does anything. It's the money that's going to hit your bank account every single month. That's the income floor. That's the retirement gap. That's what matters. And the bottom line is it's customizable to your situation.
You know what you need to pay the bills every single month and going into chapter two of your life, which is that lifestyle you need to enjoy and live to the fullest. You know what that amount of money should be. So, let's back out of it. Okay, you have social security. How much is that? You have a pension if you're so fortunate. How much is that? You have dividend income. How much is that? You have a side hustle. How much is that? Do you have other money coming in? How much is that? Rental income, whatever. What is that income floor for you?
Let's say, Stan, I need $6,000 a month for the wife and me to live the life we want, not including inflation. We'll talk about that in a second. Let's say we added all that up, and that's $4,200 you already have covered out of the 6,000 you need. So how do annuities fit? Well, with my calculators, you can run a reverse engineer a quote under this specific situation. You need $6,000, and you have $4,200 in place. You need $1,800 to make up for that. You can run the calculators if you need Immediate Income right now, which would be the Immediate Annuity quote. Or income down the road would be the Income Rider and Deferred Income Annuity quote. Put in that $1,800 and have all the companies bid on that to see who will require the least amount of money to guarantee that $1,800 contractually. That's where annuities fit. I always tell people to use the least amount of money needed for annuities to solve the contractual problem. And the annuity Gods say, "Don't say that again, Stan. We want it all." No. No, no, no. You use as little amount of money as possible to make up for that income floor, that retirement gap that everyone's talking about. That's the retirement gap, period.
Now, Social Security was never put on the planet as the sole source of Lifetime Income. We all know that. It is the best inflation annuity on the planet because it does increase, period. At the time of this blog, next year, you will see a pretty good increase in your social security payments. But let's talk about inflation because when we talk about the retirement gap, most people talk about inflation and if inflation is transitory? Who cares? It's about you. And when I say that, inflation is about your specific situation. I'll give you an example. I have two lovely daughters, but they're out of the house, so I'm not buying the diapers, the baby food, the milk, or all that stuff. We're not picking them up at dance every night and spending a lot of money on gas. So, it affects me differently than it might affect you out there and you have to figure out inflation for your situation. That same scenario where you need $6,000 a month. Let's say two years from now, inflation has driven up that number to $6,500. So now, Stan, The Annuity Man, I need an additional $500 for that retirement income gap. How do I go about doing that? You go to my here, run a reverse engineer quote to solve for $500, and fill in that gap for inflation. That's it.
People are making this too complicated. When I first got into the annuity business, I could not believe everyone was making it difficult. These are contracts. You buy them for the Contractual Guarantees. You shop all carriers for the highest Contractual Guarantee. You own an annuity for what it will do, not what it might do. You never base a decision on a hypothetical, theoretical, back testing, unicorn chasing the butterfly, a scenario where some agent says, "This is why you should buy it. Because of that." No, you buy it for the worst-case scenario. You buy it for the Contractual Guarantees. Annuities are commodities. You shop all carriers for the highest Contractual Guarantee.
Going back to all these articles about retirement income gaps, they all should have a link to my site, to the reverse engineer quote, so you can run that reverse engineer quote to solve for your specific number that you need. I don't care about everyone else; I care about your number, and you should also care about your number. Stop reading all those articles. Go back into your specific situation and say, "This is what it's going to take for us to live that life." And if COVID's done one thing for all of us, it reminded us very harshly how fragile life is and that you need to maximize it now. You need to live for the day now. You need to enjoy yourself now, and you need to appreciate everything now. You need to make sure that you're taking those trips and doing those things on your bucket list before the cognitive decline happens to one out of one of us. You need retirement income insurance. You need income insurance. You have fire insurance and car insurance and home insurance, and flood insurance. Do you have income insurance? Do you have inflation insurance? And what's inflation insurance? Inflation insurance is being able to reverse engineer quotes to solve that inflation you need if it affects you specifically. But just because some talking head on a television program says, "Inflation is transitory, and inflation's going to affect Christmas, inflation will affect turkeys and Thanksgiving." Who cares? It's about you. It's about you, and it's about the income floor that you need, period, for your life, for your spouse's life, for your family's life, period.
Remember this. When you're talking about buying Lifetime Income insurance or retirement Lifetime Income insurance, that's a real thing, period. It should be. I'm out here pounding the table. Do you have Lifetime Income insurance? It all is about life expectancy. Your mortality credits, mortality risk, mortality pooling, the risk pooling. It's all about that. And right now, those are at bargain prices for you, meaning they're in your favor. Eventually, life expectancy tables after COVID are going to increase, which means the payments are going to be longer, which means that they're going to be lower because they're stretching out your life expectancy. So, buying Lifetime Income insurance right now, buying a Lifetime Income annuity is a good thing. And we can structure it so that it pays for your life and your spouse's life, and when both of you die, whatever money's left in the account goes to the beneficiaries, and the evil annuity company doesn't keep a penny.
Chapter two of our life's going to be interesting. It's going to be about the kids and the grandkids. It's going to be about watching them grow up and watching their families grow up and supporting them and traveling with them, having enough money and having enough Lifetime Income so that everything's going to work the way we want it to. And if we need to reverse engineer a quote for inflation, we will do the same thing.
I have a lot of life insurance in place in case something happens to me, so my wife can continue to see the kids if she wants to move out and be close to them and see the grandkids, dogs, cats, etc. Remember, even with Stan The Annuity Man, America's annuity agent, it's all about lifestyle, and it's all about transferring risk. You need to figure out how much risk you want to shoulder. That's market stuff, and how much risk do you want to transfer, which is the Contractual Guarantees that annuities of all types can provide.
Now, I encourage you to read these blogs over and over again. If you want to listen to the videos, we have a youtube playlist on retirement or videos on Immediate Annuities or Index Annuities. We've done them all. I have a podcast called, Fun With Annuities, where we bring on celebrity guests to talk about markets and finance and retirement and research, not just annuities. And we call it Fun With Annuities because we thought that was cool, and my CEO came up with it, so we call it Fun With Annuities. So, she gets the credit for that.
Remember, you can run quotes 24/7/365 and see the best contractual guarantees on the planet. And at the end of the day, you should not hesitate to hit that link. What have you got to lose? Do you think I'm some Svengali that can put you in a trance and make you buy without you wanting to buy? No, we're going to have a conversation. We're going to talk like I'm sitting with you, drinking some sweet tea, and eating barbecue in Charlotte, North Carolina. That's what it's going to be. I'll listen to you, and if you don't need an annuity, I'll tell you you don't. I'll let you know if it's not the right time. But if it does fit, I will shop all carriers for the highest Contractual Guarantee for your specific situation.
Never forget to live in the 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.