Annuity vs Perpetuity: Key Differences Explained

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Hi there, Stan the Annuity Man,

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America's annuity agent, licensed in all

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50 states. Today's topic might be my

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favorite topic ever. So, you know, I

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have a team of people that put these

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topics together for me and we go over

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them in a in a big meeting room and

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we're drinking the sodas and things like

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that and they're like, "We need to talk

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about annuities and perpetuities and the

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difference between the two." And I I did

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a Scooby-Doo. I'm like

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I was like, "What are you talking

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about?" I'll tell you what we're talking

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about after this.

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[Music]

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So, we're sitting at the at this table

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and my CEO very very smart and I'm like

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southern Stan, right? You know, I'm from

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the South originally. Sometimes you hear

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that twang coming out, right? And if

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anyone else wants to send me peach

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cobbler, go ahead and do that. That's my

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favorite dessert. So, of course, I'm

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sitting there going, "What's a

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perpetuity?" Because for me, perpetuity

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is my wa my wife loves me in perpetuity.

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You know, politicians are stupid in

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perpetuity. It means forever. It's it's

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just never going to stop, right? My

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wife's in the background going

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force vomit. But, you know what I'm

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saying? That's that's what we're

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thinking as perpetuities. And so, I said

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to my CEO, very smart person. I said,

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"What are you talking about?" And she

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said, "Oh, by the way, in a long time

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ago in England, there were perpetuity

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bonds that went forever and paid a

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coupon forever. There was no maturity

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date. There was no end date. It was a

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perpetuity bond." I'm like, "Huh?"

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Again, I did a Scooby-Doo. Like, that's

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pretty interesting. Now, to me, having

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worked for Dean Whit, Payne Weber,

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Morgan Stanley, UBS, and the big

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buildings, the marble buildings, man, I

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looked good in the suit. had the tie and

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the whole thing and the whole briefcase.

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Um I guess a perpetuity type bond in

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today's world would be a dividend stock,

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right? Uh to me that's a perpetuity

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yield that you as long as you own the

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stock, it's going to pay the yield

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unless I guess the company decides not

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to pay that dividend. But there's a lot

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of legacy stocks out there, big ones

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that that are going to pay that dividend

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and they're known for dividend uh

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payments if you buy the stock. So

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that's, you know, a perpetuity type

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investment. Now with annuities, and

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there's many different types of

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annuities. You can't just say annuities.

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Uh I love that when people say, "What's

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the best annuity, Stan?" I don't know.

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Tell me what you're trying to achieve.

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There's no best annuity. If anyone says

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that that they have it, then they're

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just trying to sell you something.

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They've or as my CEO says, they've only

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learned one product, and that's the

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product they're going to sell you

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regardless of what you need or if you

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need it. All right. So with annuities,

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let's take an example of like a deferred

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annuity. a deferred type annuity,

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multi-year guarantee annuities, fixed

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index annuities, multi-year guarantee

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annuity, for example, you could buy a

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three-year maturity or a five-year

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maturity. You know, after that, it's

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matured. Okay? And by the way, spoiler

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alert, all annuities have what we call

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an end date to the policy. A lot of

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times people get the policy, they bought

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a 5-year MA, but and they see in that

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contract somewhere where the end date

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is, you know, decades down the road.

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What that means is we can get out of it

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five years without penalty. You can get

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your money back. But if no one contacts

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you and no one ever calls you and you

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forget you had the policy which will

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never happen at theanuityman.com

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that policy is going to end. It's not an

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in perpetuity policy. Annuities are not

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in perpetuity. Now asterisk to that if

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you buy a lifetime income product SPIA

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DIA QAC and income writer SPIA is single

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premium immediate annuity. D is deferred

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income annuity. Ulac is qualified

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longevity annuity contract and then

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income writers that can be attached to

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say index annuities. the income

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guarantee is in perpetuity. As long as

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you are breathing, the annuity company

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is on the hook to pay. So, I think that

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the unique topic of the difference

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between annuities and perpetuities.

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First of all, we all learned something

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today. Correct me if I'm wrong. Nod your

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head that you didn't even know there was

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a perpetuity bond. I didn't either. I

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thought that was cool and it was issued

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in England a long time ago. And somehow

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because of the perpetuity bond, my CEO

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says it's no longer available. So, of

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course, I said, "Well, is it still in

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perpetuity?" I mean, I don't know. But

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the point is I had to ask my friend um

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Mosha Mleski because he's so smart and

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he's done all this research on tantines

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and I'm sure he if I brought perpetuity

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bonds to Mosha Mleski, he was recently

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on my podcast. I'd encourage you to view

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that. He'd he'd be like, "Yeah, the

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perpetuity." He'd go down the rabbit

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hole because he's so smart. Every time I

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ask Mosha a question, he goes, "Do you

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want the one minute, 10 minute, or one

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hour version of the answer?" I love

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that. I think if I said, "Hey, Mosha,

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how you feeling? How you doing today?"

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He'd be like, "Do you want the one

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minute, the 10-minute, or the one hour

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version of the answer?" I mean, he's

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that smart. But I think that what you

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need to understand with annuities is

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that lifetime income is as long as

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you're breathing. So, that's in

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perpetuity, right? I mean, as long as

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you're breathing, if you live for people

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say, "What if I live to 150?" They're

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going to pay. Well, what if I lived to

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177? They're going to pay. Well, what if

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I live to 200? Well, they're going to

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pay. they meaning the annuity company.

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That's the transfer of risk. You're

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transferring the risk to the annuity

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company to pay you as for as long as you

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are breathing. And that's what I always

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tell people. There's no ROI, return on

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investment. There's no ROI till you die.

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It's a really neat rhyme, but it's true.

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And we don't know that ROI until you

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die. And I and I make this offer to

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everybody. I will fly to your funeral. I

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will sing ac capella, a song that I've

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made up about ROI, and I will include

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your ROI on that annuity. No one to this

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date has taken me up on that, which is

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sad because my voice remains untapped

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and unknown to the musical public. I

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digress. The point is this. Annuities,

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you have to understand you buy them for

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the contractual guarantees. You own them

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for what they will do, not what they

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might do. Deferred annuities like MAS

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and index annuities, they have they have

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an end date to that annuity. Okay? They

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they just do. Um but immediate

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annuities, deferred income annuities,

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qualified longevity annuity contracts

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and if you buy the and attach the income

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writer for lifetime income to say an

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index annuity, those income guarantees

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are in perpetuity. So the lifetime

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income is in perpetuity. My wife of 34

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years, Christine's love for me is in

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perpetuity, right, Christine? Hope

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you're watching this. My daughters,

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well, forget that. Um and and

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politicians in DC will be crooked and

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stupid in perpetuity. Can we all agree

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that all of those are in perpetuity? So,

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that is my

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I was just rolling on annuities and

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perpetuities. That should be a t-shirt.

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I really believe that. Maybe. I don't

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know. So, when you go to the cocktail

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party next time, walk up to someone you

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really don't like and say, "Hey, do you

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know what a perpetuity is? Do you have a

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perpetuity bond?" And if they go, "No."

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You can say, "I do because I bought a

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SPIA from Stan the Annuity Man for

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lifetime income." And that's lifetime

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income is in perpetuity. Get me a

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scotch, right? Go get me a beer player

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because I just one uped you. All right,

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I'm having fun. Listen, do me a favor.

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Hit the subscribe button and I will see

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you on the next Stan the Annuity Man

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YouTube video and I'm going to shoot

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them in perpetuity.

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[Music]