Are Fixed Annuity Rates Going Up?

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Hi there, Stan the Annuity Man, America's annuity agent, licensed in all 50 states and Puerto Rico,

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founder of CGO, Contractual Guarantees Only. Question of the day: are fixed annuity rates going

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up? I guess, are fixed rates going up? We can talk about both of those, and you can find out if I'm a

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Stangali, which is a Svengali of interest rates, and if I know where things are going,

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if I can see the future, if I can see the annuity future. If anyone can, it's me— after this.

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So, are fixed annuity rates going up? Well, let's talk about interest rates and annuities first,

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because I think the context of that and the foundation, the factual foundation

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I'm going to put in place, will make you think a little differently about interest

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rates and annuities and what interest rates and annuity rates are two different things, okay?

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Interest rates we all know, well, the Fed, son, I've been following the Fed for a long

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time, I kind of know what the Fed's going to do. No, you don't, okay? Because if you do,

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you're allegedly trading interest rate futures, and you're never talking to anybody, hopefully.

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Nobody knows where those interest rates are going to go. We can take a gander at it, we can take a

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stab at it, we can throw a dart at it. All I can tell you is, you know, we have 39 trillion and

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counting in debt, so it's probably a good prediction that regardless of what kind of numbers

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are shown or numbers are going to be shown, to maybe point us in the direction of lowering

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interest rates, because we have to service the debt based upon the interest rate levels, okay?

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Now, with annuities, there's two types of rates that you need to understand. The first rate is,

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say, a MYGA rate, like the annuity industry version of a CD is called a multi-year guarantee

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annuity. It's called a MYGA. You can go to my site at theannuityman.com. You can check the best rates

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in your state. You can download a MYGA owner's manual for free that I wrote that talks about it.

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You can go to my YouTube channel, and there's a few hundred videos on MYGAs that I've done,

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that if you really want to go down the rabbit hole. That's a rate, a guaranteed rate

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that is contractual. Now, 20% of that rate is about the Fed. The other

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parts of how they determine that rate is on, you know, the pricing on lifetime income,

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life insurance— remember, life insurance companies issue annuities, issue MYGAs— the bond portfolio,

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the legacy bond portfolio that they have, the age range tranches that they have for lifetime

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income. They have a myriad of what I call pricing levers, whereas a CD looks straight at the Fed,

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MYGAs glance at the Fed, okay? So that's an interest rate that they look at the Fed,

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but it doesn't determine the whole thing, because it's capitalistic inside of a life insurance

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company. They're trying to attract your money and make money, but not as much money as you think.

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The other rate are annuity rates going up. The other rate is the payout rate for lifetime income.

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I know you weren't expecting this, but this is very important.

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When you buy a lifetime income product like a single premium immediate annuity, SPIA,

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deferred income annuity, DIA, qualified longevity annuity contract, QLAC, or an Income Rider,

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if you look at the quote that you can run on my site at theannuityman.com or that we can customize

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and send you, you're going to see a payout rate, and that truly is a mathematical reflection of

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your life expectancy or life expectancies. Are those going up? Maybe, okay? Maybe. Are they going

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down? Maybe. We don't know. But what we do know is artificial intelligence is getting ready to

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change the game and lengthen out life expectancy tables, which will change that payout rate.

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So you have interest rates— the Fed— you have annuity rates, which is a tiny portion of the Fed,

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but it's rates, and then you have payout rate for lifetime income products. So the broad question,

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are rates going up? On this one, I'd say no, which is the Fed, because we're just so deep

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in debt. We’ve got to lower it. Somehow, they've got to cook the books and cook the numbers that

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they're showing to lower it or give the new Fed guy or gal the reason to lower it,

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because we’ve got to service the debt. So I'm going to say it's going lower here.

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The middle one, which is annuity rate—

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I don't know. I think it's 50/50 where it goes, higher or lower, because

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life insurance companies that issue annuities want customers, and there's 15,000 to 16,000

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people turning 65 every day, which means there's a demographic tidal wave of customers,

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which means that they're going to try to attract them. And because annuities are

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commodity products, and you go to our site at theannuityman.com, you're going to quote all

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carriers for the highest contractual guarantee, somebody's going to be raising rates to get your

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money. So on this one, I'm going to say 50/50, leaning toward rates are going up— rates meaning

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annuity-type rates, which is a combination of four or five pricing levers, okay?

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So the third one, are payout rates going up or down? Again, commodity product companies wanting

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your business. All I'm going to tell you on this side here is eventually— and it might be tomorrow,

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it might be a year from now, it might be five years from now— but eventually,

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artificial intelligence, GLP-1, you know, people losing weight on GLP-1, medication,

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that's going to change the game. That's going to change the game.

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By the way, Big C and Doc behind the camera— side note— I read this the other day, hope it's true.

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I think it is because I read it in two or three different places.

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The GLP-1 stab-yourself stuff that's now in pill form, which, by the way,

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this is interesting: more people tried GLP-1 weight loss drugs than tried iPhones when

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they first came out. Over 25% of households are using GLP-1 weight loss medications.

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Where did they come from, Big C? From the saliva of a Gila monster.

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True story. Which means that some biologist, some crazy, went, you know what, that Gila monster

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spit is very, very fascinating. Think about it, though— that's where it came from.

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Because I guess Gila monsters don't eat a lot. And if you think about it,

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you don't see a lot of Gila monsters at fast food restaurants. So that right there will tell you.

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Okay? So are annuity rates going up? Yes, I did tie that all back in— how about that?

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Fed rates? Yeah, they're going down. Annuity rates? I think they're going up because of the

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demographic tidal wave and companies being able to price on different things, not just

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interest rates, to attract your money. And then payout rates are going to change against you,

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meaning the artificial intelligence breakthroughs and the medical breakthroughs

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that's going to shorten the time frame, is going to shorten, which means

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your life expectancy is going to lengthen out, projected, which means the payments will be lower.

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So it's a good question, but three different types of rates inside of the annuity world that not many

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people talk about. One last thing on the payout rate: a lot of goober annuity agents out there are

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going, “Well, I'll get you this upfront bonus and get you 8% roll-up over here and get you lifetime

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income over here, right here.” They never talk about the payout rate. That's where the game's

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played. Some of the highest bonus products with the highest roll-up have the lowest payout rate.

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So it's all about the payout rate when it comes to lifetime income.

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One other thing over here on the payout rate side that drives me crazy:

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we do have some competitors— I know it's hard to believe, I don't have a competitor— but some

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companies try to compete with the annuity man, and they'll say, "You're getting a 7.8% SPIA." No, that's

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the payout rate, player. That's not yield. And they put it up there like it's yield,

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and I'm going, oh my God, this is why— this is why— this is why my head hurts sometimes, because

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that's misleading and fraudulent. And I've actually called some of the carriers, go,

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man, you need to take that down. “I'm not taking that down.” Okay, whatever. Because payout rate,

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payout rate, and payout rates if AI comes through, it's going to go lower, right?

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But the reason that you quote all carriers is carriers have to fill those age tranches that

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I always talk about, and maybe they raise it just to fill that tranche for your age range.

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They're commodity products. So if I can get one thing through to you, this isn't like,

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you know, when you see CNBC and Fox Business going, “Well, the Fed's meeting today.

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You need to go.“ Who cares? Who gives a crap? When you're buying contractual guarantees

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for annuities for lifetime income, principle protection, you don't care,

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okay? You don't care, because these annuity companies are trying to attract your money

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and provide the highest contractual guarantees for lifetime income. It's got to be A+ or better.

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So with that being said, do me one last favor. I did a video on

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lifetime income, that's a little bit longer, but it tells about the pricing,

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goes a little bit more in depth with this. But this was gold— is what this was. This was gold.

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But watch that. I think you'll learn something. And go to our site at theannuityman.com,

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download my free owner's manuals, run quotes. And you can contact me at [email protected].

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See you next time.