Don’t Drink the Annuity Inflation COLA: Fun With Annuities

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Welcome to Fun with Annuities. I'm your

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host, Stan the Annuity Man, America's

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annuity agent, licensed in all 50 states

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in Puerto Rico. Founder of CGO,

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contractual guarantees only, which means

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you own an annuity for what it will do,

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not what it might do. Never buy an

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annuity for hypothetical, theoretical,

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back tested, promised returns. Never buy

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an annuity for an upfront bonus. That's

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candy for the stupid. Never buy an

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annuity for market returns. Period. End

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of story. Annuities saw for four things:

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principal protection, income for life,

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legacy, and long-term care. That's it.

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Period. End of story. and we're offering

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all carriers with the highest

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contractual guarantees for your specific

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situation. And we're not, you know, we

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don't like one over the others. We like

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the highest number. Today's topic is an

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interesting one because it addresses

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some of the really bad sales pitches

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that are out there that continue to

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proliferate

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uh the annuity industry, and I'm hoping

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to squash those. I'm I'm going to squash

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them. I've squashed a lot of them. I'm

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going to squash this one, too. It's

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called Don't drink the annuity inflation

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cola. So, you know, I'm playing off the

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the, you know, don't drink the cola.

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Cola in this case is cost of living

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adjustment. You know, the evil annuity

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uh um industry, they do not have a

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solution for inflation. Now, um COLA

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cost of living increases adjustment is

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an increase to the lifetime income

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stream. You say, "Well, Stan, that

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sounds great. I have that already with

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Social Security." And yes, you do.

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Social Security is the best inflation

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annuity on the planet. So all of you out

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there that say I don't own own own an

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annuity. You do. You own one at least.

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Uh that's social security and that it

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has a cola attached to it, you know, for

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inflation and and cost of living. But

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it's not actuarial. It's political,

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meaning that the, you know, the

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politicians raise it. They raise it to

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get your vote or keep your vote or keep

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and have people vote for them. That's

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the reason that no politician has the

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cojones

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or coonas, whatever, to change social

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security. I think in the in the in the

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future it will be means tested but we'll

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see how that goes as well because a lot

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of people even the people that have that

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have accumulated a lot of money they've

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worked hard you know they're 20 and 30

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year overnight sensations like me you

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know things don't happen overnight but

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what I want to let you know is if you're

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looking for an annuity that increases

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your income stream for forever

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understand that the annuity company is

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not going to give that away for free so

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let's go over the two types of products

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that can offer that the First the first

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one is and there are four types of

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products that um product types in the

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annuity industry that provide for

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lifetime income. Okay, single premium

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immediate annuities, deferred income

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annuities, qualified longevity annuity

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contracts, and income writers. So let's

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talk about three of them because they're

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all they're all the same structures,

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PSDs and QAXs. You can attach at the

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time of application a cost of living

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adjustment increase. You can choose the

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percentage, two, three, four, 5% that

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it's going to increase by. Before you

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get excited, the higher percentage that

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you choose, the more they're going to

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lower the payment.

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5 to seven years ago, there was a CPIU,

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consumer price index for urban

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consumers. That's what that saying

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stands for. There was a CPIU attachment

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to some immediate annuities, but that

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went away. So, it's now at the time of

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this taping, check the taping, colas,

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that you can choose the percentage. But

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let me do a visual for the people at uh

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that are listening to me in a car or on

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the run on a treadmill. I'll I'll try to

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explain it. When you buy an immediate

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annuity with without a COLA, without a

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cost of living adjustment, which means

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it's just a flat line. It's it's going

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to be the same payment for the rest of

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your life. Visually, for the people

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listening, I have my hand right at my

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eye level, hat level. Okay? If you

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bought the same the exact same single

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premium immediate annuity and put a 3%

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cola, meaning it's going to increase the

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income by 3% every single year, income's

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going to start here. And for the people

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listening, I have my hand at kind of

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chest level.

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So without the cola hat level, with the

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cola chest level, annuity companies

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don't give that away.

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Typically, it's a seven to nine year

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break even point. And that's kind of

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dependent on your age by giving you a

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range. So if you say, "Stan, I don't

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care what you say. I want to increase."

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Okay, as long as you understand they're

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severely lowering the payment to make up

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for that increase, then we're good. Or

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you might say, "Stan, I want to do three

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immediate annuities. Two of them

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flatline, one of them with a cola."

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That's fine. But you're not going to get

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some hype sales pitch from us that says,

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"Well, colas are great." No, that's

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drinking the annuity cola. That's saying

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that's that's that's saying that there's

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an annuity company that's figured out

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how to address inflation. There there's

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not. Which leads to the second one which

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is the problem that agent's pitch.

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They'll say to you the this well this

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index annuity okay this index annuity

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when the index increases then the income

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increases. Boy that sounds great right?

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Well first of all the index annuity

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that's that's a whole another issue on

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its own. If you want to read my book,

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Index Annuity Owners Manual on that or

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watch videos on that, you can see. But

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index annuities were developed in 1995

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for CD returns. But yet somehow they're

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I think fraudulently sold as market

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products. They're not market products.

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They're life insurance products issued

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at the state level, overseen at the

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state level. They are not securities.

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You're not going to get market returns.

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Listen to me. You're not going to get

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market returns. I don't care what anyone

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shows you, promises you, tells you, back

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test, whatever. You're just not. It's

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not going to happen. But the same thing

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happens when that promise is in place.

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Hey Mr. Jones, this index annuity with

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this income writer. And by the way, an

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income writer is an attachment to the

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index annuity for lifetime income.

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That's the guarantee.

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But what they do is when they when

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there's a couple of products, handful

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out there that will have these hopes and

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dreams and unicorns that if the index

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increases and increases your income

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stream, what do you think they do? What

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do you think they do that the other

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income writers without that? They lower

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the payment so severely that it will

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never make up for if you bought an

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income writer without all of those

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promises.

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So you cannot ever drink the annuity

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inflation cola. If anyone says that they

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have a annuity that solves for

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inflation, they are full of crap.

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They're lying to you or they're a

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sociopath or they're lazy or their IQ is

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low or a combination of all those.

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And there's and it just doesn't work. So

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if you say, "Okay, Stan, I'm not going

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to drink the annuity inflation cola.

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What are what are you going to do,

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player?" Well, there's only one way to

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address inflation with annuities. Okay?

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And everybody here's the interesting

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part about inflation that kills me. You

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know, we all talk about inflation like

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it's this one thing. It's this one thing

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that affects everyone the same. It

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doesn't. Inflation is personal.

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Inflation is going to affect you

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different than it affects me. But if you

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look at your income floor, the amount of

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money that's sitting your bank account

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every single month, and let's just say

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it's 5,000 a month, and you say, you

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know what,

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inflation is affecting me and the wife,

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and we need an additional 750 a month.

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The only practical, pragmatic, rational

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way to address inflation is to do what's

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called a reverse engineer quote, solving

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for the 750 using the least amount of

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money. You can go to my site and do that

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anonymously. You don't have to put in

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your name, email, or um phone number.

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You just put in your your gender, date

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of birth, state of resident, and run a

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reverse engineer quote solving for the

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750. That's how you do inflation with

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annuities. There's not products that

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magically adjust

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index annuities. There's not a product

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on the planet, I represent all carriers,

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that magically adjusts for inflation

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that that really is good with inflation.

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No, it's a good sales pitch. It just

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doesn't work.

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immediate annuities. Yes, you can you

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can attach a cost of living adjustment

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and choose that percentage increase, but

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they're going to lower the payments to

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make up for that. You are not going to

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beat the annuity company. You are not

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going to find a sweet spot or arbitrage

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moment that you are going to beat the

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annuity company. If there's anybody that

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could beat the annuity companies, it's

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me.

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It's me. But I can't, so you can't.

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So the only way to do inflation is the

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way I just told you is to solve for it

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at the time you need that income gap

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filled and use the least amount of money

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to fill that income gap. So the question

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is well Stan we filled at that 750 and

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then three years from now we need

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another 500. Do the same thing. Reverse

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engineer quote solving for the 500. Buy

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an immediate annuity at that time. I'm

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sorry that there's not a product out

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there that, and I know you're looking

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for it, and if you ask enough people,

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they'll tell you they have it, but they

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don't. That magically adjusts for

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inflation. There's not a product that

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magically adjusts for inflation. Even

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TIPS, Treasury inflation protected

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securities, even tips have their flaws.

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You know that.

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What I what I'm trying to do here is is

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hopefully convince you not to fall for

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the sales pitch because it's out there

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and you might buy the dreams, but you're

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going to eventually you're going to own

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the contractual realities. I get calls

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every week from people go, "Well, this

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guy said it was going to do this. I'm

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three years into it. It's not going to

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do that." You think really

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trust me is not two th those two words

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aren't in the annuity industry. It's

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contractual. Are the contractual

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guarantees what you want? Yes or no?

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That's it. All right. So, do not drink

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the annuity inflation cola. Go to my

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site, run the quotes, etc. If you need

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to run a cola quote, shoot me an email,

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stantheanuityman.com. I'll do something

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personal for you, okay? Personal

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and customized. All right. My name is

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Stan with annuity man. I'm What did I

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just say? My name is Stan the Annuity

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Man. That's fun with annuities. And that

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was kind of fun, but brutally honest at

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the same time, which is what it always

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is.