How Is Income Taxed In Retirement?

0:00
Hi there, Stan the Annuity Man, America's annuity agent, licensed in all 50 states,

0:04
America's top agent, the pioneer of contractual guarantees only. So the question of the day is,

0:09
the topic of the day is how is retirement income taxed. We're going to go through all of that,

0:14
but I got to address something that Big C behind the camera asked me. He goes,

0:18
you know, I shoot in different locations across the country just to, you know,

0:22
remain in the witness protection program with annuities because people want to know where I'm

0:26
shooting all this stuff. And he's like, man, I don't even know your last name. I went, I don't

0:30
have one. Doesn't really matter. And in fact, few years back, I approached the lovely Christine,

0:35
wife of 37 years, and said, would you ever consider changing your last name to the Annuity

0:40
Man? So, you'd be Christine the Annuity Man or Christine Annuity Man. I could take out

0:45
if that's her. That conversation didn't go as planned. She was not on board with that. Even

0:52
though I tried to explain to her the marketing behind it, we could film like the going to the

0:56
court and then the judge's reaction going, "You want to do what, son? You want to do what? Ma'am,

1:03
are you really on board with that?" I mean, that's the way I envisioned it. But it had been on

1:08
film. It had been gold. It have been marketing gold. But it didn't go over well. So,

1:13
still, they still don't know my last name. It's Stan the Annuity Man. That's really all that

1:16
matters. But what else matters is us talking about how retirement income is taxed, how

1:21
chapter 2 income is taxed, how the big brother IRS, how they going to get paid, after this.

1:34
Alrighty, then, as Jim Carrey said, look him up actor, does the same character in every movie,

1:40
which is kind of cool. How is retirement income taxed? I don't really like using the R word. I

1:44
like using chapter 2 because chapter 2 is all about you. Nothing really rhymes well

1:48
with retirement. So chapter 2 is all about you. So the income that you're getting really depends

1:54
on where it's coming from. So obviously Social Security even though our politicians said Social

1:59
Security is never going to be taxed. That's just like the fourth rail. We're never going to touch

2:03
it. But yeah, they do. So now it is taxed. Social Security is the best inflation annuity

2:08
on the planet. It's political, not actuarial. Quote me on that one. So that is taxed. So

2:14
let's go to the others. Let's just say you have a Roth IRA. You've paid all the upfront taxes.

2:19
You trust the government not to pull the rug out from under you. Anything coming out of that Roth

2:23
IRA is tax free. Hello, that's good. Let's just say you have an IRA, 401(k), 403(b), 457, something

2:32
that's been deferring taxes over all these years. Okay? When you take money out of that, whether

2:38
it's with an annuity payment or whatever, you're going to be taxed at ordinary income levels. So,

2:44
if you buy an immediate annuity, a deferred income annuity in there, QLAC, Qualified Longevity

2:49
Annuity Contract, which were actually put on the planet to use inside of IRAs for lifetime income

2:54
or Income Riders, that money coming out is taxed at ordinary income levels. Okay? So, we've gone

2:59
through Social Security, right? We've gone through Roth IRAs, tax free, and then IRAs. And then let's

3:04
talk about non-IRA, nonqualified as they say in the business, checking account type money.

3:10
Taxable money. What happens with that? How is that tax Stan the Annuity Man? Well, let's

3:15
talk about the annuities that you can use with non-qualified money. And by the way, you can buy

3:20
an immediate annuity inside of a Roth IRA and get lifetime tax free income. You can buy an immediate

3:25
annuity, deferred income annuity, whatever. All of these, you can buy an annuity inside

3:29
of all of these structures, but the taxation rules apply. Now, where it gets a little funky,

3:35
as they say, in South Philly, where my daughter lives, is non-IRA assets, non-qualified asset.

3:41
So let's take immediate annuities for example. If you buy an immediate annuity with non-IRA assets,

3:47
that income stream is a combination of return of principal plus interest. So you're only going to

3:52
pay taxes on the interest. So if you go to my site at theannuityman.com, run a single premium

3:56
immediate annuity quote and put in their non-IRA, okay? It's going to break down the income. You'll

4:02
see the total income, but you'll also see taxable amount. So, there are some good tax

4:08
things going on in the non-qualified side. What I would encourage you to do, go to my site at

4:13
theannuityman.com. You can run quotes to your heart's content 24/7, 365. So, your spouse is

4:20
snoring. You get up, you run quotes on the annuity man, IRA, non-IRA, Roth IRA, and see what that

4:26
guarantee is going to be. We only going to show you the contractual guarantees of the policy. And

4:30
if you're using non-IRA money, you can then see what the taxation of the actual income stream is.

4:36
Ordinary income levels. So, let's take the example. I'm going to get in the weeds

4:40
a little bit here. So, put on the galoshes. So, let's take the immediate annuity example. Okay?

4:45
You're getting your money back with interest. So, you're not paying taxes on the principal. You're

4:48
only paying taxes on the interest even though you're getting the full amount. But let's say

4:52
you live forever, you beat the actuaries, you're old as dirt, and there's nothing in the account.

4:58
You're still going to get a lifetime income stream. Okay? But then all of it's taxable. We'll

5:03
explain all that to you. If you don't want us to explain all that to you, I've actually written an

5:06
owner's manual on single premium immediate annuities and the other five products that

5:11
you can download for free and read at your heart's content or you can go down the rabbit hole and say

5:15
go to my YouTube channel and go, SPIAs, I want to know about SPIAs. And boop, there'll be hundreds of videos

5:21
on immediate annuities that you can take notes on. Just think about this when you're looking at

5:26
your retirement income, chapter 2 income. Most of it's going to be taxed unless it's in a Roth IRA

5:33
and hopefully they don't change the rules. The only other thing I'm going to throw on top of

5:37
that is my previous life at Morgan Stanley. Got to say like Morgan Stanley tax free municipal

5:43
bonds if you can find them. Those coupons that yield is tax free? No. Okay, talk to your advisor

5:50
about those. See if they can find that. But that would be the other addition from the standpoint

5:55
of income. But with all of this, you're building your income floor. Your income

6:00
floor is all the money that's hitting your bank account, regardless of what happens in life or

6:05
the markets. That's your income floor. So, add all of that up and if it's sufficient,

6:11
great. If it's not, then you need to talk with us and see if we can fill in that gap to get

6:16
you to the income floor level that you want. And also, if inflation hits your specific situation

6:22
and you have to fill in that gap for inflation, then we can do what's called a reverse engineer

6:26
quote using immediate annuities to find out which carrier would require the least amount of

6:32
money to back up that guarantee. Get educated. There's no urgency to buy an annuity. Upfront

6:37
bonus is candy for the stupid. If it sounds too good to be true, it is every single time. There's

6:41
no U-Hauls behind hearses. Fly first class or your kids will. I could keep going. Bottom line,

6:46
use annuities if needed to enhance your lifestyle. My site is built for the consumer. We're licensed

6:53
in all 50 states. Every single person in my building in Las Vegas licensed in all 50 states,

6:57
but not on commission. We're not hammers looking for nails. We want you as a client, but only if it

7:02
fits you, not us, okay? We're going to be fine. Do me a favor. Go to my site and take advantage

7:08
of that. Take advantage of the fact that you can run quotes and look at fixed rates and shop

7:12
around without anyone calling you. The only way we're going to call you if you schedule a call,

7:16
then we'll call. But there's no outbound section of the annuity man of people going, "Hey, hold

7:22
ahead. Hold ahead." No, it's not. I hate that. I hate when people call me. So, we don't

7:25
call call. We only call when you want us to call and we call at the time that you tell us to call.

7:29
Do me one last favor. You can hit the subscribe button. You can put comments down there and we

7:33
look at them. Okay? Just be nice. You can email me direct stantheanuityman.com. I have no life.

7:39
I'm 61. Been married 37 years. So, I'm checking my emails and I will respond. Be nice. But above me,

7:45
do me a favor. Click that link. That link's going to tell you how the process works. Now,

7:51
I'm not being presumptive or assumptive or thinking that you got to be a client. No,

7:55
it's hey, what if I did become a client saying, "How does it work?" That video tells you. So,

8:00
go there, take a look at that. Email me, call me, whatever. We're here to help. See you next time.