Steve Parrish: Decoding Annuities in the Consumer's Mind

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[Music]

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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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I am so glad to have a repeat guest on

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smart guy in the room from the American

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college Mr Steve Parish how are you I'm

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doing great how are you I'm good I'm

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good I'm glad that you're back on um

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there's a lot that's happening in the

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world obviously there's a lot happening

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with 11 000 Baby Boomers hitting 65 and

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I know your work

1:00
um is extensively focused on you know

1:03
retirees and vote and and how things

1:05
work and I just to give you some Kudos

1:08
last time you were on you explained very

1:11
succinctly and simply which I love uh

1:14
the three phases of uh retirement go go

1:18
slow go and no go and I have people

1:21
repeating that to me all the time

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they'll call me up and say I'm in Gaga

1:24
but I'm afraid of slogo and I know I'm

1:26
gonna get to no-go and I'm like yeah

1:28
that's you're right but it's what you've

1:30
done is simplify that thinking which

1:33
makes me I'm able to now say listen

1:36
there's no U-Hauls behind hearses you're

1:39
in go go take advantage of it live your

1:41
life travel do your things because one

1:43
out of one of us if we live long enough

1:45
are going to get the no-go so with that

1:48
being said and that that Foundation

1:49
established What specifically is on your

1:52
mind Steve that you're working on

1:54
because we're very interested in your

1:56
work and what you're doing

1:58
well I think there's two things going on

2:00
um one for pre-retirees because yeah I

2:04
deal with retirement income but sure got

2:05
a plan for it and then also what's going

2:07
on with retirees it's interesting with

2:10
the pre-retirees with all the things

2:12
going on I think the big issue these

2:15
days Dan is inflation's up markets are

2:18
down I mean that's just kind of a very

2:20
simple formula where they're looking and

2:22
saying what's that mean for me and

2:24
they're looking down the road looking at

2:26
their parents or grandparents and saying

2:28
they did or didn't retire successfully

2:31
am I going to be able to to retire I

2:33
think that's their big issue and and now

2:36
they hear about social security and

2:37
whether that'll be around the other

2:39
thing that occurs to me with these

2:42
pre-retirees is complexity and now we

2:45
always have complexity but if you think

2:47
about it we've gone through two very

2:50
different presidents

2:52
um Congress switching back and forth and

2:54
so they hear these proposed laws and

2:55
they're not sure whether they are law or

2:57
or are ones that are proposed so they're

3:00
kind of going

3:01
I don't get it I think those are the big

3:04
ones going on with them sure and I think

3:07
it's different for people that are older

3:09
and retired because with them I think

3:13
their big issue is is health insurance

3:15
and I mean you watch TV and it makes it

3:18
sound like you get paid for buying

3:19
Medicare but people who are on Medicare

3:22
know it's money's coming out of their

3:24
pockets correct and so they're worried

3:26
about that and and just the whole idea

3:28
if I am I going to run out of money

3:29
especially if they're on a fixed income

3:31
and you got inflation hitting them and

3:34
then with them it's similar to the

3:37
pre-retirees but see if this makes sense

3:39
to you

3:40
their issue with complexity is they just

3:42
want their lives to be simpler I'm of a

3:45
certain age and I've even noticed that

3:46
is simply you know I work to make my

3:49
money I I'm there

3:51
um do I really want to put up with all

3:53
this and I think some of it and I might

3:55
not want to admit it is they look and

3:58
think they forgot where they left their

3:59
keys or they put their phone in the

4:01
refrigerator and so they're kind of

4:02
saying it's got to be simple because I'm

4:05
not sure I'm as sharp as I used to be so

4:08
that's that's kind of something that

4:09
nags on their mind that probably

4:11
wouldn't Nag on a pre-retiree yeah I

4:13
think um that's happening to me in my

4:15
life right now and we talk about in the

4:17
world of retirement accumulation and

4:20
then decumulation I don't really like

4:22
that because it sounds negative but in

4:25
my personal life we're going from

4:26
accumulation to decimulation of stuff

4:29
and taking carloads and carloads of

4:31
stuff to Goodwill and Salvation Army

4:33
that we don't need anymore but I think

4:36
there's a correlation I think as we get

4:38
older

4:39
we we want less and we want it to be I

4:42
think there's a reason that people are

4:44
moving to the tiny houses there's a

4:46
reason that Ford just came out with a

4:48
minivan that you can live out of

4:50
occasionally you know they're they're

4:52
and I think I think uh the consumer is

4:56
saying even though we're a consumer

4:58
Nation

4:59
it comes to a point as you get older is

5:01
I just don't know if I need all this

5:03
stuff anymore and I just did a video on

5:04
you know if you had more money would it

5:06
really change your life it hit a nerve

5:08
with people because I want people to

5:09
think why are we chasing returns why are

5:12
we doing that why don't we have a level

5:14
of income flooring you know we've talked

5:16
about that and guarantees in place and

5:18
if you can live off the guarantees then

5:20
my question is why wouldn't you

5:22
right and I mean that even translates

5:24
into figuring out what you do with your

5:25
money because one of the things occurred

5:27
to me is is when you're pre-retirement

5:30
and you're thinking about building up as

5:31
much as you can which makes sense so

5:33
that you can accumulate it or whatever

5:35
term you want to use sure what are you

5:37
trying to do you're trying to maximize

5:39
your return for the minimum amount of

5:40
risk and that's when you get in all the

5:42
fancy stuff of modern portfolio Theory

5:45
and

5:46
um you know trying to make sure you've

5:48
got your risk premiums and I you know I

5:50
can throw out all those fancy um

5:52
b-school terms but once you retire and

5:56
you're actually dipping into all that

5:58
yeah you're still trying to maximize

6:00
your return for the Min amount of risk

6:02
but what's your return your return Isn't

6:04
what you're getting on your money your

6:05
return is what comes into your bank

6:08
account monthly because that's what you

6:10
want is money to live on correct what's

6:12
the risk the risk is that you run out of

6:15
money before you run out of oxygen that

6:16
means that kind of straightforward is I

6:18
want this amount of money and I don't

6:20
want it to run out

6:21
which is different than during the

6:23
accumulation phase when you're you know

6:25
you're looking at all kinds of standard

6:26
deviations and those kind of things to

6:28
maximize your return

6:30
I think that people have a hard time

6:32
making that transition the fear of

6:35
missing out whatever they want to call

6:37
it my my wife calls it also the scars of

6:40
scarcity a lot of us a lot of us grew up

6:43
with um you know in a in a less than

6:45
wealthy environments and um you know now

6:48
that we have money we still have that

6:50
mindset of you know I call it my mom

6:53
goes to the to the restaurant and she

6:55
always tell her instead of carpe diem

6:57
with my mom it's by the drink meaning

7:00
that buy the Cobra tea or lemonade

7:02
because you can afford it her comment is

7:04
yeah but it's like two or three dollars

7:05
I'm like you can afford it it's okay buy

7:08
the drink that's scars of scarcity

7:11
how do you think the annuity industry

7:14
could convey more of a lifestyle Peace

7:18
of Mind message than getting caught in

7:20
the weeds of of numbers and those type

7:24
of things I really think we need to take

7:25
our message down a notch from the

7:27
standpoint of math to reality

7:32
yeah and that's um and sometimes we're

7:34
Our Own Worst Enemy because as we add

7:36
all these wonderful incredible features

7:39
you know

7:40
giwb and uh rilas and migas and all that

7:44
they're really meant to help you but

7:46
they also confuse you know one of the

7:48
things that occurred to me is my wife

7:50
and I are right now watching that

7:52
excellent Netflix miniseries the crown

7:55
okay and living's going on is you have

7:57
all these Royals being very formal with

7:59
each other but the one threat that the

8:02
queen keeps imposing on different people

8:04
is if they don't act right she will take

8:07
away their annuity and so in England

8:10
annuity means what annuity should mean

8:13
in the U.S right in other words it's

8:15
your pension and so it just cracked me

8:17
up as they're always talking about

8:18
annuities but not the way we do and they

8:20
you know they're not talking about

8:21
writers or anything else

8:23
they presented as your lifestyle needs

8:27
to be supported financially and that's

8:30
done through a series of payments and

8:32
annuity so I really think yes we need to

8:36
think of creative ways to accumulate

8:38
money on a tax advantage basis and and

8:41
annuities do that but for some odd

8:43
reason we emphasize that and don't

8:45
emphasize enough what it does what it

8:48
does is it gives you this income you

8:50
can't outlive now absolutely true I

8:53
think the the messaging obviously I'm in

8:56
front of the television Steve as you

8:57
know with my Logos but as I I would say

9:00
to to the cameras hey you already own

9:03
one lifetime income stream which is

9:04
called Social Security which is the best

9:06
inflation annuity on the planet my

9:08
question to you is America do you need

9:10
more income and it's really that simple

9:15
um but we get caught up in the rylas and

9:17
the index annuities and the variable

9:18
annuities and I think that is a

9:20
reflection of the commissions being high

9:22
on those products this is a very simple

9:24
fix that will never happen and I keep

9:26
saying if all commissions on all annuity

9:28
types were the same and low

9:31
then then it would the default would be

9:34
for the advisor to to point people in

9:37
the right direction to the product that

9:39
really solves the issue the problem in

9:43
our industry is it's it's driven by

9:45
commission and complexity whereas the

9:48
majority of plot of products that are

9:49
really good in Pro consumer are simple

9:51
they really are they just never hear

9:53
about it and maybe a way of looking at

9:56
it is back in the day when we had to

9:58
find benefit plans we didn't have a

10:01
choice for what annuity we got the

10:03
employer told us in other words you you

10:06
worked hard and they told you they'd

10:07
give you a one percent for each year

10:09
that you worked and that was the way it

10:11
was and okay you know you didn't chop it

10:13
so really and I said this I think in the

10:16
last time we visited but I've been

10:18
talking about it being annuities being

10:20
kind of a DIY DB meaning do it yourself

10:24
sure find benefit absolutely if you look

10:28
at it as simply okay I've got Social

10:30
Security and I no longer have a defined

10:32
benefit plan but I get this 401K pot of

10:35
money how do I create my own defined

10:38
benefit plan yep that way you're working

10:40
backwards in a nice way well what do you

10:43
want to have for an income when you want

10:44
to have it and then you can work back

10:46
and we in the industry can say Okay a

10:49
good way to do it is to accumulate it

10:51
this way or that way or to have this

10:53
feature that feature but you started

10:55
with the end game of I want an annuity

10:58
to use an English approach there you go

11:01
I want this income and then work

11:04
backwards

11:06
I totally agree I coming from the market

11:08
side where I work for I work with

11:10
Deanwood and paying whatever Morgan

11:11
Stanley EBS worked at World Trade 2

11:13
Center for a while

11:14
um so I've been on that side of the

11:15
Ledger the Securities industry has done

11:18
a phenomenal job of convincing the

11:20
public that quote unquote they have to

11:23
have money in the markets they have to

11:25
have exposure to the markets regardless

11:28
of age you have to have potential growth

11:31
I really believe there's an argument for

11:33
our industry say you have to have

11:35
contractual guarantees you have to have

11:38
lifetime income guarantees I don't think

11:41
it's an argument and anyone that argues

11:44
against that needs to read Wade fowles

11:46
paper on how he destroyed the four

11:48
percent uh rule because that's still Pro

11:52
proliferates for the people that don't

11:54
know what that means out there is when

11:55
your advisor Master of the Universe

11:57
wealth architect whatever it says on the

11:59
card says oh by the way you never have

12:01
to buy life to make them annuity we're

12:03
just going to manage your money and just

12:04
peel all four percent for your income

12:07
needs well that's fantastic in a Raging

12:09
Bull Market but in the markets we're in

12:10
now not so much so um

12:14
yeah I know you're at the the round

12:16
table with all the really smart people

12:17
where they don't announce where you guys

12:19
meet and they fly you into say like

12:21
Zurich

12:23
um but around the round table is there a

12:25
concern that we're losing the messaging

12:27
battle as an industry

12:29
I think there is a concern that the

12:31
consumer is listening to the parts of it

12:34
that they want to listen to and ignoring

12:36
the rest yeah and so um the four percent

12:39
rule at this point has largely been

12:42
discredited because I I mean still it

12:45
was never a rule that's silly it was

12:46
kind of a a finding I like that term

12:49
yeah I like that if yeah if you have the

12:51
right situation what you can do is take

12:54
your accumulation and

12:57
um pull out four percent a year adjusted

12:59
every year for inflation and given past

13:02
history uh that probably will take you

13:04
out to age 95. well I made about 14

13:07
assumptions and saying all that the

13:09
challenge with that kind of thinking and

13:12
where we're to answer your question are

13:14
we losing the message is somehow you

13:16
said if it feels like it's saying if you

13:20
invest in equities markets which go up

13:22
go down but take out four percent which

13:26
is flat somehow that all works well

13:28
that's not the that's simply not the way

13:30
math is going to work that is a variable

13:33
account and the other one is a fixed one

13:35
somewhere along the line the car is

13:37
going to break down or could break down

13:40
or or the other thing is maybe take too

13:42
little and you wasted your time you

13:44
could have you could have done better

13:46
What's um

13:48
I know you do a lot of work with

13:51
annuities as a retirement solution but

13:53
what's

13:54
right now for the people who've already

13:55
retired a lot of people that are

13:57
listening to this have what's keeping

13:59
them awake at night that you're finding

14:02
and what are those

14:04
um Solutions and what what should these

14:06
people be thinking about

14:08
well I think as I said before one of the

14:11
things keeping awake at night is medical

14:14
costs but

14:16
really that just translates to money

14:18
coming out of their pocket and money

14:19
comes out of their pocket are they going

14:21
to have enough in the future I think the

14:23
other part that goes with that is when

14:25
is the future and so more and more

14:28
they're looking at life expectancy in

14:29
fact I know we talked about this last

14:31
time but that's another message that's

14:33
being misunderstood they oh what was it

14:36
last week they came out with a major

14:39
thing on national TV that said people

14:41
are living two years uh less than they

14:44
did before

14:45
completely misstating what's going on

14:47
right what that meant is if you take the

14:50
whole population and you add in covid

14:52
gun violence and opioid addiction that

14:57
as a whole life expectancies have

15:00
shortened in this just these last few

15:02
years

15:03
didn't really have a lot to do with

15:05
retirees once you've gotten to let's say

15:08
age 65 okay your chances of getting in a

15:12
gun battle or last chances of getting

15:14
opioid addiction or less covet yeah that

15:17
went up but that's hopefully more of a

15:19
blip the fact is life expectancy for

15:23
older people keeps going up certainly

15:28
covet affected it but in general it's

15:30
going up so I I worry that people look

15:33
and go well I'm going to get to my life

15:35
expectancy and they come up with numbers

15:36
like 78 which is not here life

15:39
expectancy for a retiree no but I'll

15:42
just keep living till then and then I'll

15:43
wake up dead one morning in other words

15:46
that's it

15:47
that's what I think keep them awake is

15:49
more and more they're realizing no my

15:52
aunt Ethel is you know 98 has had

15:55
dementia for 10 years and is in a

15:57
nursing home that costs money is that

16:00
what's going to happen to me I think

16:01
that's really the big issue is am I

16:05
going to live too long and am I going to

16:07
lose my marbles what am I going to do

16:08
about it

16:11
people

16:12
are afraid you know the a personalities

16:14
of the world are afraid that they will

16:16
there will be cognitive issues but

16:19
you need to plan for that I mean it's

16:21
it's one of the just one of those things

16:23
um for whatever reason long-term care

16:25
has been sold well to prepare for that I

16:29
think the cognitive side of it as well

16:32
uh needs to be sold and and you know

16:34
that's a lot of what I do as my

16:36
edutainment uh thing educator and

16:39
educate entertainer of trying to just

16:43
strip all this down to what people are

16:45
really really thinking

16:47
um and how annuities can be used

16:49
contractually to give them the lifestyle

16:51
that they've scrimped and saved and

16:53
tried to achieve and now they're here I

16:56
did a recent video called you've won the

16:57
game why are you still playing

17:00
um which has kind of gone viral which is

17:01
you know you're staying up at night

17:04
worried about the markets and you

17:05
probably probably don't need to

17:08
um let's talk about annuities and how

17:11
you are seeing them either being used

17:13
properly or improperly and when I say

17:16
the word annuities for people out there

17:18
for the people that say I hate all

17:19
annuities that's like saying I hate all

17:21
restaurants or I hate all shoes

17:23
there's many different types I I'll I'm

17:26
still to this day Amazed by either the

17:29
press or advisors that say never buy an

17:32
annuity because if you die to keep the

17:34
money and that's their take on it I'm

17:36
like well how in the world is that still

17:38
valid out there or being even it's not

17:41
valid of course but it's being said by

17:43
credible people I mean as an industry we

17:47
really need in a a room that I oversee

17:50
that's an attack room it's kind of like

17:52
the political attacks when they say

17:53
something we come at them for the facts

17:56
that needs to happen truly as as a as an

17:59
industry we could afford to do it don't

18:02
know why all that again I need to be

18:03
bizarre of the annuity industry Steve I

18:06
think we need to say the beginning we

18:07
can arrange that please do please talk

18:09
to the Grand poo boss

18:11
um and tell them that but talk about

18:13
annuities how they how they're being

18:14
used properly and improperly in your in

18:16
your opinion well I think really that in

18:20
my mind going back to the whole idea of

18:22
an annuity you you know for the crown at

18:25
the end of the day annuities really

18:27
should be seen as an income source and

18:29
frankly that's not always how they're

18:30
packaged because people don't always get

18:32
that but they do get I'm making more

18:34
money than Charlie is on my money

18:37
um so it occurs to me that what people

18:40
aren't understanding about annuities is

18:43
the whole idea and this is Wade foul

18:46
says this but the whole idea of a

18:48
mortality premium it's it's insurance

18:50
and people like insurance they just

18:52
don't like paying for insurance so the

18:55
whole idea is if I'm I'm planning for my

18:59
retirement you know and I say

19:02
um my life expectancy is 83 years old

19:05
okay fine does that mean I just

19:09
plan for taking out enough money such

19:11
that when I'm 83 years old I run out of

19:14
money no obviously because you know

19:16
you'd have to plan out the 95 or so

19:18
because you don't know how long you live

19:20
the insurance companies don't have that

19:23
restriction they take your money my

19:25
money a bunch of other people's money

19:27
pull it all in do a good job of

19:29
investing it because frankly they have

19:31
billions of dollars rather than

19:33
thousands of dollars and so they can be

19:35
more creative in how they invest it but

19:38
they basically say we'll start paying

19:40
this out and they do base it on your

19:42
life expectancy because one of you and I

19:46
hate to say between you and me who it is

19:48
but it's you will die before we're done

19:51
life expectancy yeah because I'm

19:54
speaking so obviously I'm the one that's

19:56
going to live longer

19:58
true I lived pretty hard and ran pretty

20:00
hard in college so there's some scars

20:03
there

20:04
um so we'll just kind of see but I'm

20:05
actually betting on my wife there you go

20:07
definitely gonna outlive me for sure

20:09
there's an evil conspiracy there so well

20:12
and when you have the floor you can get

20:13
even with me and say that you know I am

20:15
older than you are so how I'm gonna die

20:17
sooner but my point being is somebody is

20:19
going to die sooner right so the one

20:21
that lives longer gets the mortality

20:23
premium as we call it and so

20:27
um it's it's really insurance I know

20:29
insurance is a real snoozer but that's

20:31
what you're doing you're getting

20:32
longevity Insurance the fact is that

20:36
more of us worry or know about

20:38
situations of people living too long

20:40
rather than dying too soon I mean

20:42
everybody drives up the hearse and says

20:45
you need life insurance because you know

20:47
I don't know at 54 you suddenly die of a

20:50
heart attack but we know more people who

20:53
again are in the retirement home and

20:54
have dementia so sure I see annuities

20:57
simply as longevity insurance and to

21:01
answer your question why don't people

21:03
just accept that I suppose as one what

21:06
happens if I die too soon well my answer

21:08
to that is you truly think you're going

21:09
to die too soon buy some life insurance

21:11
kind of cover both sides you know a belt

21:15
and suspenders

21:17
um I think maybe the other one is

21:19
control you mentioned that you know

21:22
you're in the game or you won the game

21:23
so why are you still playing is people

21:25
spend a lifetime accumulating

21:27
accumulating their assets and so to to

21:30
hand it over to a big cold insurance

21:33
company that you don't know and give it

21:36
up I think there is that reticence my

21:40
counter to that though is when you're

21:42
retired don't you really want to just go

21:43
out on the links and golf or play with

21:45
your grandkids and let someone else send

21:48
you the payments rather than worry about

21:50
it but I think that's the other one Stan

21:52
is they just hate to give up that

21:53
control

21:54
and my counter to that comment is you

21:57
don't have to right current interest

21:59
rate levels with multi-year guarantee

22:01
annuities you can protect the principal

22:02
peel off the interest never touch the

22:04
principal and live so you don't have to

22:07
buy an irrevocable contract there's a

22:09
lot of people out there and I you know

22:11
annuities are math this is just math and

22:14
I always typically okay tell me about

22:15
your Investments and you know let's look

22:18
at the three principal protective

22:20
products that are let's just say CDs

22:22
treasuries and migas multi-year

22:23
guarantee annuities for people who don't

22:24
know who that is that's a fixed rate

22:27
annuity just this annuity Industries

22:28
version of a CD but in essence you can

22:31
protect the principal and just peel off

22:32
the interest so let's just say at the

22:34
time of this taping you can average four

22:36
to four and a half percent which you can

22:37
in combination of those three products

22:39
multiply that against your net your

22:41
investable net worth and tell me yes or

22:44
no if that's enough income without you

22:46
touching the principal what I'm finding

22:48
Steve is that

22:50
um a vast majority of people that works

22:53
for them and at this point I'm saying

22:55
annuitization is always there for us

22:57
Spears D is qlex

22:59
but let let us have our hands forced to

23:03
do that

23:05
okay

23:06
um especially if you're in your Go-Go

23:08
years yes you do need to annuitize going

23:10
forward for the cognitive issues and and

23:12
the no-go's stage of your life but I

23:15
think it's a it's an excellent

23:17
transition to go uh maiga for CDs

23:21
treasuries then to an immediate annuity

23:23
I did a video called maiga to spea which

23:26
I think is the the

23:28
baby boomer version of transitioning

23:30
from accumulation to annuitization

23:34
um you can't whack them all of a sudden

23:36
and say Hey you gotta you gotta buy this

23:38
and the money's the money's gone and

23:40
then when you die the whatever leftover

23:42
goes to your beneficiaries that's hard I

23:44
think as an industry we need to do

23:46
transitional steps that still achieve

23:48
the goal

23:50
yeah and you make a good point in that

23:52
that way they still have control so the

23:54
ones that are in the Go-Go years of

23:56
retirement and don't need all the money

23:59
they can feel better that they still

24:01
have some control and then the one thing

24:03
the uh the dirty word we haven't talked

24:05
about which is really my background is

24:06
tax you've got advantage of that don't

24:10
say that I haven't had my coffee yet

24:12
come on yeah all right so let's talk

24:14
taxes

24:15
well that's the the thing that

24:18
um people don't always think about

24:19
especially a more let's say affluent

24:21
people who aren't going to live paycheck

24:24
to paycheck in retirement is they're

24:26
getting some really nasty surprises

24:30
um I will admit I experienced as well

24:32
though I saw it coming is the Irma tax

24:35
what happens is people go well everybody

24:37
pays the same for Medicare well it's not

24:40
true it is means tested sure so I pay

24:42
about twice what other people do for my

24:46
part b Medicare and it's because I'm um

24:50
you know on podcasts with Stan and still

24:52
making money right for doing all these

24:54
kind of things and so I get hit with

24:57
this tax well the point I'm getting at

25:00
is during those Go-Go years not only are

25:02
you go going and seeing the grandkids of

25:05
going to Disney World and all those kind

25:06
of things but also you are making money

25:09
one way or another you might be retired

25:11
but from Investments and that kind of

25:13
thing and so um it it fuels up your

25:18
modified adjusted gross income and that

25:20
causes some really ugly taxes and that's

25:22
I mentioned that but there's also net

25:24
investment income sure uh there are

25:26
other taxes that can hit you my long way

25:29
of saying one of the beauties of

25:31
annuities during the accumulation phase

25:34
is they defer it you're going to pay the

25:37
piper at some point but maybe it's not

25:40
even you that's going to pay it maybe

25:41
it's your kids when they inherit some of

25:43
this but it defers your income until the

25:46
slow go years when you don't have as

25:48
much income coming in and can afford to

25:51
pay taxes because you're in a lower

25:52
bracket

25:53
you know people need to also realize

25:55
that when you if you do Transition

25:57
either sooner or later to an immediate

25:59
annuity uh lifetime income stream which

26:02
is an irrevocable contract pension

26:04
there's no medical test

26:07
um you can I mean you're going to get

26:09
guaranteed issue it's primarily based on

26:11
your life expectancy so that's another

26:13
reason that you could maybe do a mica to

26:15
be a strategy control the assets Etc I

26:18
want to bring up a really you you hit me

26:20
with a really bad word which is taxes

26:22
that hurt but I'm going to throw one

26:25
more at you that everyone seems to be

26:29
aware of and afraid of and it's

26:31
inflation I think that a lot of people

26:33
complain about it that shouldn't you

26:35
know I've done videos on that stop

26:37
complaining about inflation especially

26:38
if you have a large asset base you're

26:40
going to be fine but for the 60 percent

26:42
of Americans that have four hundred

26:44
dollars in their checking account total

26:45
and that's all they have they're getting

26:47
hit hard or the or the majority of

26:50
senior citizens that only have ten

26:51
thousand dollars to their name these are

26:53
the people that are getting hit hard by

26:56
inflation the rest of us it's a moment

26:58
in time but with that being said let's

27:01
talk about your view on annuities and

27:04
that iword inflation

27:06
yeah and I'd like to address it from two

27:08
standpoints one the the people that pay

27:11
you the annuity the insurance companies

27:13
how does this affect them and two at the

27:16
consumer level and I actually want to

27:18
throw an idea at you and see what you

27:19
think about sure absolutely

27:22
um so at the insurance company really

27:24
just was recently asked by a reporter

27:27
about that in my mind inflation not

27:29
crazy inflation but the kind of

27:31
inflation we have right now actually is

27:33
some ways more of a Tailwind than it is

27:35
a headwind for insurance companies

27:37
because insurance companies are really

27:40
good investors in bonds and the fact is

27:43
as interest rates go up and as we see

27:45
the um the rate be higher on bonds that

27:49
actually takes the insurance companies a

27:52
little bit out of a hole and gives them

27:54
more to work with second that means that

27:58
they can frankly be more competitive as

28:00
compared to other Investments because

28:02
the fact is and you may have seen

28:04
there's a a a cannick study that I think

28:06
just came out last week or week before

28:08
right that these insurance companies are

28:10
paying something like 11 percent higher

28:13
single premium media annuity payments

28:16
now simply because they're getting more

28:19
return on their Investments so no

28:23
uncontrolled inflation is a horrible

28:24
thing and I'm not saying it's gonna if

28:26
we just had this forever it's a problem

28:29
so right now the inflation is really

28:32
kind of helping the insurance companies

28:34
dig out of the hole a little bit so do

28:37
you agree with that from from that I do

28:39
I do and it also

28:41
um reiterates what I always say is

28:42
annuities are commodity products

28:44
regardless of type and you have to you

28:47
have to shop for the highest contractual

28:49
guarantees as these companies reach

28:50
capacity as volume comes in they'll

28:53
lower those guarantees to um you know to

28:56
adjust for that you know looking at the

28:58
fed and everyone tries to watch the fed

29:00
and time the FED I always tell people

29:02
with annuities it's kind of a Fool's

29:03
game because it has yes they do watch

29:05
chairman Powell at the time of this

29:07
taping who's the chairman of the FED but

29:09
they're not fixated on him they're

29:11
fixated primarily on the tranche they're

29:13
trying to fill the the the the dollar

29:15
amount they're trying to raise and their

29:17
capacity and if they reach it they'll

29:19
lower the guarantees regardless of what

29:21
chairman chairman Powell is doing in

29:23
fact at the time of this taping

29:25
um we're right previous to or previous

29:27
to a red Fed rate hike and the trend is

29:32
um companies are lowering their rates

29:33
and guarantees just because the money's

29:36
coming in so fast they it's hard for

29:38
them to even process it

29:40
right and and so really I mean inflation

29:44
if it were like Germany in the early

29:46
20th century that's a different issue

29:48
but frankly

29:50
um I agree with you for a lot of people

29:52
it's not that big a deal and I will even

29:54
put in these terms I did a a culac and I

29:59
did it before some of this inflation hit

30:01
and so you know for a second I thought

30:04
well was that a bad idea because the the

30:07
spending power of that that was a

30:08
guarantee sure is before inflation went

30:11
up and I thought no because really I

30:13
have locked in a future income and we

30:16
don't know where income will be in the

30:18
future but the fact is compared to other

30:20
consumers I do indeed know I will have a

30:23
base floor of income so inflation is

30:26
there it does affect spending power but

30:29
at the same time it's nice to have

30:31
something to spend even if it diminishes

30:34
a little

30:35
let me throw my idea out at you all

30:37
right let's let's hear it Wade and I uh

30:40
wait I'm sorry Dr fowl uh and I uh have

30:43
a uh paper being published it's coming

30:45
out in January actual planning uh that

30:48
we're excited about what we did we

30:49
looked at Social Security in this whole

30:51
thing okay uh should I take it now or

30:53
should I take it in the future and we

30:56
can get into the more the details if

30:57
you're interested but the bottom line is

30:59
using Monte Carlo using a number of

31:02
different methodologies we basically

31:04
said look

31:06
you really should if you could afford to

31:08
do it delay Social Security and always

31:11
almost always is going to come out ahead

31:13
interesting you can you can challenge me

31:15
on how we got that uh later but okay the

31:18
point that occurs to me if it makes

31:20
sense to always delay Social Security

31:23
um then what do you do to fill in the

31:26
Gap in between and it occurred to me how

31:28
valuable annuities can come in in that

31:31
situation I don't mean necessarily even

31:33
guaranteed annuities but in other words

31:35
what you're doing is

31:38
okay I'll put it this way a challenge

31:40
for annuities for annuity payouts is

31:43
that they are not sensitive to inflation

31:46
uh it's hard to or you you probably know

31:49
I imagine it's impossible by a a true

31:52
annuity payout that's uh has a CPI it

31:56
doesn't exist listen annuities do not

31:59
address inflation perfectly annuity

32:01
companies don't give anything away

32:03
they're not politicians with Social

32:04
Security

32:05
so you know for people that always say

32:07
what are we going to do about inflation

32:09
I said well nothing because anyone that

32:11
tells you they have an annuity that

32:12
addresses inflation they're lying to you

32:14
yeah so it is what it is

32:18
um and when you attach an increase or

32:20
something somebody says well if the

32:21
index increases the the payment

32:23
increases the annuity company just

32:24
simply low drastically lowers the

32:26
initial payment to make up for that

32:27
there's no magic to that so

32:30
um but I am interested a little bit on

32:33
the carte blanche nature of 70 being the

32:37
bogey that doesn't always fit for people

32:41
no and I'll come to that but I just want

32:43
to throw out my my point with the

32:45
annuity is because annuities don't have

32:49
a CPI on them actually they're they're

32:51
perfect to fill in the blank until 70.

32:54
so we'll go back to the 70 but what I'm

32:56
getting now

32:57
why not weight to 70 if you can right

33:01
fill in the the difference with things

33:04
like annuities and whether you annuitize

33:06
it or you're just keeping it in my go

33:08
what I'm getting at is let's say you go

33:10
ahead and take an a annuity and I mean

33:12
for life sure the thing is okay

33:15
inflation bit by bit erodes spending

33:18
power but it's been it's eroding

33:20
spending power on your annuity maybe

33:22
between age 62 and 70 so it's not

33:25
cutting in totally when you hit 70 and

33:28
Social Security kicks in that is your

33:31
inflation rider that's the thing where

33:33
you're getting 8.7 type increases and so

33:38
what I'm getting is isn't that a good

33:39
compliment what you could use is use

33:42
annuity strategies to really fill in the

33:45
gap between when you could file for six

33:48
at for Social Security is 62 and when

33:50
you should file it at 70 because it has

33:53
all these advantages the one minor

33:55
disadvantage is it's not inflation

33:57
sensitive

33:58
but that's only during that eight years

34:00
and the Social Security takes over on

34:03
inflation in your later years it makes

34:05
sense it does let me address a couple

34:07
things the three ways to to do what I

34:09
call Gap filling income gap filling

34:11
would be a period certain immediate

34:13
annuity for that specific time period a

34:15
lifetime income immediate annuity or a

34:18
myga and just peel off the interest

34:21
during that time period those will would

34:24
be the ways to do it but I have a

34:25
different take on inflation how to how

34:27
to uh and my clients we go about it a

34:29
different way you know inflation is

34:32
personal and customizable and everyone's

34:34
situation is different you know give my

34:36
example my two daughters are out of the

34:37
house we're no longer doing dance

34:39
classes I'm no longer taking them back

34:41
and forth

34:42
Etc we no longer buy milk those type of

34:44
things what I tell people all the time

34:46
is look at your income floor and then if

34:49
you need an increase because of whatever

34:51
specific customized inflation is hitting

34:54
you then we reverse engineer an

34:56
immediate annuity quote to solve for

34:58
that specific dollar amount so if you

35:01
have a five thousand dollar income floor

35:03
as an example and two years from now you

35:05
say you know what it's really like Fifty

35:07
four hundred now Stan okay great let's

35:09
do a reverse engineered immediate

35:10
annuity quote solving for the 400 and if

35:13
not seven years from now if it's an

35:15
additional 200 more we do the same thing

35:17
that is the real way that annuities

35:21
dress inflation the other way too is

35:23
what you have done which is a culac

35:25
which is a qualified longevity annuity

35:27
contract used in an IRA asset that you

35:29
can earmark to turn on in the future but

35:33
if you really want to to throw a a dart

35:36
at it and a rifle shot at it is you're

35:39
you're tracking your your income on a

35:41
monthly basis and you're filling in the

35:44
Gap with an immediate annuity using the

35:46
least amount of money to solve for that

35:48
income gap that's kind of what we're

35:49
doing

35:50
yeah and that and that's exactly where I

35:53
was going because you can use annuities

35:55
to do that Gap filling and that gets to

35:58
your original question is but not

36:00
everybody wants to delay to 70 and then

36:02
if you don't want to delay to 70 don't

36:04
delay but right

36:06
is as from an academic standpoint we've

36:09
we've crunched the numbers Every Which

36:11
Way from Sunday and the fact is delaying

36:15
the 72 things one delayed delaying to 70

36:17
is going to make sense in the great

36:20
majority of cases and the funny thing or

36:23
I don't know if it's funny but it's

36:24
interesting is that even if

36:27
Social Security does cut what the

36:31
trustees are saying in about 11 years

36:33
you would have a 21 reduction if all

36:36
things stay equal which they won't stay

36:38
well even if that happens it still

36:41
generally makes sense to delay your

36:43
Social Security that's the thing that

36:45
surprises people is no I better take it

36:47
why I can because they're going to take

36:49
it away well one I don't think they're

36:50
going to take it away but even if they

36:52
dropped at 21 it still made sense to

36:56
wait until later but I need income how

37:00
am I going to get income that was the

37:01
answer you gave there are so many

37:03
different annuity Solutions and you're

37:05
doing it during a period

37:07
before the inflation is going to eat up

37:09
the dollar so I just think it's it's a

37:11
nice compliment I I don't mean to be

37:13
dogmatic about it but I just think if

37:15
people would realize Social Security is

37:17
a great gift

37:19
but take it in the future that's going

37:21
to help a lot with flexibility and what

37:23
you can do with annuities

37:25
getting back to my marketing brain you

37:27
know I can see the television

37:28
commercials since all of you already own

37:30
an annuity

37:32
because it's true if you have a Social

37:34
Security number you already own one uh

37:36
and then dovetail into what the annuity

37:38
industry can provide from a value

37:40
proposition let's um you know one more

37:43
topic I know that man I could talk with

37:44
you forever uh the 20 2023 I know it's

37:48
hard to believe it's coming up it's

37:49
there

37:51
um New Year's beginning what um what are

37:54
some of the things to be watching out

37:56
for in terms of like taxes and markets

37:58
planning things like that also I want

38:00
you big question talk about the secure

38:03
Act

38:04
and the stretch Ira stuff and then how

38:07
annuities can help in this crazy

38:09
changing environment that we live in

38:12
yeah the uh it'll be interesting to see

38:14
what happens this year this coming year

38:17
but we're still trying to sort through

38:21
um what happened to us back in in theory

38:23
in 2018 with secure act let's just put

38:25
the cards on the the table the secure

38:28
act basically was Congress saying you

38:30
know what annuities are a good thing I

38:32
really believe that because what they

38:34
said is we've got a crisis and even

38:37
though we're arguing about everything

38:38
this is back during the Trump

38:40
Administration the one thing that they

38:42
could agree on was we need to help

38:44
people save more for retirement and what

38:49
did they do really what they did is they

38:50
put in features like more 401ks making

38:53
it easier to buy annuities all those

38:55
things we're trying to bolster

38:57
retirement how did they pay for it they

38:59
took away the stretch annuity yes the

39:02
stretch Ira in other words we those of

39:06
us who had some affluence said now I'll

39:08
just hold on to my IRA and give it to my

39:10
kids and then look at what a stretch I

39:12
ra is it's an annuity in other words you

39:16
were able to straight uh to pull it out

39:18
over the lifetime of the decedent you

39:21
can't do that anymore essentially they

39:23
took away our toys and said no you have

39:25
to do it over 10 years

39:27
so what I think is going to happen is

39:29
we're going to see more of that uh the

39:32
secure act 2.0 at least as of the

39:35
recording Congress hasn't uh passed it

39:37
yet but it sure looks like they will and

39:40
in doing that they're going to probably

39:42
do things like make annuities even

39:44
easier to use through work they're going

39:48
to probably stretch the rmd out to age

39:51
75 so you're not required to pull down

39:54
your money they're doing all these

39:56
things to encourage retirement and so

40:00
um where I was going with that is now

40:03
you're going to have the tools available

40:06
to save more for retirement why not use

40:10
annuities as the way to get that second

40:12
annuity your first annuity with Social

40:14
Security get the second one because

40:17
they're going to let you save more money

40:18
and I don't know why people don't use

40:22
annuities more to to pay out their

40:26
retire environments either as an spia or

40:28
a Dia but they should because now they

40:31
can save more so so do it that's that's

40:33
where I'm going with that it it helps

40:36
you need the annuity to make all those

40:38
secure act changes positive

40:40
you know why people don't do it you know

40:42
Steve annuities are all annuities are

40:44
bad all annuities are expensive all

40:45
annuities are in the agent's favor you

40:47
know all the misinformation that's out

40:49
there that's stuck in people's heads

40:52
um is amazing I I'm trying to when we

40:56
talk about it

40:58
excuse me well we talk about annuities

41:01
I'm trying to get people to understand

41:02
that there's so many different types so

41:04
that

41:06
when they come to us we ask two

41:08
questions what do you want the money to

41:09
contractually do and when you want those

41:12
contractual guarantees to start from

41:14
those two answers we can determine a if

41:16
you need an annuity at all and B which

41:19
type is going to provide the highest

41:20
contractual guarantee and provide the

41:22
best contractual solution so going into

41:25
it it might not be an immediate annuity

41:28
it might not be a cue like it might not

41:30
be a might go we don't know it might not

41:32
be an annuity in general

41:34
but I think there's some the education

41:36
that we're trying to provide out here is

41:38
there's many different types and that

41:41
doesn't mean you need to own one that

41:42
doesn't mean you need to put all your

41:44
money there but um you know I I do think

41:47
that we're making some Headway as an

41:49
industry just because I think the

41:52
demographic Title Wave of people that

41:54
are a little bit tired of the markets

41:55
and the volatility

41:57
even though people have told them that

41:58
annuities are bad they're looking

42:00
they're looking and these types of

42:02
podcasts that aren't salesy they're

42:05
educating people on the value when we

42:08
have really smart IQ people like you on

42:11
that are talking about it in a rational

42:12
way when I have weight on or or Moshe

42:15
molesky or or Michael finka I mean and

42:18
you Mr Steve Parish

42:20
um it validates the category so you know

42:23
I really appreciate you know you you

42:26
giving those words of wisdom as I always

42:28
do at the very end of the podcast is the

42:31
mic drop moment

42:33
where I throw the microphone to you and

42:35
you're going to wow us with a very very

42:38
succinct closing statement so I'm gonna

42:41
I'm going to not I don't get any I don't

42:43
give any

42:44
prep on that but I'm going to count you

42:46
down so are you ready

42:47
five four three two one go Steve

42:53
well as a age and don't get any younger

42:56
I realize in talking to a lot of my

42:59
friends that are

43:01
Baby Boomers that I want to bet for you

43:03
not against you and so when we talk

43:06
about annuities what I'm really getting

43:08
at is chances are you're going to live a

43:11
long prosperous life and so why not

43:14
ensure that you financially can back up

43:17
that long prosperous life I don't want

43:20
to bet you against you um sure bad

43:22
things can happen and that's why I get

43:23
insurance that's why you get the right

43:26
Medicare make sure you buy life

43:27
insurance and don't get rid of it when

43:29
you retire but what you really need for

43:31
insurance is some kind of financial

43:33
backing to back up the fact that I'm

43:37
betting for you not against you and

43:38
you're going to live a long life and you

43:40
need to back that up financially that's

43:43
why I just have this fascination with

43:45
annuities that's why as a consumer I've

43:47
bought my own and as an academic we'll

43:50
do the numbers all day and tell you

43:51
things like hulax make the most sense

43:53
but I get it people like to control it

43:56
but people like you Stan are offering

43:59
these Alternatives that still get that

44:01
long-term income and some flexibility on

44:04
the way up

44:06
well said uh do me a favor and when you

44:09
and Wade I think you're it's coming out

44:11
in a month or so so that paper please

44:13
send us that link so we can share it

44:15
with with all of the listeners Etc

44:16
because they'll be they're they're going

44:18
to email me about it in droves I'm going

44:20
to get a thousand emails asking for it

44:22
so if you're listening to the podcast

44:24
wait a month and then send me the email

44:26
we'll get it to you but I want to thank

44:28
every single person on all major podcast

44:30
platforms that listen to this ever

44:33
growing podcast never I can't believe

44:36
it's growing like it is and I want to

44:38
thank everyone on the fun with annuities

44:40
YouTube channel that's watching our

44:41
beautiful mature faces talk about a very

44:45
controversial topic my name is Stan the

44:47
annuity man and I'll see you next time

44:54
[Music]