Terry Savage: Chicken Money Is Still Tasty

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[Music]

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welcome to fund with annuities where

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let's get to

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[Music]

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it welcome to fun with the ities I'm

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your host Stan the annuity man uh proud

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and privileged to have a repeat guest on

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our show when you look up the words

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consumer advocate in the dictionary her

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picture should be there because she was

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actually a financial consumer Advocate

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before anyone started talking about that

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her name is Terry Savage welcome

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Terry thank you Stan always good to be

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with you let's jump in let's uh let's

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let's skip the formalities we're good

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friends and I'm dying to hear what you

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have to say at the time of this taping

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we are were not in Jackson Hall Wyoming

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but we have been watching Jackson Hall

1:06
Wyoming in the FED um weigh in on all

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this chaos Miss Savage well finally At

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Last At Last and it doesn't matter what

1:15
you say or what I say the stock market

1:17
had its say today up over 450 points to

1:21
a new all-time high and just think

1:23
everybody thought this was in the market

1:25
what happened today which by the time

1:26
you listen to this podcast you'll

1:28
probably have heard is that the FED

1:31
chairman finally acknowledged that it

1:33
was time to start cutting rates the time

1:35
has come to quote him and um but even

1:38
more so than that he took a Victory lap

1:42
and I think in my latest column which I

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just posted at terrysavage.com and it

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will'll be syndicated in your local

1:49
newspaper in the week week ahead um he

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took a Victory lap a well-deserved

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Victory lap because forever and ever in

1:56
order to get inflation cured think back

1:59
in

2:00
1980 uh 82 83 which was the most

2:04
traumatic example the FED had to jack up

2:07
rates and then create a humongous

2:10
recession and throw a lot of people out

2:12
of work to cool the demand that was

2:15
pushing rates up this fed board and this

2:18
fed chairman seem to have managed to

2:22
cool inflation it's not down to their 2%

2:25
desired level yet but it's getting there

2:28
and it they have done it without well as

2:31
the FED chairman said yes in

2:33
unemployment is up about 1% but to

2:36
4.3% which is still a very low rate so

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they haven't thrown a lot of people out

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of work he explained that part of this

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was more people coming into the labor

2:45
force that's helped them out um so

2:48
they've done it a cooling of the economy

2:51
a slowing of inflation expectations they

2:54
did not create a recession take a b fed

2:58
chairman for a soft landing and they're

3:01
about ready to cut hard question the

3:05
$800,000 uh $800,000 $800,000 job redo

3:10
that just was announced that our one of

3:12
the cabinet members or didn't even know

3:14
existed which is kind of crazy but when

3:16
they had to readjust that 800,000 800 I

3:19
keep saying dollar I guess that's

3:21
because I'm in the Dollar business it's

3:22
money 800,000 job Readjustment what was

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your take on that and it for the people

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that don't know what I'm talking about

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um the government had to readjust the

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jobs number by

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$800,000 again $800,000 Terry um [ __ ]

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real money I know but tell tell give me

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your give me your take on this 800,000

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number because when I saw that the

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conspiracy theorist in my head was like

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wait a minute that seems interesting

3:53
timing numbers are always restated and

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and um I I want I I wrote a posted

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column at terrysavage.com I want to

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point out how

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apolitical the FED is I don't think the

4:06
government is really the one that um the

4:09
labor department which does the jobs

4:11
numbers I don't think that was in

4:12
intentional there would be too many

4:13
heads would roll but I want to give you

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this little piece of research um the FED

4:18
always says it's not

4:21
political um the FED always adjusts

4:25
interest rates

4:27
despite an upcoming election and there's

4:30
a JP Morgan Chase article uh Asset

4:33
Management article that I I link to um

4:37
and it says since

4:39
1980 the FED has either hiked or cut

4:43
rates in every single election year

4:46
except in 2012 and by the way if you

4:49
don't remember back then rates were at

4:50
zero and the economy was you know coming

4:53
out of the financial crisis otherwise

4:55
the FED cut rates in five election years

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and hike in five election years um and

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in some years there were more than

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others for instance in

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1980 they actually hiked once by 1% and

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cut rates by five and a half percent

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between February and July that was that

5:14
recession we were talking about um so I

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I think that we can count on the fact

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that no matter what the politicians say

5:22
because there is obviously going to be a

5:24
rate cut coming that the FED is

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apolitical history says they're

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apolitical they rely the numbers will

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get another jobs number as you point out

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in the next week we'll have another

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Consumer Price Index number before they

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announce that they have their next

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meeting but it's pretty clear that there

5:40
will be a rate cut it is not political

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and I you know a lot of the fed's gotten

5:45
a lot of bashing and a lot of uh you

5:48
know threats of of controlling it and

5:51
replacing the FED chairman and so forth

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but I think if we manage to slide

5:56
through the end of the year with

5:58
inflation still staying down at this

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level without a recession and there you

6:03
know the leading indicators there a

6:05
bunch of signs that the economy is

6:06
slowing maybe even too much we'll see

6:09
but I think this fed has done just a

6:11
terrific job interesting and you and you

6:13
have you've known fed chairman and and I

6:17
mean you Che people you I mean to yeah

6:21
go go back tell people your credentials

6:24
throw down the credentials here okay but

6:25
let's back up I was um a founding member

6:29
in the first woman Trader on the Chicago

6:30
Board options exchange that's a long

6:32
long time ago and at the time the local

6:34
TV station in Chicago was looking for

6:36
someone to explain inflation and

6:38
interest rates I feel like I I came

6:40
through this movie before and I still

6:41
have a videotape of me walking alongside

6:44
Paul vuler who was incredibly tall I not

6:47
V he was like six eight yes yes he was

6:49
and I remember him saying to me you

6:51
really know these numbers don't you we

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were talking about the money supply in

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those days that's when people first came

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to understand the linkage between the

6:59
creation of money and inflation and

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inflation expectations so I've been

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around this game for a while and um I've

7:07
seen fed chairman I

7:09
remember uh Milton fredman say I see no

7:12
recession on the horizon he was wrong I

7:14
remember Ben Bernan and helicopter money

7:16
and so forth yeah I happen to think that

7:20
um J Powell I'll give you a j Powell

7:23
story back in about 2012 you know I just

7:25
mentioned that interest rates were

7:27
almost at zero remember that in Europe

7:30
um there were rates were actually

7:33
negative in on euros and people were

7:36
paying the banks to hold their money

7:37
there was so much concern huge amount of

7:40
negative interest rates on Bonds in

7:42
Europe in the Euro zone so I was at a

7:44
dinner where it was a business dinner

7:47
but questions were allowed and as a

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journalist I've written a syndicated

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column now for 35 years and you can read

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my columns at terrysavage.com

7:57
um I I raised my hand right way J Paul

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was maybe 10 feet in front of me and I

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said because T bill rates were like a

8:06
quarter less than a quarter of 1% in the

8:09
trading markets and I said excuse me

8:11
chairman Paul but do you foresee

8:14
treasury bill rates going negative in

8:16
the United States the way rates have

8:18
gone negative in Europe I will never

8:21
forget this he fixated me with the most

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Stern grin and his eyebrows Drew

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together and he said we will not have

8:29
negative interest rates in the United

8:32
States the way he said it was literally

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chilling to me like he alone and I think

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he did and we didn't have negative

8:39
rights well because I can't say the word

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jobs and I keep saying the word dollars

8:43
instead of

8:44
jobs um you know we're in a political

8:46
environment you know I always tell

8:48
people red or blue it's all green to me

8:51
I don't really care either way we're

8:54
going to survive as a country we just

8:56
have to

8:57
plan um and we have to make those plans

9:00
regardless of who's going to be in

9:01
office in your in your recent article

9:04
you always mentioned chicken money and

9:06
and chicken money for Terry Savage which

9:08
I hopefully she's trademarked if not

9:10
I'll trademark it for her on her behalf

9:13
um it's the money you don't want to lose

9:14
it's that principal protection money and

9:17
what you mentioned in there was chicken

9:18
money even with rates you know

9:21
decreasing is still not a bad play can

9:23
you cover that yeah well you know this

9:26
all came about many years ago when I was

9:28
giving a speech and I said the world's

9:29
really divided into the Bulls and the

9:31
Bears Bulls think the Market's going up

9:33
the Bears think it's going down we're

9:35
much more Savvy now than we were when I

9:36
was speaking to audiences back then but

9:38
I said I add a third category the Bulls

9:40
the Bears and the chickens and there's

9:43
nothing wrong with having chicken money

9:44
and in fact you should have some and how

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much depends on your situation not just

9:49
how old you are but how much money you

9:51
have what your financial needs are and

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what your own personal risk tolerance is

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what lets you sleep at night so you

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sorted out but chicken money by

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definition is money you cannot afford to

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lose and as such it belongs in things

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like short-term CDs treasury bills

10:08
there's a column Tria

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mun how buy treasury bills direct from

10:13
the Federal Reserve not through your

10:15
broker through treasury direct the very

10:17
very safest things that let you sleep at

10:20
night it it's as as the man of the

10:23
chicken money investor is I'm not

10:25
concerned about the return on my money

10:28
as I am about the return of my money so

10:31
that's how you absolutely correct no and

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I love chicken money I love it yeah well

10:36
so here's what's happening um about two

10:40
maybe two and a half three years ago I

10:42
started talking again as I had in the

10:44
80s about treasury bills because the

10:47
banks were very slow three years ago to

10:50
lift their rates on CDs right now

10:52
treasury bills let me just do a

10:54
one-onone i you have sophisticated

10:56
audience but just in case um every the

10:59
go we have a national debt $ 34 trillion

11:02
dollar national debt don't get me going

11:03
there we borrow money and every Monday

11:06
we have a treasury auction of three and

11:08
six month IUS treasury bills billions of

11:11
dollars as old maturing ones come do and

11:13
we borrow more money the rate at that

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Monday auction midday is set by huge

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institutions around the world central

11:20
banks huge institutions bidding they

11:23
decide what the rate they would accept

11:25
based on the outlook for inflation

11:27
what's going on in the US economy and

11:28
the rest of the world and when you buy

11:30
t- bills you agree to accept that

11:32
average rate set at auction well about

11:35
six five four five six months ago the

11:38
six-month t- Bill yield which you buy at

11:41
treasurydirect.gov minimum $100 this is

11:44
not for just rich people right that rate

11:47
was about five and a half percent even a

11:48
little bit higher uh now as we speak

11:52
that rate is down under

11:54
5% and because the FED is obviously

11:57
about to cut rates you you will see and

12:00
those people who bought them t- bills

12:02
bought themselves t- bills four or five

12:04
months ago and said oh automatically

12:06
renew it whatever the auction rate is

12:09
that auction yield will be lower in the

12:11
coming months and the money that drops

12:13
down into your account in the form of

12:15
interest from your t- bills will be

12:18
smaller good point though even if the t-

12:21
bill rate for six months is like 4.8

12:23
maybe four and 3/4s we've still got

12:26
inflation down near 3% so you're still

12:28
making a pretty good deal for yourself

12:30
yep however it will be less dollars in

12:33
interest earned less dollars the

12:35
government will have to pay and that

12:36
will add to the national debt but the

12:38
fact is t- bills you buy them you roll

12:40
them over automatically at maturity and

12:43
that's where your chicken money goes but

12:45
those rates are coming down and Savers

12:47
will have to be prepared but still not a

12:49
bad deal when you consider inflation is

12:52
lower and I look at chicken money really

12:55
there's I think there's five products

12:57
there's there's CDs there's Treasures

12:59
there's money markets there's AAA AAA

13:01
municipal bonds and then there's

13:03
multi-year guarantee annuities which the

13:05
annuity industry version of a CD all of

13:06
those are principal protected anything

13:09
outside of that category you got to

13:10
convince me why and of course all of

13:13
these come with different types of

13:14
maturities and different types of rules

13:16
but I do think everyone needs chicken

13:18
money I do want to Pivot however to the

13:21
Beloved stock market no wait before you

13:24
do that wait before you do that Folks by

13:27
the way any of you haven't watched me

13:29
podcast with Stan because I always take

13:31
what I learn from him and I do every

13:33
time and I I I I want to educate my

13:37
readers who are maybe not as you know in

13:39
Daily newspapers around the country Stan

13:42
multi-year guaranteed annuities I've

13:45
never to be quite honest included those

13:47
in my chicken money you got they are

13:50
Insurance cont company contracts correct

13:53
okay you know that all the banks of

13:55
short if you get a one-year CD it's FDIC

13:57
insured it's the same insur whether you

13:59
buy from your local state bank or a big

14:02
well-known National Bank okay I I never

14:05
included migas and we we're gonna have a

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little discussion here in my chicken

14:10
money because number one they're

14:12
insurance company guarantees okay which

14:14
if an insurance company went under

14:16
that's only insured by a state guarantee

14:18
fund which does not exist we've talked

14:19
about that before so I'm gon to ask you

14:23
explain why you think first explain aiga

14:28
okay and then why you think that should

14:31
fit in chicken money because the aspect

14:34
of chicken money is you get access to

14:36
your money pretty quickly in a money

14:37
market deposit account money market

14:39
mutual fund T bills three or six months

14:41
out you can get your money so why do

14:43
migas fit in that category they have to

14:46
fit in that category because number one

14:47
they're principal protection products

14:49
number two they they function just like

14:50
CDs the difference is that and they can

14:53
be held in all types of accounts but the

14:54
difference is in a nonqualified non IRA

14:57
account that interest can grow tax

14:59
deferred uh with most migas you can

15:02
there's liquidity features you can take

15:04
out the interest or you can take out 5%

15:05
or 10% they're all different if you go

15:07
to my site at the annuity man.com we

15:09
have a live feed for your specific state

15:11
but the backing of the companies life

15:14
insurance companies issue annuities they

15:17
issue these fixed annuities and there

15:19
are rules in place for these life

15:22
insurance companies to not be as dumb as

15:24
Banks they're not smarter than Banks

15:25
they're just more regulated than Banks

15:27
and they have to have your money on hand

15:30
100% in investment grade bonds day one

15:33
and most of the time that we have seen

15:36
uh a company be absorbed by the state

15:39
guarantee fund it's only happened a few

15:40
times since 2008 what typically happens

15:43
in the annuity world is another life

15:46
insurance company will come in and buy

15:48
that company up and the guarantees that

15:50
they have outstanding because annuity

15:53
products even migas are what I call

15:56
Golden Goose products you cannot lose

15:58
confidence and them and the big

15:59
companies know that um but there are

16:02
companies the Tria a tri you know the

16:04
tri A+ companies that issue migas that

16:08
if they go out of business there's

16:09
Anarchy and there's no power we're

16:11
fighting each other we are at that point

16:14
where I hope we never have to know the

16:16
difference of these compan I mean that

16:18
would be a crisis now tell me on turn

16:20
the tables because I get to interview

16:22
every sure absolutely so if I said to

16:24
you okay Terry just told me that today

16:27
probably next Monday's auction um the

16:29
six-month T bill will yield

16:31
4.9% the interest gets paid UPF front

16:34
but I don't declare it on my tax return

16:36
to the year of maturity I don't pay any

16:38
state income taxes that might be a

16:40
consideration so call it

16:41
4.9% and then I know I'll have to renew

16:44
in six months and the rate might be

16:46
lower so give me an alter what give me a

16:49
product tell me from let give you a rule

16:52
on a dou company what could I what's the

16:55
product you would sell me instead of a t

16:58
I'm not I'm not going to spe

16:59
specifically name a company or a rate

17:02
what I'm going to tell you is the rules

17:04
that you have to have in place to choose

17:07
I always tell people if your if your um

17:09
Target date for maturity is less than

17:12
three years so that includes three

17:13
months six months up to two and a half

17:16
years never buy a Miga but if you want

17:19
to lock in a guarantee past the

17:21
three-year time period what you're going

17:22
to find is the MGA is going to be more

17:25
competitive and have a higher

17:26
contractual guaranteed yield than a CD

17:29
and the question okay Stan why and the

17:32
reason is life insurance companies have

17:34
many factors that they price off of life

17:37
insurance that's very profitable because

17:39
they know when you're going to die

17:40
lifetime income products that's very

17:42
profitable because they know when you're

17:44
going to die Legacy Pro uh Bond

17:47
portfolios that they've had in place

17:49
forever and then capacity you know what

17:52
they can bring in and guarantee and

17:53
typically multi-year guarantee annuity

17:56
companies because people say wait a

17:57
minute Stan why would this MAA be higher

18:00
than a CD the four-year MAA higher than

18:02
a four-year CD it's because the the

18:04
annuity company the life insurance

18:06
company issues the annuity and this is a

18:08
kind of a broad rule if they can make 50

18:11
basis points on the off the money

18:12
they'll give you let's just say they'll

18:14
give you 4% if they know they can make

18:17
three and a half on short-term paper and

18:18
all the other things involved in pricing

18:20
that's the reason the three-year and out

18:22
Ru is what I tell my clients to look at

18:25
obviously we look at claims paying

18:26
ability of the carrier but we really

18:28
haven't seen a lot of disruption in the

18:31
MGA space one more thing Terry that I

18:34
want people to understand when if if

18:37
people are out there and they think that

18:39
taxes are really going to go up and they

18:41
don't want to pay taxes on their

18:43
interest the good part about a Miga in a

18:45
non IRA account and yes you can have

18:47
them in an IRA account or Roth but let's

18:49
just talk about non-qualified money if

18:51
you don't want to pay taxes on that

18:53
interest you can let it

18:55
defer or you could just you take it out

18:58
yeah

18:59
or you could take it out when you need

19:01
it in other words look at a Miga

19:03
interest like a light switch okay you

19:06
can flip it on and off when you want but

19:08
let's just give you an example let's

19:09
just say they go okay all you evil rich

19:12
people with migas out there we're going

19:13
to tax that interest rate at 90% I'm

19:15
just bringing that as an example then

19:17
don't take it all right wait let me stop

19:20
you let me stop you with people are

19:21
wondering what I was doing this is my

19:22
phone and here's what you can do I went

19:25
on cnbc.com and in the top is the

19:28
markets and I looked at bonds and I do

19:29
this all the time and right now we you

19:32
talked about okay not less than three

19:34
years I want to make that very clear

19:35
chicken money has shortterm very

19:38
shortterm access but not a Miga because

19:40
there probably are penalties and so

19:42
forth but now let's compare apples to

19:44
apples I'm looking as we speak at the

19:47
fiveyear US Treasury uh rate it trades

19:50
in the multi-trillion dollar treasury

19:52
market all day long and then once a

19:54
month there'll be a two-year note

19:55
auction or a seveny year a fivey year

19:57
whatever so as we talk a fiveyear note a

20:00
five-year treasury US Treasury is

20:02
yielding

20:05
3.64% on a 5e on a five year that's

20:08
that's I mean I'm looking at the real

20:09
Market that's great so if I called you

20:13
up today and said Stan again this will

20:15
be different when you hear this but I'm

20:17
talking about today is the day that J

20:19
Powell said yeah we're going to cut

20:21
rates so so uh actually rates are down

20:24
the yields are down a little bit they

20:26
were close to 3.7%

20:28
yesterday at this time but but today

20:30
it's 3.64 so if I call you up today and

20:34
say you're going to give me like a CD

20:37
thing where I don't have to pay taxes

20:40
until I take it out at the end and I

20:41
could keep rolling it over and you're

20:44
gonna give me a Guaranteed Rate

20:45
guaranteed by a double A PL insurance

20:48
company so I'm not waking up in the

20:50
middle of the night I'm pretty well

20:51
locked in for five years but I would be

20:53
more or less in a treasury what's the

20:55
yield I could get on my M I'm not going

20:58
to give a specific

20:59
year but but let's just say it's 100 to

21:01
150 basis points higher typically okay

21:04
you said today you could get me yeah

21:08
yeah you could but here's the thing

21:10
that's but it's not as static as that

21:12
Terry don't make it that static if

21:14
someone calls us and say I'm deciding

21:17
between a treasury and a Migo then I'm

21:20
GNA say how big is the safety factor to

21:23
you and if they say that's all it is and

21:25
I'm going to say buy the

21:26
treasury because treas because it's the

21:29
safest money on the planet period is it

21:32
75 basis points or 100 basis points

21:35
safer than the MGA from the insurance

21:36
company for the same five

21:39
years it depends on the person you can't

21:41
just say you buy you always buy the Miga

21:44
because it's higher it's going to be

21:46
higher but you're going to have to feel

21:48
comfortable with the claims paying

21:49
ability of that carrier and state

21:52
guarante fuzz whatever however you want

21:53
to frame that but I want the MGA and we

21:57
put and we put this in our chicken money

21:59
it's just part of the five chicken money

22:01
categories again CDs money markets

22:04
treasuries munis M you've done what I

22:07
wanted to do I think I'll write another

22:09
column about Myas because all of a

22:11
sudden the rate Gap is very interesting

22:13
yeah but here's what I'm saying to all

22:15
of you if you buy a six-month treasury

22:18
bill by the way you have to wait from

22:19
treasury direct you have to wait until

22:21
it matures you want maturities

22:23
instantaneous because your kids going to

22:25
college or you might need to pay buy a

22:27
new car in three weeks then you put it

22:29
in a money market fund you can buy a

22:31
treasury only money market fund that's

22:33
instant access treasury bill get three

22:35
and six month access decide your

22:37
maturities stagger them a migga you've

22:39
got to fight Miga has instant access too

22:42
with a lot of them some allow loans

22:45
right but you're you're gonna get a

22:46
higher rate there but again the chicken

22:49
money definition I'm not so concerned

22:51
about the return on my money is the

22:53
return of my money I have no hesitation

22:55
stand in having my chicken money in te-

22:58
bill

22:59
but for also what I call Chicken money

23:02
about principal risk I have no

23:03
hesitation about putting a portion of

23:05
that in aiga but that's a longer term

23:08
commitment a little bit less liquid and

23:11
a teeny little bit please God we never

23:13
have to differentiate between safety of

23:15
the treasury printing all the money it

23:17
needs and insurance there's no differ

23:19
there listen okay if the the treasury is

23:22
the goal standard of safety all the

23:25
conspiracy theories Theory people can

23:27
email me but telling you that's as good

23:29
as it gets and then underneath that um

23:32
you can argue it's it's FDIC or sipc and

23:36
underneath that you can say AAA AAA

23:39
insured insured municipal bonds if you

23:41
want to argue that I would say out of

23:43
all of those and we're talking about

23:45
treasury CDs money markets triaa triaa

23:47
munis and then migas I would put migga

23:50
as number five ranked from a safety

23:52
standpoint within the chicken money but

23:54
it has to be in the chicken money

23:56
because it protects your principle and

23:58
there's the demographic tidal wave of

24:00
people that are looking to say that that

24:02
what I always tell people if you won the

24:04
game why are you still playing that have

24:06
enough money that they just want to peel

24:08
off the interest when needed then then

24:11
do the chicken money strategy another

24:14
key thing there's you know let's talk

24:15
about by the way I know your listeners I

24:19
I know all of you out there I hear from

24:21
you my email is Terry at terrysavage.com

24:23
so and she responds she responds she

24:26
gets a bunch and I have an asked Terry

24:28
blog at terrysavage.com and I stay up

24:30
late answering this question I respect

24:32
the fact that the audience for this

24:34
podcast is pretty sophisticated but you

24:36
just made an important point I want to

24:37
go back to there are some people who

24:40
have chicken money because they're older

24:43
they're retired they're not working

24:46
anymore and this is all they've got and

24:48
they're just hoping to make their money

24:50
last as long as they do I'll talk to you

24:52
about the stock market and it over the

24:54
long run and I'm a True Believer I have

24:56
been for all these years since my early

24:58
trade days on the floor of the cboa but

25:01
for some people the chicken money

25:03
is if you don't have this it's it's you

25:06
know you shorten your lifespan by having

25:07
a heart attack because you just do not

25:09
want to lose it and a lot of people are

25:10
exposed to stock market risk in their

25:13
retirement that they don't even

25:14
understand we can talk about Target

25:16
correct all these con games that people

25:18
don't understand the true risk so but

25:22
your audience your right is special so

25:24
when I talk to chicken money I'm trying

25:25
to reassure people who just want to keep

25:28
it safe it's all they have they may be

25:30
younger a woman just got divorced she

25:32
got this much money that's right yeah

25:34
over the long run she should be invested

25:35
in an IRA or something but right now she

25:38
cannot lose that $27,500 that goes in a

25:42
money market again now all of you people

25:44
out there have different choices to make

25:47
I think your audience is people who a

25:49
pretty darn sure at this stage that they

25:51
have enough or will have enough to be

25:53
able to retire and continue to live

25:55
comfortably are many are concerned with

25:57
I'm just going to pass what am I going

25:59
to pass on to my children or

26:01
grandchildren and that category of

26:03
safety becomes a little bit different a

26:05
little teeny bit more risk that you

26:07
could take in terms of earning more

26:09
because this is not your last penny so

26:11
let's sort out chicken money well for

26:14
the chickens that are really pecking

26:15
away at the last few grains there and

26:17
they have to keep it safer and shorter

26:19
well and I think chicken money dovetails

26:21
into the other thing that I preach about

26:23
is income floor you have to have an

26:25
income floor in place so that you don't

26:27
disrupt Investments I think the 4% rule

26:30
is dead I think it doesn't hold water

26:32
from a factual standpoint Wade foul has

26:34
destroyed it factually in books which is

26:37
and the 4% rule for people that don't

26:39
know this put all your money in the

26:40
market and just take out 4% in gains

26:42
when you need it well that's fantastic

26:44
in in a Raging Bull Market if you have a

26:46
couple of bad years it's tough I always

26:48
tell people you already own the best

26:50
annuity on the planet Social Security

26:52
build from that with guarantees whether

26:53
it's a lifetime income annuity or the

26:56
chicken money where you protect your

26:57
principal just take interest so that you

27:00
can hit those annual or those monthly

27:02
bills without disrupting any type of

27:04
growth Investments if you choose to do

27:07
growth Investments but I think going

27:09
forward into where we're headed

27:11
regardless of who wins the election

27:12
doesn't matter we're it doesn't matter

27:15
we're going I know people are yelling at

27:17
me but TR just bear with me you have to

27:21
plan for either either party winning you

27:25
have to plan for it and the interesting

27:27
part about that I need your weigh in on

27:28
this is regardless of who wins they're

27:31
all going to be dealing with the same

27:33
Financial mess and they're all going to

27:36
have to do things that you can plan

27:38
around whether they do this then you

27:40
plan for this but I think now is the

27:42
time not to watch the bad ads and the

27:44
debate and and all this stuff in the

27:46
pundits on TV the time is now to plan

27:49
okay if this person wins this is

27:51
probably going to happen I'm going to

27:52
plan for that if this person wins this

27:54
is probably going to happen I need to

27:56
plan for that which dovetails in into

27:59
the stock market and I am absolutely

28:01
dying to hear your thoughts on this this

28:05
rolling train down the track that we're

28:08
seeing well this is very interesting

28:11
what's going on now I I also put in a

28:13
recent column some stock market history

28:16
um you know we look at a lot of

28:17
indicators that work for a while and

28:19
don't work for a while and a 67% track

28:22
record is you know putting some odds on

28:24
your site here's one a stock market

28:26
indicator that has an a 87% success

28:30
record over the last nearly 100 years

28:33
and that

28:35
is if the stock market gains in the

28:39
three months preceding a presidential

28:42
election which is to say

28:44
August September and October if the

28:48
stock market is

28:50
higher leave it at that a simple thing

28:52
like that 87% of the time the incumbent

28:56
party stays in power power interesting

29:00
so you know we've had some interesting

29:02
days we had that thousand Point down day

29:05
we've had the stock market rallying uh

29:08
there a reason I started our discussion

29:09
today with the FED being apolitical

29:11
because they do move during election

29:13
years and half the time they move up and

29:15
half the time they move down and it's

29:17
it's not

29:18
political okay conspiracy theorist you

29:21
can have your say but that's just you

29:23
know JP Morgan Asset Management St you

29:26
can find that at Terry Sav . scroll down

29:29
under my columns and about the fourth

29:31
one down now is is the Fed political so

29:34
you can read it for yourself so the fact

29:36
is that we're having the stock market

29:39
tell us some very interesting things

29:41
these days and uh we will H we have to

29:44
see now I'm gonna disagree I'm gonna say

29:47
something that's controversial I tend to

29:49
avoid politics okay in my discussion and

29:53
I'm but particularly now when you said

29:57
it doesn't matter matter who wins in the

29:59
sense of the markets and the economy I

30:03
agree with you more this this time

30:06
around than ever I think this election

30:10
despite labels of left and right and

30:14
we're going to cut taxes for the rich or

30:16
the middle class I think this is going

30:19
to be a really pivotal election based on

30:22
a whole lot of other things that are

30:25
very important to many Americans sure

30:29
and I think that Economic Policy I go

30:33
way back to when James Carville was in

30:35
Clinton you know it's the economy stupid

30:37
well the econom is doing reasonably well

30:41
I mean we're growing we haven't had

30:42
recession uh GDP is growing at 2% at

30:45
least for a lot of people it's

30:47
not I understand that completely but the

30:51
fact of the matter is I don't think the

30:53
economy per se is the issue this

30:56
election now now what you were right

30:59
whenever we get to the end of this you

31:01
know next February 1 one we're okay it's

31:04
done it's done and let's go

31:06
forward we have some big issues and we

31:09
will have a new Congress yep and that

31:12
those elections are just I think equally

31:14
important not equally but very very

31:16
important this year because there will

31:18
be big things to deal with now you know

31:20
that my co-author who I really have you

31:22
had Larry kotov on your podcast oh

31:25
absolutely he's been on the he's been on

31:27
the podcast and for people that don't

31:28
know he ran for president smart smart

31:30
guy smart guy he's so smart he he's

31:32
going to win a Nobel Prize he wrote book

31:35
yours from Social Security and he and I

31:37
wrote a book uh last year called Social

31:39
Security horror stories about the 21

31:42
billion dollar in clawback because

31:43
Social Security is such an accounting

31:45
mess that they paid people that they now

31:48
think they shouldn't have there's no

31:49
statute of limitations we are meeting

31:51
with the Social Security commissioner we

31:53
have it on the books he has um we were

31:55
on 60 Minutes and he referred our book

31:58
into 60 Minutes uh he's limited Club X

32:01
to 10% but a lot of disabled people are

32:03
just getting taken off the roles and

32:04
getting multi th000 bills way back

32:07
during the pandemic you worked an extra

32:09
three months and made more than the

32:11
limit so we want all the money back we

32:13
PID you're yeah you're still disabled

32:15
but you were over the limit for three

32:16
months give it all back we are working

32:17
to get that changed yeah Larry cot Lov

32:21
just like it sounds type it in yeah I've

32:23
done a podcast with him you can find his

32:25
stuff with Terry as well like she say to

32:27
has been on 60 Minutes with him just a

32:30
really interesting smart guy with a big

32:33
heart that's applying his his brain to

32:36
the betterment of society just like

32:38
Terry's been doing for the past 40 plus

32:40
years um but yeah very interesting

32:42
person that is not accepting the Social

32:46
Security um answers at F solving he's

32:51
got software by the way maximize my

32:53
social

32:55
securitys before you go claim or decide

32:57
should my husband do this should I came

32:59
on my spouse's benefit and then switch

33:01
do da age 70 off 67 I take it early go

33:05
to maximize my social security.com pay

33:08
$50 they will give you the correct

33:11
answer because nine times out of 10

33:13
Social Security will give you the wrong

33:14
answer mislead you and cost you a

33:16
lifetime of benefits and your advisor

33:19
your advisor doesn't know don't ask your

33:21
advisor Social Security claiming qu if

33:24
you ask me a social security claiming

33:26
question I'd be like got to be kidding

33:28
me I have I mean i' I'd rather you ask

33:30
me how Rainbow's made no you you how do

33:33
we get here oh I know how we got here we

33:35
got here because I was about to say

33:37
social security is a big thing for me

33:39
now we have a website Social Security

33:41
horror stories we have the book and

33:43
everything we are actively working every

33:45
day to get the mess that it is and the

33:47
new commissioner I must say commissioner

33:49
Martin no ali um is doing a great job of

33:52
trying to whip these people in shape but

33:54
you have thousands of Agents depending

33:56
on who you get on the phone capable of

33:58
granting waivers on these Club XS they

34:00
have no no no adult supervision don't

34:03
get me started but the point is that's a

34:07
current problem that Larry and I are

34:09
making a dent in it makes me feel good

34:11
good but the real problem is that Social

34:14
Security is a really significant part of

34:17
the income of of millions of Americans

34:21
the vast majority of people the vast

34:23
majority because more than half of the

34:25
people who get Social Security really

34:27
rely on it for at least two-thirds of

34:29
their retirement income so it's this is

34:32
the truly the net and we know I mean you

34:35
it's is not a political question we know

34:38
the actuaries say that we're getting

34:41
within 10 years of the moment where the

34:43
money coming in from the people working

34:45
won't be enough to pay the benefits

34:47
we've promised okay so how do they deal

34:49
with that you can't reduce Social

34:52
Security checks for someone's Grandma

34:53
who doesn't have anything so this next

34:56
Congress will have the last best chance

34:59
to deal with Social Security and

35:02
nobody's talking about nobody's talking

35:05
about any entitlements we're gonna do

35:07
this we're gonna but Social Security

35:10
it's just it's a number Larry's the

35:12
expert on it that he says that it's 75

35:14
trillion and they don't calculate Beyond

35:16
a few years correct the fact is the next

35:19
Congress both Republicans and Democrats

35:22
are going to have to deal with it and

35:24
what are they goingon to have to deal

35:25
with Waging raising the cap

35:28
okay why should people who earn more not

35:31
pay the tax I know that's you that's

35:34
that's your audience I mean yeah but but

35:37
but the fact is if we talked about what

35:39
would happen if the insurance companies

35:41
collapsed or something like that Social

35:43
Security is just about as Unthinkable as

35:45
that so either they print the money and

35:48
what's that called inflation there you

35:49
are Zimbabwe with what 8 92% inflation

35:53
you just can't print money they have to

35:55
come up with Actuarial

35:57
um ways of dealing with Social Security

36:00
and we are on the cusp of That So when

36:03
you say to

36:04
me to everybody and you're right don't

36:07
listen to the pundits and the economics

36:10
and the platforms that's baloney they're

36:12
going to have to come face to face with

36:14
a bunch of financial crises growth will

36:16
solve the problem of the deficit

36:19
political action or compromise of some

36:21
sort will solve the problem of Social

36:23
Security at least push it off and the

36:26
next Congress is not going to have the

36:28
luxury of at not to mention all the many

36:31
other issues that we face as Americans

36:34
the next Congress is not GNA have the

36:36
luxury of of debating what's going on in

36:38
the political world today in my mind and

36:41
I I want to tell people out there my

36:42
clients non-clients people that t tune

36:44
in because they saw Terry Savage's name

36:46
solve for your problem okay everyone's

36:49
problem is unique you know the pundants

36:51
talk about the financial pundits talk

36:54
about you know things from a 30,000 foot

36:56
view that's not you you everything is

36:59
customizable to your

37:00
situation um period you know and I've

37:03
been on the other side of the desk I

37:05
work with Morgan Stanley UBS I work for

37:08
them I work for Dean Whitter and Payne

37:09
Weber back in the day so I've been on

37:11
that side of the desk annuities don't

37:13
solve for everything they only Sol for

37:15
four things principal protection income

37:17
for Life Legacy and long-term care never

37:19
ever ever buying annuity for market

37:21
growth regardless of that really good

37:23
stake you at ate at the seminar but

37:26
because it's not designed for that and

37:28
you never should should buy it for that

37:30
Terry do you think the artificial

37:33
intelligence and that wave of technology

37:36
that had a little bit of a hiccup

37:37
recently do you think that our continual

37:41
drive as a country to be better and be

37:44
more Innovative is that pushing the

37:46
markets what what's happening here do

37:49
you think the internet changed

37:52
everything darn 35 years ago I was

37:55
writing weekly column and I faxed it in

37:58
do they even make faxes anymore I no

38:00
nobody has a fax anymore it's hysterical

38:02
I don't I mean who has a fact um just

38:05
before earlier today I know was

38:07
listening to something on the news or

38:09
something like that a local and um and

38:13
they are now going to use artificial

38:15
intelligence to read colonoscopies

38:17
they're working on the gradients and the

38:19
scales to help spot anomalies and help

38:24
Physicians and Radiologists spot

38:26
anomalies do you use think the way the

38:28
internet changed the world it's hard to

38:31
think back before but we're old enough

38:32
to remember sure I mean I remember when

38:35
remote controls happened on TV that's

38:37
how old I am you know and I think that

38:39
changed the world at the time I I got

38:41
one of the first car phones ever because

38:44
I I don't just I had one of those that

38:47
was that was huge it was thing yeah by

38:50
the way remote control for all the

38:51
people this will make him laugh my dad

38:53
had a remote control and you're like

38:55
really yeah it was me he told me go turn

38:57
the channel

38:59
always down turn to channel there were

39:02
only three or four Chels so we just

39:04
proving we're all what I'm trying to say

39:05
is that we you know you've been through

39:09
cassettes and atrax and out it's on your

39:12
phone Blu-ray disc I've got a I've got a

39:14
really good deal on some Blu-ray disc

39:15
for you Terry yeah exactly exactly you

39:18
might add an antique sphere get

39:20
something for those look

39:22
um that's what's exciting that's what's

39:25
exciting about a free enterprise economy

39:27
what's exciting about America the fact

39:30
that great minds get a chance to develop

39:32
new things that'll help U medicine and

39:35
help consumers and just change our lives

39:38
and that's why you always have to be

39:39
open you always have to be investing

39:41
that that's what the stock market a

39:43
diversified portfolio gives you not the

39:45
hot stock of who's going to find but

39:47
there were finding cures for for medical

39:50
issues uh I think the cancer moonshot is

39:53
whether it becomes under Biden's um

39:56
presidency or down the road I I you know

39:59
we look back and think 100 years ago

40:01
they were still putting leeches on

40:02
people to you know to cure them I I

40:05
think there are just so many wonderful

40:07
things that are coming down the road

40:09
that will be Investments for all of us

40:11
and what our job is is to keep the free

40:14
markets alive and and

40:17
rewarded um within boundaries of of uh

40:22
full disclosure and Equity so I'm I'm

40:25
just a a real cheerleader for America

40:27
and I think we're beginning to

40:29
understand the opportunities ahead of us

40:30
so when you ask about AI I you know I'd

40:33
love to be around to see all the things

40:34
that does I'm not afraid of robots you

40:36
know coming in well and and in the

40:39
political tribal environments that we're

40:41
in I want to remind people that this is

40:43
a great country and it is unmatched and

40:46
I was talking to someone this morning I

40:48
said if there was a and he he mentioned

40:51
his his tribal policy the tribal group

40:54
he was a part of I said okay so you're

40:56
red or blue if the opposite person was

40:58
standing beside you and you totally

41:00
disagreed with them politically and

41:02
you're standing on the street corner and

41:03
they got attacked randomly would you

41:05
stand up for them and fight for them he

41:07
said absolutely I said exactly we got to

41:10
get back to that as a country we all 911

41:13
showed that we all are in this we're all

41:15
in together okay and I'm hoping that we

41:19
can go toward that and I know you guys

41:20
are out there saying Stan you're getting

41:22
sappy and you're going to cry and I no

41:24
I'm not I'm just saying we forget the

41:27
opportunities that this country provides

41:30
someone like myself someone like you

41:32
that that knocked the door down and then

41:34
took a hammer and beat the glass ceiling

41:36
into pieces uh to get on this the

41:40
Chicago Board of options that's insane

41:42
but that's fantastic in a country like

41:45
this I really wish that and I'm I know

41:49
I'm hoping that politicians would talk

41:51
like that more instead of getting

41:52
personal and putting each other down I

41:54
don't know how we went got to that and

41:56
the Consultants at tell them that work

41:58
but it doesn't work on me you know I'm

42:01
looking for people's ideas whether it's

42:03
in the private sector the public sector

42:05
I don't really care I just want to hear

42:07
ideas I want to hear people thinking um

42:10
I want IQ uh when I'm turning on the

42:13
television which is now hard to find I I

42:15
want IQ that's the reason I think I

42:18
think that entrepreneurs and and people

42:21
that are involved in technology they've

42:24
tuned all that out they're going forward

42:26
with their ideas hopes and dreams and

42:28
that's the reason I think you see the

42:29
stock market where it's at my

42:32
opinion well you know what I happen to

42:34
agree with you perfectly maybe that's

42:35
the right place to end it but let me let

42:38
me say a couple of things you you made a

42:40
very good point about that no matter

42:42
what you're still going to have to

42:44
manage your own money and your own um

42:48
future and your own income and

42:50
retirement that's the goal um to have

42:54
enough to generate income and then leave

42:56
some to your family

42:57
so I happen to think this is a per a

43:00
perfect time to do some financial

43:03
planning of your own with someone

43:07
sophisticated and someone you can trust

43:10
um and I just let me just say this I

43:14
sell nothing I have no clients I've

43:16
never gotten a penny from endorsing a

43:18
product or service I my brand is Terry

43:21
Savage The Savage truth on money that's

43:23
the title of my most recent book which

43:25
the fourth edition of is now a couple

43:26
years old

43:27
and um my goal is to introduce people to

43:31
places where they can get trusted

43:33
Financial advice I'm GNA come to you

43:36
last but let me give you some of those

43:39
places um I think the most important

43:42
thing in evaluating a financial planner

43:46
is that it be a

43:48
fiduciary and a fiduciary who fully

43:51
discloses all costs and preferably a fee

43:55
only for iary not fee based pardon not

44:00
fee based not fee based fee only they're

44:04
not competing for a trip to uh Bor Bor

44:08
Hawaii or whatever else it is based on

44:10
the number of units they sell of this

44:12
that or the other they're not getting a

44:14
trailing commission so my good friend

44:17
now but and my co- podcaster and you've

44:19
been on our friends talk money podcast

44:21
cam Krueger created something called

44:23
wealth ramp wealth.com

44:27
which is like match.com for fee only

44:29
fiduciary advisors there's number one

44:33
number two Larry kov you're going to

44:34
have to have him back I've just posted a

44:36
new article yeah I need I need he called

44:38
out Fidelity and you could find it on

44:41
his substack uh blog kotlov Larry kotlov

44:46
he called out Fidelity's Financial

44:47
Planning in his most recent pod blog

44:51
that I I want to send a copy of that in

44:54
the column I've just posted on

44:56
terrysavage.com

44:57
about his maxify planner M

45:01
axii planner.com which is economics

45:05
based financial planning you need to

45:06
have him on to talk about that it's

45:08
something you can do yourself very

45:10
inexpensively they will help you through

45:12
it they do it they have financial

45:15
planners that license this software but

45:17
he just called out Fidelity and Vanguard

45:20
and every other bigs for giving

45:22
misleading planning advice that's not

45:24
based on economics this is going to be

45:27
the next big blow up here so I agree

45:30
that I think the financial industry is

45:31
going to change definitely I think and

45:34
then I do believe first of all I have an

45:37
Unity money that drops into my checking

45:39
account on a regular basis and it can

45:44
you see me smile when I say it it

45:45
because it always comes as a surprise a

45:49
delightful surprise and in fact

45:52
um I I didn't really under I I bought

45:56
these annuities back when because I was

45:58
trying to understand them well enough to

46:00
write about and I didn't want to write

46:01
about something that I wouldn't do

46:02
myself and here I am all these years

46:04
later and the money's coming so I

46:07
believe in annuities in their place in

46:09
your portfolio for some not all pardon

46:13
for some people not all no for in their

46:16
place in your portfolio sure and I

46:18
cannot tell you Stan we tell this is

46:20
true because on my ask Terry blog I get

46:23
these questions I got talked into this

46:25
thing I don't know what it is and I go

46:27
you know what I can't diagnose this but

46:29
go to stand the annuity man.com set up

46:32
an appointment and you can trust the

46:35
advice he gives you so when I talk about

46:37
getting trusted advice I get nothing out

46:39
of that nothing out of these

46:41
recommendations but there's so much

46:44
misleading information out there it's

46:46
terrible from some very well-known names

46:49
that's how they get all the money to run

46:50
the ads and the commercials build the

46:52
big buildings so my brand is a Savage

46:55
truth and I and I welcome you at

46:57
terrysavage.com post your questions if

47:00
you write about an annuity the odds are

47:01
if I don't know the answer right off the

47:03
bat that's right I will copy it and send

47:05
it to Stan and say help me answer this

47:07
reader will we're the only site and you

47:11
know we're licensed in all 50 states

47:12
we're the only site that has a a place

47:14
where you can click it's for second

47:15
opinions is if you've either bought

47:17
something or been pit something and you

47:19
just want a second opinion on it we'll

47:21
give it to you we're not going to try to

47:23
sell you something we're going to give

47:25
you either what the facts about what you

47:27
own that's been a GameChanger because

47:30
people want they just want to know I

47:31
tell people all the time if you can't

47:33
explain it to a 9-year-old don't buy it

47:35
no offense to nine-year-olds you know

47:37
Warren Buffett who you know and have

47:40
videos on your site with yes Terry and

47:42
Warren Buffett I if he doesn't

47:44
understand it he doesn't buy it I don't

47:46
know why people want to make it so

47:49
difficult understand what you're doing

47:51
take your time there's no urgency to buy

47:55
or make a move if someone trying to make

47:58
you sign the paper you're going to miss

48:00
out on this and that then walk away

48:02
period been doing this for 30 years

48:04
Terry's been do this for 40 plus listen

48:07
there's no urgency the only urgency is

48:09
for you to understand what you're doing

48:11
exactly and get good advice before you

48:13
do it believe me you don't want to be

48:14
funding their retirement you want to be

48:15
funding yours that's a Savage truth

48:17
Harry Savage it's so great to catch up

48:20
with you you know we haven't seen each

48:22
other like face to face and dinner for

48:24
years that has to change one of these

48:26
days

48:27
our our lyes have to meet on the tarmac

48:30
[Laughter]

48:33
right Florida okay well listen Take Care

48:37
thank you so much and thanks everybody

48:39
for joining fun with the nity see you

48:41
next time

48:46
[Music]