Annuities Demystified: Building a Secure Retirement Income You Can’t Outlive

Episode 68: Audio automatically transcribed by Sonix

Episode 68: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ+ community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom so you and your loved ones can have the retirement you've always dreamed of, a retirement you can take pride in. No matter who you are, where you're from, or who you love. So now let's start the show. Here's Matt McClure.

Speaker1:
Hello and welcome to another edition of Take Pride in Retirement. Matt McClure here with you, your host, your advisor, your friend, your pal and your confidant. Really do appreciate you taking the time to join me. As always, if this is the first time that you have joined the show, this is the show where we empower the LGBTQ+ community to protect and grow their hard earned money so that you can have the retirement that you've always dreamed of. That's what it's all about. It's about having a retirement that you can take pride in, hence the name of the show. So yeah, not just a not just a clever name. It actually has a meaning. Um, and that is it. So, you know, I want to give all of my thanks to you for joining me, for being a part of this show, for being a part of this journey that we are on together, um, especially people who are building safe and secure retirements in communities where pensions are disappearing. Social security faces uncertainty across the country. And if you want help creating your own personalized plan, I would encourage you to go to take pride in retirement. That's take pride in retirement. You can also give me a call 8552469278552469211. Follow me on the socials. I'd appreciate that I'm on Instagram. I am also on well, I'm on YouTube as well. I'm on Facebook, also on threads and on blue Sky now as well. Um, things starting to pick up in all of those different venues. So I really do appreciate you being a part of those communities as well, because when you're part of those communities, you are a part of the take pride in retirement community as a whole.

Speaker1:
So I really do appreciate that. Um, and, you know, I mentioned Social Security, I mentioned pensions all about, uh, income today on the show. That is what it's going to be. And this is one of my favorite topics to talk about. It's really the, um, kind of the thing that I, for lack of a better term, specialize in is, uh, you know, creating incomes for people in retirement incomes that you cannot outlive. Right. And so that really is going to be the crux of the show today. It always comes up. You know, one way or another in the show today, it's going to be the whole show. That's what we're going to focus on here. And so, um, that it's going to be a lot of great stuff. We're going to talk about annuities, um, as one of those sources of income of guaranteed retirement income. Right. And so the role of annuities today will kind of break down why it's not your grandfather's or your grandmother's or whoever's retirement plan. They're making a comeback in modern retirement planning. Then I'll break down the types. Which type is right for you? We got migas, we got FIA's, we got fixed. We got variable. Uh, we got all different kinds of annuities. And you might say, okay, my eyes are glazing over already. Don't worry. I'm going to break it down in plain English so that you can understand what those different types of annuities are and whether or not they might be good for you.

Speaker1:
I always say, um, you know, this is not a one size fits all situation. When I go through and make a retirement plan for somebody and work with somebody coming up with their own retirement plan, um, it's, you know, could this be right for you? Yes. Okay, then let's explore that. Not, you know, it's my way or the highway. Not not that at all. That's not the way I operate. We're a team. And so when you work with me on a personalized retirement plan, that's what we do. We work together as a team. I will make my suggestions. I will give you my advice. And whether or not you take it is is up to you. I'll encourage you one way or another and you might say, well, I'm more comfortable with this than that. And I'll say, okay, well, let's explore this then. And maybe that is off the table. So, you know, it's a collaborative experience. We'll also talk about how annuities can help protect you from market volatility. We're going to go through a little bit of a case study here a problem solver segment where we'll talk about two different retirees that had two different outcomes. And the big difference maker there was an annuity. We'll talk about that. Right or wrong. It's everybody's favorite financial game show after all. I'm going to talk about some different things. Kind of bust some annuity related myths in that segment as well. And of course we'll get started with some inspiration for our conversation, shall we? Let's do it with our quote of the week.

Speaker3:
And now for some financial wisdom. It's time for the quote of the week.

Speaker1:
And this week's quote comes from Peter Drucker, who was an Austrian born American management consultant, also an educator and author, widely regarded as the father of modern management. So here's what he had to say. That fits right in with our show this week. The best way to predict your future is to create it. I love it. The best way to predict your future is to create it. I will often say my crystal ball is broken. Don't know when it's going to be fixed. They've had it in the shop forever, I don't know. Just doesn't work. Um, and so, you know, you're not expected to be able to predict the future in order to have a secure outcome in retirement. What you need to do is plan for the what ifs, because we don't know what's going to happen. And that really is the crux of the show. And having, you know, that retirement income that you can't outlive, that really is what it boils down to when it comes to creating a retirement income. You want it to be guaranteed. You want it to be guaranteed for the rest of your life. And so that is what we're going to talk about. And that's how you create a future that you can take pride in, you know, create that future. And, you know, maybe that's the way to to sort of fix your crystal ball a little bit when you create your future, instead of just trying to predict it or trying to wish or trying to throw stuff against a wall, see what sticks, right? You want to create that future and you want to do it in the right way so that you can have that retirement.

Speaker1:
You can take pride in period. So let's go through a little bit of a summary of what annuities are and why they are sort of making a comeback today. Well, not sort of. They're making a comeback these days. Um, you know, annuities were kind of seen a few years ago as, as I was alluding to at the top of the show, your grandfather's retirement tool. Um, but here's what really, you know, kind of has changed about that. Traditional pensions are going away. Social Security's future faces some uncertainty. Will they have to cut benefits in the future because of the trust fund, you know, being depleted? Will they do anything to shore it up? Will that guarantee, will that promise still be there for future Americans? Market volatility seems like the new normal here. Um, you know, it's all year long. We've seen ups and downs, wild swings in the markets. Yeah they're up for the year at this point. But is there another shoe that's going to drop at some point and send the markets reeling once again. And so what are annuities. You know you might say um well you know I've heard that word before, but I don't really know what an annuity is.

Speaker1:
Basically an annuity is you put money into the annuity, you pay that money to an annuity company. Usually it's an insurance company, a life insurance company, um, who also does annuities. You give them a certain amount of money. And there are different ones where you can maybe, you know, give you're required to give a lump sum. There are those that you can also, um, you know, maybe do a certain number of deposits into the annuity over a certain amount of time. Um, those, those kinds of things just sort of vary company to company. But generally speaking, what an annuity is, you give that company your money. It either is then immediately paid back to you or paid back to you within the next year in special, you know, in, in increments, you know, in equal payments, let's say, or increasing payments. That could be an option as well. But you get that for a certain amount of time, for a set amount of time. And that could either be the rest of your life, which is what I like to do, except for in special circumstances. Um, it could be for a certain number of years, like if you want to retire earlier than you had originally planned, actually, had this happen to a client just this year, he said, you know, I planned on working until 60, so I planned on working until I'm 61 now.

Speaker1:
Uh, he said, I plan on working until I'm 66 or 67. I know I'm not going to do that anymore. Um, work is just taking it out of me. And so I want to quit next year. And so we put a plan in place previously so that at 66 or 67, whatever he decided in the future to retire, he could have a steady income that had the potential to increase on a yearly or bi yearly basis, um, for the rest of his life. And so we know that he's got that and he'll have Social Security, uh, you know, the size of the Social Security check may depend on whatever happens over the next few years with the trust fund and all that, but he needed to bridge that gap between when he's actually going to retire and when he had initially planned to retire. So we put a certain amount of money into what's called a single premium immediate annuity or a spia. That's kind of almost the simplest kind of annuity. You give that company your money, they pay it back to you in a certain number of years. In his case, it's like 6 or 7 years, um, kind of thing, six years to cover that gap between when he's going to retire and when the other income from his other annuity, which is another one of the types we're going to talk about here in a minute.

Speaker1:
Um, that annuity kicks in right. So it is just a, um, a way to basically set up your own personal pension. It's the easiest way to think about it, you know, used to be back in the day, um, and in the public sector, it's still this way. A lot of the time. Um, but, you know, it used to be you'd work for a company for 40 years, you'd retire, you'd get the gold watch, you'd get a pension, which is an income payment for the rest of your life, and they'd send you along your merry little way. Well, that doesn't really happen much anymore. You know, it's like, less than 15%, I think, um, just somewhere around that number of private companies, uh, offer a pension to their employees of any kind. Um, and then, you know, you've got the federal government, federal government employees will still get a pension and that kind of thing, but pensions are going away. And that really is why annuities are becoming more and more popular. And annuities, you know, cover that that, uh, that gap, they can bridge a gap. They can be that steady income. They can replace that paycheck for the rest of your life because you stop working. The paycheck quits. Coming. Right. Unless you have an annuity set up and then, you know, you've got guaranteed income for the rest of your life.

Speaker1:
And for LGBTQ+ retirees specifically, you know, you may not always have the same sort of family safety net or spousal protections. Annuities do offer something really powerful that guarantee, right? A way to create your own pension, like income stream. Um, the thing that I like about annuities more than anything else is that because of all of the different benefits that can can be there, the thing that it creates goes beyond just the dollars and cents of it all. It creates peace of mind, because if you know that you've got a steady paycheck that's going to come in in your retirement years. You know that like clockwork. It's going to come every month or however often you can do it quarterly or semiannually or whatever annually if you want to. A lot of the time, again, sort of depends on the company, but that's going to come in for the rest of your life, guaranteed, backed by the claims paying ability of that particular issuer. And so you want to work with strong companies. The ones that that we work with are A-rated or A+ rated by Moody's and Am best, and all the big rating companies, Standard and Poor's. And the people who rate these things who are much smarter than I am. Um, so I, I trust them. Um, but, you know, I mean, limra which, uh, also tracks these, these things, um, projects that more than $400 billion in annuities will be sold this year, and that is a record high, with more buyers in their 40s and 50s locking in guarantees early.

Speaker1:
As a matter of fact, I have a client who is in his 30s and has purchased an annuity, maybe purchasing another one here fairly soon, and it's just going to park it and let it grow. And then by the time he's able to retire, by the time he plans to retire, that will have grown to a big, nice nest egg just in that annuity. And he's also contributing regularly to a Roth. He's also contributing to his 401 K at work. And so there's a lot there that really goes into that comprehensive plan that we've created for him. And he's diversified. He's well-diversified in his investments and in those those opportunities. So, you know, if you're wondering if your retirement could use a stronger foundation, I like to think of the annuity as an income foundation for your retirement. Right. If it's appropriate for you and your situation and if your retirement could use a stronger foundation. That base of support, that everything else that the rest of your retirement is built on. Let's talk about it. Let's talk about how annuities might fill that, that void and strengthen up shore up your retirement. Just does it take pride in retirement? You can also call me directly.

Speaker1:
855246 9211. And by the way, if you go to take pride in retirement.com. A lot of stuff you can do there. You can. Um, you know, find all the different, uh, social pages and all that stuff. You can see all the, the past episodes. You can watch a nice welcome video of myself talking about why I do what I do. Um, but you can also schedule an appointment with me directly right there in the, uh, upper right hand corner of the website of the home page there. There's a schedule, a consultation button, and you can just click that. It takes you directly into my calendar and shows you my real time availability. Pick a time that works for you and we'll get we'll get to meeting. All right. Because I mean, really, like I said at the top, This is it's not a one size fits all deal. When I am talking on the show, it's for general information purposes here on the show. Right. I am giving you information in a general way. Now, the specific things that I talk about as examples may or may not be right for you in your individual situation. I got to take a deep, deeper dive into your situation, and I can do that and then give you a personalized plan that is something that is tailored to you, something that's tailored for you in your situation. So take pride in retirement.

Speaker1:
Com is the website. All right. So annuities come in many different shapes and sizes as I've already sort of alluded to here. Um, and so the basic kind of a thing is you put in, as I said, either a lump sum of money or payments over time into an annuity. It grows in a certain way. Or if it's a spia, a single premium immediate annuity, like I talked about before, that's the only one that really doesn't have growth built in, um, or potential for growth built in. That one just gets paid out. The money that you paid in gets paid back out to you essentially just in equal payments over a certain amount of time. The other kinds of annuities have growth built in. So you put the money in. They grow over time. Later on you take an income from them and you can structure them in a couple of different ways. They can be qualified or non-qualified. So qualified is basically retirement money. They can be treated like, um, you know, an IRA or a 401 K, that type of tax deferred treatment or tax free treatment like a Roth. Yeah. You can have that structured as a Roth. And you can actually if you've got money sitting in a 401 K or an IRA right now, and you want to move that into an annuity so that you can create your own personal pension, it does not create a taxable event, as long as that annuity is the same tax treatment as where you're transferring it from.

Speaker1:
And so you don't have to worry about any of those Implications at all. So that's just kind of the basic basics of what an annuity is. So what are the different subtypes of annuities. Well we've also already talked about a spia. That's that single premium immediate annuity. Put money in get it paid back out in equal payments then. Or increasing payments if that's a possibility. But then there's sort of like you know anytime basically anytime I talk about um, Medicare on the show, I always talk about it as an alphabet soup. Right. Because you got part A, part B, part D, you then got part C, which is Medicare Advantage, and then you've got all the Medicare supplements which are like d e f g h I, j k l m n o p, blah, blah, blah blah blah. Right. So let's talk about that as the alphabet soup. There's kind of an alphabet soup when it comes to annuities as well. And here is kind of just the simple explanation of the different types of annuities. First of all, you've got a fixed annuity. A fixed annuity is an annuity that earns interest at a steady guaranteed rate for a certain period of time. Right. So you might have a guarantee that for the first 2 or 3 years of that annuity, or for the first 6 or 7 years of that annuity, you've got this guaranteed rate, three and a half, four something percent, something like that in that neighborhood.

Speaker1:
Um, just as an example. Right. Not a guarantee here, but just as an example. But what is guaranteed is that interest rate will stay that interest rate for whatever period of time. So, you know, it does kind of limit your growth potential a little bit because there's no more upside than that. But you do have the upside of that guaranteed growth. And so you sort of it's one of those that you you know, what you're getting when you go into it. Right. You know exactly what you're going to get in the beginning with that fixed annuity. So that's it earns a fixed interest rate over time. So that's a fixed annuity right. A variable annuity is kind of at the exact opposite end of the annuity spectrum. Nothing about it really is guaranteed, except for the fact that, you know, if you don't lose your money in the market, there will be a guaranteed income stream when you turn, turn on that income stream in retirement, right. So a variable annuity is invested in the market. Those dollars go directly to be invested in the market. And that means potential growth and quite a bit of potential growth with the market. I mean the sky's the limit or the market is the limit.

Speaker1:
Market performance is the limit, I guess. But that also means that all of that money is at risk in the market. I generally don't like to use variable annuities for that very reason, because the clients that I work with want the guarantees. Um, and that's just, you know, human nature really to want those guarantees. Um, and a lot of times variable annuities will come with high fees and all that kind of stuff too. So because it's like kind of layers of fees, right? Because you've got maybe an advisory fee here. You've got a fund manager who's managing the underlying investments. Well, they got to be paid to. So it's, you know, all these different things. And so you want to eliminate. That's one of my goals. Working with people is to eliminate as many of the fees that they're paying as possible. So that's why I like, um, some different types of annuities, not really variable annuities all that much, although there are certain situations where they could make sense. Right. Okay. So you've got your fixed annuities very simple guaranteed growth. You've got your variable annuities much more complicated not guaranteed growth invested directly in the market. Which means you've got market risk still as a potential thing but a potential higher growth rate obviously. Um, the couple of other types of annuities that are right in between, and these are really the two that I tend to work with the most.

Speaker1:
These, these two types of annuities, um, one is a mega a multi year guaranteed annuity He usually those have terms that last between like three years and ten years, something like that. Ten years is usually about the longest you'll find, but it's a multi year guaranteed annuity. It works a lot like a fixed annuity, but the interest rate that it earns tends to be higher. And it operates kind of like a bank CD in that way where you put money in three, five years, whatever it is, and you earn a guaranteed interest rate for that certain amount of time. Now, unlike a bank CD with Omega, you generally do have some liquidity, right? You put with a bank CD, you put the money in. It's essentially in a lockbox, you know, for for the amount of time that the CD, uh, you know, term is that number of years and you really can't access it. You have no liquidity there. But with Omega, you do at least have some liquidity up to 10% usually, uh, that you can get of that money without paying a penalty. So at least there is that. And then so basically it's sort of like a kind of like a CD replacement essentially. Amiga. Because usually the interest rates for Amigas are higher. So you'll earn more on those.

Speaker1:
Um, and then you can actually have some liquidity, some access to that money. What tends to be my favorite type of annuity, though is one called a fixed indexed annuity or an fhia. So you've got Miga which is Miga. See how I'm talking about the alphabet soup here. Right. The Miga Miga. It's multiyear guaranteed annuity. That's the one I was just talking about. Then you have the fhia the fixed indexed annuity. So like a fixed annuity, you know, you put money in and later on you're going to get money out after some growth has happened. Right. So the fixed sort of part of the fixed indexed annuity though is the principal protection. You put money in let's say you put $100,000 into an annuity just as a random number to throw out there. Um, you've got that $100,000 and, you know, that is your your base of money. It's not going to go anywhere because with the fixed indexed annuity, that's the other part of the name indexed. It is indexed. The growth in the annuity is indexed to a certain market index. Right. So it's it is tied to in market index without being directly invested in that index. So it's sort of best of both worlds a lot in a lot of ways. You've got the protections that are similar to a fixed annuity where you you put your money in and you know that the value is not going to go down, but the index part gives you more growth than a fixed annuity, because it's the performance is tied to how an index performs, a market index performs.

Speaker1:
And it could be the S&P 500. It could be a proprietary index like the BNP Paribas Global age factor index, which is one of those that is more and more of a proprietary index that's used by at least one annuity carrier out there. And so you've got that. It's tied to an index. So you've got market like growth potential. So it's kind of like a variable annuity right. But the FIA the fixed index annuity tends to be kind of like the Goldilocks. It's right in between the two because you don't have the market risk. But you've got that greater growth potential than with a regular fixed annuity. But you've got that protection unlike a variable annuity. Right. So and here's the thing I mean the right annuity really depends on your goals. It also depends on your timeline. You know you may need to access funds in the near future. And so a product with a long surrender charge is probably not going to be the best fit for you. What's a surrender charge? Well, I mentioned it sort of in passing when talking about my guys a minute ago. Um, with any annuity, there's going to be a surrender charge, period. Pretty much any annuity, there's going to be a surrender charge period.

Speaker1:
During that surrender charge period, you can access, generally speaking, up to 10% of the value of the annuity without penalty. Anything above that you will be charged a penalty as it's a surrender charge. So you're getting more than the allowed amount that year. But that's not forever, right? Eventually you're going to use this money to turn on an income stream that you can never outlive. And that's really the beauty of the whole thing. That's the reason you want this to grow, is because you can then take on flip a switch, essentially turn on an income stream, and that's guaranteed income for the rest of your life. It's not going anywhere. So, you know, I mean, if you want if you know, you're going to want access to those funds in just a few years rather than several years down the road, Then work with a financial advisor, a financial professional, somebody like myself, to find the annuity that fits your situation best, one with the shorter surrender charge period, one with, um, you know, an income solution that fits your needs. And look, if you are confused by all the kind of the jargon, the mygas, the fees, the fix, the variables, all of those things, don't worry, you don't need to memorize the acronyms. Um, really and truly, that's what I'm here for. I've got the acronyms memorized already, so you don't have to.

Speaker1:
I, you know, took, uh, classes, courses in, in all of this stuff. Um, if you, uh, ever converse with me via email or if you watch the video version of the show on YouTube or wherever, um, or the, you know, highlights on, uh, Instagram or blue Sky or threads or Facebook, then you'll see after my name a couple of acronyms. Well, one of those acronyms is CAS. That is certified annuity specialist. And that is one of my certifications that I have is certified Annuity Specialist. I have taken the time to be educated about these things so that I can give you all of the information that's out there and help you make a more informed decision. So I've got the acronyms memorized so you don't have to give me a call 85524692178552469211. You can also go online. Take pride in retirement comm take pride in retirement.com. That is the website. And uh yeah. Just make sure and reach out to me. Set an appointment. We can do it via zoom. If you happen to be in the metro Atlanta area, we got a couple of offices in metro Atlanta. Would love to meet with you and really get you on that road to a more secure retirement. That's what it's all about. You know, I talked about market volatility a little bit earlier. Just mentioning it kind of in passing here. And annuities can be a tool to help protect from market volatility.

Speaker1:
You know it's been kind of the norm here lately. And retirees who depend on their portfolios. Well you know it can feel whiplash during those big market swings. We had a big one like March and April of this year. It was down and then back up and then down again and then back up. And it was just not a fun ride to be on. I don't necessarily like roller coasters anyway. Um, I think I've been on one roller coaster that I enjoyed in my entire life. So that's sort of the thing that I always, you know, the parallel that I always draw. But, you know, for LGBTQ+ retirees, you know, who may have fewer intergenerational wealth transfers to rely on, volatility can be especially dangerous. You're relying more on yourself in a lot of different circumstances. So annuities can provide some stability during those periods of market volatility by offering a couple of things. One is guaranteed lifetime income. So no matter what the market does in your retirement years, you know that income is going to keep coming. You don't have to worry about that part of it. As I was mentioning as well with with fixed indexed annuities, principal protection, you put in that money, that lump sum or that, you know, big pot of money, that's your principal and that's not going to go anywhere. It's based on the claims paying ability of the issuer, of course, but it's not going to go anywhere because it is principal protected.

Speaker1:
Diversification huge one. If you're invested in an annuity, you are already diversifying your portfolio. You know, if you've got a stock heavy portfolio. I was working with a client and actually several clients now have had this same sort of issue, um, where, you know, getting close to retirement, but you're still 80% invested in stocks. No no no. We got to rebalance all that because you're taking too much risk. Because what if the market what if there is a market downturn? You don't have protection in there. You're pretty much all exposed to the market. So if you've got a really stock heavy portfolio and you're nearing retirement, a fixed indexed annuity or another type of annuity, even a Miga or, or a fixed annuity might be something that's good for you in that situation because it will immediately diversify your portfolio. And my favorite, that that peace of mind part of this, you know, can help reduce stress, help you sleep better at night because it is something that just really does provide a lot of peace of mind when you know that there are, because there are so few guarantees in life at all. So having any guarantees is always a good thing. So yeah, I would love to help you get to those guarantees. Once again, take pride in retirement. That's take pride in retirement.

Speaker4:
It's time for this week's Problem Solver.

Speaker1:
I always feel like a superhero after I hear our problem solver. Introduction there. Um, I love it, though. And I'm living my superhero fantasy. Don't I look good in the outfit? Anyway, I'm such a dork. Um, so problem solver is basically a case study here this time around where we're looking at two different retirees who had completely different outcomes in their retirement. Now, what I, what I want to to do here is compare and contrast the two and show you what the big game changer was for one of these particular retirees. So we're talking about Mark and Linda here this time around. And Mark, the names obviously have been changed to protect the innocent. Um, or as Blanche Devereaux would say, the names have been changed to protect the satisfied. Um, so Mark and Linda, um, they have, you know, the same amount of money, let's say, going into retirement. So same same pot of money. And this really goes to show you it's not the amount of money that you have going into retirement. It is how it is invested and how that money is being, um, shepherded. It's being taken care of for you into your retirement years. So Mark invests everything in the stock market. But as I was alluding to a moment ago, as the market drops, let's say the market drops 25%. His portfolio shrinks. His confidence really is shrinking. His confidence crashes right along with the market, and that really derails his long term plans because he didn't have anything that was principal protected.

Speaker1:
He was investing everything in the stock market. And when times are great, that feels great and you're in a bull market. Boy, that's awesome because you're taking part in all of those gains, but you also take part in all of those losses as well. This has to do with something called sequence of returns risk. We'll do that on a different show because I've already given you enough definitions today. So that's Mark. Invest everything in the stock market. His portfolio drops right along with the market when when the markets lose 25%. Linda however she splits her investments between equities in the market. So that's her in the market portion and a fixed indexed annuity. So when the market falls she's already turned on income from that annuity. She's in retirement. She's already turned on income from that annuity. She's got that peace of mind because that annuity income is not going anywhere. It's unaffected by what's happening in the markets. Yeah. The other part of her portfolio is invested in the market. She still has losses there. But because she has that steady stream of income via that annuity, that is giving her peace of mind, flexibility and confidence to be able to stay the course with the other part of her investments. She is able to then wait things out until the market recovers on that equity portion, on that stock portion of her portfolio.

Speaker1:
So if they have the same amount of money going in, you can see how, you know, Mark may have to go back to work, may have to, you know, suffer because of a decreasing, um, amount of money inside his portfolio and he him having to make withdrawals from it at the same time. That's sort of that sequence of returns risk thing that I was talking about because, you know, if you're withdrawing money at the same amount of time that the stock market is crashing, you have an even smaller amount of money to then make up for any losses in the future. And you have got virtually no runway before, you know, to to make up for that loss that you've experienced. So it just compounds the situation. And so the same dollar amount can lead to very, very different outcomes. That guaranteed income that Linda has in retirement gives her that peace of mind, gives her confidence to keep going, gives her that guaranteed income stream that she can't outlive. That's the that's the main thing. He's got that steady income. She's got that guarantee. And so that means so many different things in the event of a stock market crash. Mark, on the other hand, had no protection from it. He's completely exposed to it. And so in this situation, who would you rather be, Mark or Linda? I'm going with Linda in this particular situation.

Speaker1:
I'll change my name to Linda if I have to in this particular situation here. So guaranteed income really can mean the difference between a lot of worry, a lot of a lot of suffering, quite frankly, and peace of mind on the other side. So give me a call 85524692 11. If that is your preferred method of contact or just go to take pride in retirement. Com. You can also email me Matt at take pride in retirement. Com. Um, I really really hope to hear from you. Set up a consultation. It's free of any cost or any obligation. By the way, don't charge for these things. Um, I do it because I want to help you. And, you know, if I, uh, earn your trust and and want to work with you, uh, and you want to work with me, then, you know, I really do just love enjoying love Enjoying. Enjoy. Um. Making people's lives better. And we can work with each other in that sense going forward. Again, no cost, no obligation for that initial consultation. You can tell me to go pound sand if you want. After our initial consultation, if you don't like what I have to say, if you don't like my suggestions, that's fine. No pressure. That's what no obligation means. And it really is true in this particular context. Once again, take pride in retirement comm.

Speaker4:
Come on down. As we test your financial knowledge in right or wrong?

Speaker1:
Ah, yes. Before we go, we have to do it. We've got to play a quick round of everybody's favorite financial game show. It is right or wrong. And we're going to answer some common annuity questions this time around. Have you been paying attention through the show? Ah haha. We will find out as we as we play this edition of Right or Wrong. And basically how it works is kind of like a true or false kind of a thing. I will give you a statement. I want you to shout at the top of your lungs, right or wrong, after I read that statement. Alright, so I've got several of them here. This time around, I got, uh, what is it, five? Yeah, I got five statements here. We're going to see if you are correct, if you've been paying attention and if you know your stuff about annuities, at least on a basic level at this point. All right. So here is statement number one. Shout out your answer as soon as I read this okay. All annuities are too expensive. Is that right or is that wrong. That is absolutely wrong. Yes, some annuities will carry fees. Particularly variable annuities can have high fees. Um, working with somebody Not long ago. One of my coworkers was who I believe has like 3% fees in their, uh, fixed in their not in their fixed index, but in their variable annuity. Variable annuities can carry high fees like that. Whereas fixed indexed annuities, for example, or fixed annuities, uh, manages the same kind of, uh, sort of similar vehicles there.

Speaker1:
Those types of annuities can carry zero fees or very, very low fees. Definitely nowhere in the neighborhood of 3%. So all annuities are too expensive. No, that is absolutely wrong. All right. Number two here. Hope you got that one right. Number two here or correct I should say, um, number two annuities. Lock up your money forever. Is that right or is that wrong? Well, as you can tell by the sound there, that one is also just as wrong as can be. Um, annuities do lock up some of your money. Uh, potentially. Uh, but not forever. Nothing is ever locked up forever inside an annuity. Surrender periods exist. Remember I explained the surrender charge period thing earlier where you can access during the surrender charge period up to. Usually it's 10% of that money. 10% of the value of the annuity within that surrender charge period. Anything above 10% is going to cost you a fee. So it's not locked up. I mean, you can get your money. You might have to pay a fee for it. You might pay that surrender charge for it. But you do have, as I said, that penalty free access to some funds each year. So no, it's not locked up. And it's certainly not locked up forever. All right. Hope you've been listening. Hope you got that one correct as well. Uh, number three annuities can buffer against inflation. Annuities can buffer against inflation. Is that one right. Or is that one wrong. Ah, that's a much more pleasant sound to hear, isn't it? It is.

Speaker1:
Right. Some of the annuities that we work with do offer inflation protection riders or they have growth tied to market performance, obviously with a fixed indexed annuity. So that can also have inflation protection in mind when you are invested in in that because it grows along with the market. Right. So you know some will have increasing uh the potential for increasing income in retirement. So it's not like you get the same paycheck every month for 30 years. It can it can go up with market performance. It can go up by a certain percentage each year. Uh, if you invest in certain types of annuities, it's, um, there are different options there. There's a buffet, there's a veritable cornucopia of different, uh, different plans and different annuities out there. And so it's just, you know, you got to know what type to choose. And that's why you work with a professional. Right. But there are inflation writers on some of these annuities and of course, the growth tied to market performance. So annuities can buffer against inflation. That is correct. Number four annuities are just too complicated. Is that right or is that wrong. Well okay. You know, I'm sure that at this point in the show you know more than you did, but annuity annuities are too complicated. No, that's wrong with the right guidance, they can be explained and explained pretty simply. I think I've at least tried to do that here today. Um, and hopefully you do know more than you did going in with annuities.

Speaker1:
But with the right guidance, I can sit down with you and just explain to you every different sort of provision here in simple terms, terms that you can actually understand how the growth works, how the income works, what different riders may be available, which ones might be right for you in your situation. So there you go. Annuities are too complicated. No, not not at all. They can be a little bit complicated at first, but you get under the hood. You work with a professional like myself. I'll explain them to you in a way that you can understand. All right. In the last one here. And right or wrong, annuities help balance growth with protection. Is that right or is that wrong? Hahaha, yes, another pleasant sound to hear. Uh, that is right. Yes. Fias, for example, um are designed just for that very purpose balancing growth with protection. Remember I said with FIAs that's fixed indexed annuities. The growth of that annuity is tied to a particular market index, but it's not actually directly invested in that index. So you've got the growth that's tied to the market. But principal protection. So it's designed for growth and protection all in one particular product. And then if you're also invested in the market with a portion of your portfolio, you've got greater growth potential on that side as well. I mean, you just have to have the right mix for you. You know, you want to balance growth and protection in your overall portfolio.

Speaker1:
So let me help you do that and always ask three questions before investing in an annuity. Number one what are the fees. If you are working with someone and they try to sell you a bag of goods and they can't tell you what the fees are with a particular annuity, run. Don't walk away. All right. Do not work with somebody who does not know what the fees are in that particular product, because they don't know what they're trying to sell you at that point. And make sure that the fees are not exorbitant, like in a lot of variable annuities with up to 3% fees, sometimes even more. So ask yourself and ask your financial, professional or financial advisor that question what are the fees? Number two what's guaranteed? Do you have principal protection inside that annuity? Do you have a guaranteed lifetime income stream? Right. So ask what's guaranteed. And ask what is the surrender schedule? How long do I have before I can access all the money without being charged a surrender charge? Right. So how long before I can access all that money? And how much am I going to have to pay as far as a penalty within each year, if I need access to more than 10% of it? Three important, important questions to ask. And so I hope today's show really helped you see annuities not as confusing products as maybe you might have thought they were, but as tools that can really be practical things that can really strengthen your retirement. And so if that's the case, you're already ahead of the game, right? For LGBTQ+ individuals as well.

Speaker1:
You know, and couples um, building a retirement plan that includes guarantees, guaranteed income, principal protection. All of those things really can help ensure you and your family, your chosen family, your friends, whomever you have surrounded yourself with can help all of you. Enjoy retirement with confidence, enjoy retirement clarity, and with pride as well, and pride being at the center of that you want. And you deserve a retirement that you can take pride in no matter who you are, where you come from, who you love, how you identify, or how much money you have. Quite frankly, you deserve a retirement you can take pride in. Period. End of sentence and end of show. That's it. Schedule your complimentary consultation. Once again. No cost, no obligation. Just go to take pride in retirement. Com that's take pride in retirement. Com or give me a call 85524692 11. Confidence in your retirement starts with confidence that your income is going to be secure, and that is what it is all about, especially on this week's show. It's all about that retirement confidence, and it's all about income as that foundation for a secure retirement. Well, that is going to do it, as I said for this time around. Really do appreciate it. As always, I'm Matt McClure. Thank you so much for being a part of the show this time around. And until next time, take pride in yourselves and take care of each other. We'll see you then.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ+ community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free, no obligation consultation with Matt McClure and the team at Active Wealth Management, call (855) 246-9211 or go online to take pride in retirement investment advisory services offered through Brookstone Capital Management LLC, a registered Investment Advisor, BCM and Active Wealth Management Incorporated are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.

Speaker1:
Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosures of any conflicts of interest. Please refer to our firm brochure, the ADV to item four for additional information. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company, not guaranteed by any bank or the FDIC. Fixed annuities, including multi-year guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees, and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including advanced search, transcribe multiple languages, generate automated summaries powered by AI, share transcripts, and easily transcribe your Zoom meetings. Try Sonix for free today.