Guaranteed Income For Life

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Enjoy it, share it, but most of all, thank you for listening and for choosing the Truth Podcast Network. Welcome back to Finishing Well with certified financial planner, Hans Scheil, and how fun today's show I know you're going to love because it's called Guaranteed Income for Life. Oh my goodness, who wouldn't want that?

I definitely want that. And I don't know about you, but I prayed a prayer this morning and I bet you prayed one similarly. It's called the Lord's Prayer.

And in that, very early on, he says, give me this day or give us this day is actually the way you would say it. Give us this day our daily bread. And I don't know if you've ever thought about that, but what you're actually asking for right there is an annuity. As I was explaining to Hans is that we're asking God to write, have income for life, like you'll never go hungry.

And so when we get into these annuities, this Guaranteed Income for Life, I think you're going to be so excited about that. But I was thinking about this idea of daily bread, and I learned this, that actually the word manna is a form of the word what? Because Jews didn't know when that bread came down what the stuff was, and so the way it was named was based on actually a question in Hebrew, which is, huh?

Or what is this? And so it's kind of like by asking this question, that's what their daily bread is. And I don't know if you noticed it, but when you studied the Bible in the morning, I know this is for me, that the Holy Spirit will come along and He'll hit me with something in the passage that I'm reading, and I don't understand it. And I'll ask God the question, what does that mean? And as I begin to ask that question, the way I actually get my daily bread, as far as what Jesus applies for me, is He answers those questions for me, right? And doing so, right? Every day I'm getting more water in me, and more of God's Word in me, which helps me later on with the inflammation, because inflammation is like fire, right? And we know that we're going to stay out of the smoking section. That's what the Christian life is all about.

So we need our daily bread, we need our daily water, Hans, and have fun. Income for life. Well, the particular product or the category of product that we're talking about today is the deferred annuity, the deferred income annuity. And there's a whole category that we have a whole bunch of companies that for every client we put them through a software thing to pick the winners or the ones that are having the most payout five, six, seven, eight, ten years from now for any particular situation. And so the one we're using for this video and for this podcast and radio show is the $100,000 annuity.

It's from Midland National, which is one of the companies we represent, highly rated company. Male and female, both 65, married and have a, we're using $100,000 amount of deposit that they're putting in here. That can be either from an IRA or from just regular money that's in a savings account or a brokerage account, something you've already paid taxes on.

Either kind. A lot of these we do use IRA money for. What it gets us as the financial planners is a known number or a known amount of income starting at a future date. And it's not just one date in the future.

Like in the example that we have here, it's starting immediately. This would pay him $5,490 starting in two years, $6,960. And that $6,960 would be every year as long as either one of them's alive. So like pensions have a reduction when the first one dies. Social security, one of the two checks goes away when the first one dies. With this thing, it doesn't change at all when the first one dies.

It just stops when the second one dies. So it's a guaranteed income for life. And if you were gonna start the income that quickly, we would sell you something else. We got better solutions than that for somebody that wants to put $100,000 in and they wanna start the income like right away. But what's really beyond cool to me, the idea of income for life here is if you put the $100,000 in this and what do you wait, six years and you start getting $10,000 a month for the rest? Not a month, 10,000 a year.

A year, I'm sorry. Yeah. And you start getting $10,000 a year every year for as long as either one of you live, right?

Well, yeah. So if we took an example of somebody that has, let's say $500,000 in retirement savings, okay? Well, we're not gonna throw all their money into this thing, okay?

It's not gonna be five times these numbers. So if they were both 65 now and contemplating social security, whatever, we might decide that we're gonna let this thing bake for six years. And beginning at 71, we're gonna take that $10,150, but we might put 200,000 of their 500,000 in here. So it'd be $20,000 a year. And then once we start that at age 71, which I guess would be 2029, that $20,000 is gonna come in every year.

You know, if one of them lives to 95 or 100, I mean, those checks are coming in, they're gonna way beat this thing. Right, which really that is like $1,800 a month every single month, right? Oh, yeah. For like as long as it goes on.

And you know, that can make all the difference in the world. It's like you talk about a guaranteed income, just like your social security check comes in every month. This comes in every month. Even if you lived 140, you could beat Methuselah at 800 and something, it would really be a payout. Do you think the insurance company could deal with that, Hans?

I think so. We like known numbers, guaranteed numbers, you know, in financial. There's so much uncertain in retirement, we don't know how long you're gonna live. We don't know what the stock market's gonna do. We think we've got an idea of what it's gonna do.

But any one year, two years or three years, we don't get a lot of uncertainty there. And so what we want to be certain about is that you're not gonna run out of money when you're 80, 85 years old. So we want to put together a financial plan. We'll get back to the couple with $500,000 in retirement savings. They're post 65. And we're gonna see what their social security, they probably already know what their social security is now. And they're thinking about taking it a little bit early, just so they can have that plus something out of this. And we might look at what it is at 70.

And by delaying the whole time, we're not saying for sure we're gonna do that. But if it looks very good to wait till 70, we might take part of the remaining 300,000 of their retirement money, put it into something that's gonna pay them the replacement of their social security check for like the five years from now till 70. And then that runs out of, that thing just pays out for four and a half years or five years or whatever.

It pays out. It's worth nothing at the end, but it's replaced the social security check. Then the social security check kicks in and that's gonna last the rest of, well, they're both alive, two checks.

When one of them passes away, it goes to one check, but it's a certain thing. And then we're still gonna have some money left. And with the money that's left, then we're gonna figure out how we're gonna fill holes, create a hedge for inflation, maybe create another income annuity, maybe just invest it and have kind of a slush fund for whatever we need it for, for emergencies. So the thing about these future income annuities, you can buy as much or as little as you want.

You could buy less than 100,000 as if you had some money in an IRA and you didn't really need it right now and you wanted to get it to be more, you could stick it in one of these, try to last as long as you can without taking anything from it. And then the longer you wait, the more it is. Once you start taking something from it, it'll be guaranteed that amount as long as you live.

So it's a great tool to have. And these were exciting to me when I first started hearing about them three years ago. But today, the interest rates on them have gone way up comparatively as to what they had been. And with what's going on in the stock market and other places, there's absolutely no risk. Like you say, it's a known thing that here comes this money, but also you got to feel like a good steward because you're getting a good interest rate on it as well, right? Well, yeah, these insurance companies have been fighting. They want to be on the top of the list as they can't control these software programs that we use that are third party that plug all this stuff into a computer.

So what we did for this one is we put in a 65-year-old male, 65-year-old female, told her we had $100,000 and we wanted to take the income in eight years, okay? And then we plug all that in and it looks against a whole lot of companies sell these and Midland National was the winner of the lottery. I mean, they're at the top. Now, the next one down wasn't that much less and the next one down, but this one was clearly the top.

Well, they haven't been there all along. I mean, these companies are trying to pay you or pay the consumer as much as they possibly can because they want to fit on the top of the list and this to some degree bugs these insurance company officials because they want to come out and talk to us about, you know, boy, sell this one, sell that one and say, well, we're going to sell whichever one is highly rated that finishes on the top of the list and that moves over time. So it's almost like there's a market in them and especially since the interest rates have increased. Now, a thing that a lot of consumers ask based upon what you said, well, what is the interest rate? And I asked them if they want to get a junior actuarial degree. I can sit down and explain it to you because all I know with this thing is you put in $100,000 and you wait till you're 71 and then for you and your spouse, $10,150 for maybe 30 years. Okay.

Now you're going to have to tell me how long you're going to live before I can tell you what the interest rate is when the second one of you is going to die. Because, so it's a little complicated, but generally the payouts on these have increased significantly over the last year along with interest rates. Right. Which again, with a completely safe investment, right? So it's got, there's a whole combination there that, you know, gives you that idea of security when you're moving into retirement, you know, wow, that's a pretty good feeling to know that I'm not going to run out of money because that's really something a lot of people are concerned about. Well, and this allows people to then take some risk if they so desire and some of their other money. Wow.

Well, we got a whole lot more to talk about. Guaranteed income for life. It's right there at cardinalguide.com on their website where it's got the seven worries tabs. And of course, this one is obviously under retirement income.

A lot of people worried about that. And this one fits that bill really nicely. As well as Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. It's all there at cardinalguide.com. And probably most importantly, from my perspective, is a way to actually reach out and get Hans to help you with all seven. Like what is your situation, then he can, you know, look at your whole needs for in retirement and create a whole plan for you all together. It's all there at cardinalguide.com. So we come back so much more on guaranteed income for life.

Stay tuned. Guaranteed income for life 2023 is approved with annuity guaranteed disclosure added. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products.

Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by Brookstone. Welcome back to Finishing Well, a certified financial planner, Hans Scheil, of course, brought to you by cardinalguide.com. And today we're talking about guaranteed income for life. And specifically, we've been talking about these annuity products. And so I'm very curious, Hans.

So let's just say that, okay, I'm, you know, I'm 65, and I think this is a great plan. And I'm that couple that's got $300,000. And me and my wife, we buy this annuity. And then ooh, you know, we get on an airplane that's headed for somewhere, it ended up taking us where we didn't want to go, so to speak. And now we're both passed away. What happens to that money for our kids?

Okay. So if you haven't started the income yet, the cash value of the policy, the whole cash value, is going to be paid to the beneficiaries. So this money is not gone when you buy this annuity.

It's there in the cash value. And then when you start the income, it's just whittling away at that cash value month by month as you're getting checks. So even if you passed away, both of you, two, three years after you started the income, there's still going to be a sizable payment back to your beneficiaries, to your kids.

Right. And the nice thing is, since it's beneficiaries, right, it's not going to come through probate or anything. And is it going to be tax-free as well?

Well, it's depending upon the character of the money that you put in there. So if you put it in there as an IRA, or a 401k money that you haven't paid tax on, then your kids are going to inherit it as an IRA that's going to be taxable to them, and they can spread over 10 years. If you used money outside of an IRA, just money from a CD or from a brokerage account or something where you'd already paid the taxes, then it's going to be partially taxable to them. But if you've been collecting income for a little while, it's pretty much not going to come to them tax free because you've earned the income.

If it's in a non-qualified, to begin with, you collected you collected a little bit of income for a while, even after you let it sit there, and then you both passed away, more than likely they're going to get a very close to tax free or tax free amount. That answer that? Yeah. So let's go through a few other points with these is that I just want to make the general point is this adds certainty to the 70s, the 80s, and the 90s. Even if the 80s and the 90s or just the 90s are only there for one of you, this is money that's going to come in no matter what. And it's just money in the very safe department. And you can run out of assets, but you're never going to run out of income with this thing. So I just want to add that. And that's important to people when they're planning their retirement.

It's really important to people when they're in their 80s and 90s. Now there's income amount has nothing to do with the performance of the contract. If you go in and you look at an illustration on one of these things, we got one page that goes through the thing and the thing makes nothing. It's the guaranteed values. It just makes next to nothing.

It's just because we have to illustrate the worst possible scenario. And so that still has that $10,000 of income in the sixth year for life. Then you go to the next page, which produces an average scenario. So the thing makes pretty well. The 100,000 by the time you get to the sixth, seventh, eighth year, it grows pretty well. You've got a good investment performance. The income is still 10,000 for life starting at age 71. So the investment performance does not affect the payout. The only thing the investment performance affects is number one, you may never turn on the payout or you may both die before that starts or before you do it. And so sure, the performance of the thing is going to be what your beneficiaries get. Or if you start the income and live a long time, eventually you're going to blow through all your cash value and it's just going to take longer if you had good investment performance.

But the annual income does not change. That's the beauty of the thing. And we have people getting checks on these things where their cash value account is zero. But because of this promise that's put in there, the insurance company is still sending out the annual check to them or the monthly check because one of them is still alive.

Because one of them is still alive. Yeah, it's like social security. When we first started to describe this, I actually thought, man, social security is quite the deal.

Because when you start doing the math on it, you're going to see that you're going to get, if you live any length of time, you'll get more than you put into it. And I'm like, wow, that's pretty awesome. Oh, it is.

It is. And there isn't a lot of need to put a lot of time into the underlying math. I mean, it's just, we do this. This is the math we don't have to calculate because there's no risk in it. I mean, we can just put this on our side of the sheet or your side of the sheet. We've got X amount created by this deposit into this annuity.

Our plan now is to turn it on at 71 and it's going to pay them this amount. And then we can just get on to other things. We've got plenty of things that we're going to recommend and perhaps sell to you that have uncertain outcomes. And that's why these look real attractive to us because we just got certainty. Now, I already went over that the income is paid even beyond when the cash value is zero. And I have people, I have CPAs, a number of them that have bought these specific products. And they're just like, I have to explain to them how that's possible. I have to show them how the insurance company is able to do that. And nobody needs to take up a collection for these insurance companies. They know what they're doing. And it's all because not everybody outlives their annuity value, okay?

Just some people do. And they have that all accounted for in the calculation. Now, I want to add one more benefit which really ties to the show we talk about regularly and it ties to long-term care.

So this is not long-term care insurance. But if we go back to the example of the couple that put $100,000 in here. And at 71, they turn on the income for $10,230 a year.

And they're just trucking along. If either one of them can't perform two of the five ADLs or two of the six ADLs, in other words, they need care, the income amount will double. And then it'll stay doubled for five years, up to five years. Really?

Yeah. So it's got a bit of hidden long-term care benefit inside of there. Now, let me tell you the downside of that. The downside is you can only use it for one of the two people. So even though that could be either one of you. So if your wife gets sick, well, then we can double it for her. But then we can't double it for you, too. I mean, and she gets sick, lives a few years, passes away.

Now you can't turn it on for you. So it's covering two people, but it's not absolutely covering two people. So I'm going to tell you how we use this. First of all, for the people who just don't buy long-term care insurance, this is a nice backup plan. Especially if somebody buys several hundred thousand dollars of these, it's going to pay them a nice extra benefit if that comes up. We also have people who can't qualify for the long-term care insurance. Like we have a couple, I can think of a couple that come to mind right now, where one of the two of them were turned down for the long-term care insurance. So we put it on the one that could get it, so they're covered. And then they bought these to create future income, but in large amounts. And the only one of the two they're going to use this for is the one who got turned down for the long-term care insurance.

And now you can count on it, okay? So these products are so versatile. I mean, they serve a lot of needs. But the main reason you want to buy one of these is because you're going to have to pay these. You want to take part of your money, put it in here, cover two people.

Unless you're single, we can cover one person. And then it's actually going to have a little better payout. As soon as you're deceased, the payments stop.

It's not based on two people. But the reason you're buying these, you're putting the money there, you're letting it bake or you're letting it sit for a number of years. You don't have to pick the years up front. You can start it anytime you want, but the longer you wait, the more you get. And at any given point in time, we can tell you up front, like right now, that's what the number will be starting in year six or year 10 or year 12. I mean, there's a point. You don't want to let these bake beyond like 10 years, and you're pretty much going to want to start the income.

But I mean, I'll let you decide that. But that's the main reason, is you're buying a future income that is known, that's not uncertain, and it's going to last over an uncertain lifetime, because none of us know how long we're going to live. And it's especially good for the surviving spouse. When one of you has to live on without the other one, and you're now a single taxpayer, and you're getting by on one Social Security check instead of two, this thing's going to keep right on trucking. Right. And that's a significant issue because, right, there's a single taxpayer taxes change.

Oh, yeah. And like you said, you've lost one of your Social Security checks. And the last thing you want to do, the last thing I want to do is want my wife to run out of income.

But when, you know, when she's in her 80s or something, you know, pretty scary. This has no reduction when the first death. So if you go before her, these checks just keep coming in, and they're going to check in on her every now and then to make sure she's still here. But they're sending these checks for the same amount for the rest of her life. Right.

Regardless of what the market does, or whatever else happens. It's exactly what we said, guaranteed income for life, similar to Social Security. Again, I know that's attractive to me.

I would imagine it is to you. It's all there at cardinalguide.com, as well as Hans' book, The Complete Cardinal Guide to Planning for and Living Retirement, where he talks about this income in retirement as being one of those main worries that's right there. Of course, you're going to want to figure out how to get up with Hans, which is right there at cardinalguide.com, as well as a whole YouTube video on this idea. It's got a board with show notes, shows you all these numbers and things you can get into with that.

All sorts of resources there at cardinalguide.com. As always, this great show. Hans, thank you so much.

Thank you, and God bless you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such.

Any statements or opinions are subject to change without notice. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation.

Finishing Whale is designed to provide accurate and authoritative information with regard to the subject covered. Investment advisory services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors 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. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. We hope you enjoyed Finishing Whale brought to you by cardinalguide.com. Visit cardinalguide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Hans' best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement and The Workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to cardinalguide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Whale radio show on the website and send us a word. Once again, that's cardinalguide.com. Cardinalguide.com. This is the Truth Network.