How To Purchase A Monthly Income Guaranteed For Life

This is the Truth Network. Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes.

Now, let's get started with Finishing Well. Welcome to Finishing Well with Certified Financial Planner Hans Scheil. And today's show is how to purchase a monthly income guaranteed for life. Like, who wouldn't want that? And so, you know, as I was.

Thinking about this biblically, there is a fabulous story. Just a fabulous story in 2 Kings. You might know that there was a prophet Elijah, and his mantle was turned over to the prophet Elisha. And there was this widow. Unfortunately, You know, the creditors were fixing to take her two sons, and she was in a horrible place.

And the beautiful thing of the story is she humbled herself and she did something that I don't do nearly enough: she asked for help. And not only did she ask for help, she went and asked for help from somebody that she knew was godly. You know, that's the first step, obviously. But the next thing the godly man tells her is, What do you have? You know, what do you have?

And so she had a store of what? Oil. Oil, which, you know, represents money in so many different ways.

Well, what the man of God told her, because obviously God had told him, was you need to go get some buckets. You need to go get a lot of vessels to put oil in. And we're going to take that oil that you have and we're going to continue to pour it and actually to kind of create a pension for you so that you don't run out of money. And so they went and borrowed vessels, and as many as they had, you know, the Lord poured oil and she was able to, without all that oil, she was able to not only pay her sons out of debt, but she was able to continue to live on, which is, again, the idea of an income for life. And so it's kind of neat, one of the first pensions that we might find in the Bible there in 2 Kings, chapter 4.

But Hans, this is such an amazing way, but it happens with buckets of money. Mm-hmm.

Well, it does. Yeah. Most of the people come into us around sixty five. That's That's when we meet people, and they're interested in Medicare, and they're interested in learning what we know about it, and some consulting on that. that gets broadened to Financial planning for retirement because they're, you know, they're getting ready to retire.

And They have their whole life in front of them and their spouse's whole life in front of them, and they've got to figure out how to live. and live well or how to finish well. Um And they got to use what they have. And most people in this age group have.

some level of retirement savings. And for people that have a small amount of retirement savings. They're going to be pretty highly dependent upon Social Security.

So we're going to work really hard on Social Security. which is a pension and it is an annuity and it's going to stay around as long as you're alive. And we're going to work really hard on that, and then we're going to take what little savings they have which is probably big to them and figure out a way to stretch it out over the whole of their retirement.

So And it might involve one of these annuities or one of these pensions Um For life. But this is more for the people that have a moderate amount or a large amount. of retirement savings and their Retiring, they're stopping working, and they need some income in addition to Social Security, and they've got a school. The retirement savings. And most people don't really know how to do that.

I mean, they, and that's why they'll come to us. And we got to think about taxes. We got to think about drawing out too much. And if we draw out too much, every year, by the time they're eighty years old, they're broke. And all they have left is Social Security.

We got to think about market downturns. We got to think about a lot of things. that could happen between now and the end of both of their lives. And so pensions are really not around anymore unless you work Mostly for a government entity, or you possibly work for a large corporation that still has them. But most of the people that are retiring now, their parents had pensions and their grandparents did.

They have 401ks. Yeah. Most of them, if they have some good savings built up, they realize that they're really better off with this Big chunk of money in a four hundred one K or an IRA than their parents were with a stipulated. amount of money per month But the problem comes in is a lot of them don't know what to do with it. And so, when you talked earlier about buckets of money.

What I'm Really talking about is that's exactly what we do: we open up three or four buckets. And we put Their retirement savings in different buckets for different purposes.

Okay? And then we make withdrawals, and out of this whole thing, we get some guarantees that they're not going to be in their 80s or 90s. been running out of money. John. Uh yeah, and uh and again, I think if if if You list, you know, just see the genius behind this structure.

And, you know, again, it just gives me an idea that God is going to provide some way with what it is that you have. We just know he will. It's an amazing thing to stand by and watch. But again, what the widow did was humble. She came and asked for help.

And that's the beauty of people calling 1-800 Hans, right? Sure. Sure. And so we generally don't put All their money in one bucket. And a lot of people that come to us have all their money in one bucket.

Or maybe two buckets. They've got all their 401k invested in stocks and bonds, and it's. It's just set up, it goes up and down with the market, and they haven't had to pull any income out of it, so they've done nothing but watch it go up. And that's one bucket of money that they'll come to us with. And then the second bucket, if they have one, is going to be their bank account or their money market account where they have some cash.

That they've already paid taxes on, and they've saved up, and that's kind of their go-to money if they have a problem. And we're going to go back to that first bucket where they've just got this big bucket of money, and it may be a million dollars. I mean, there's just a lot of. who view themselves as very average people that five years ago had five or six hundred thousand And now they've got a million or more. Just because of the growth in the markets of what's gone on over the last several years.

Um so people have this large bucket of money. And they're usually terrified that it's going to go down all of a sudden with what's going on in the markets. That kind of thing. And so. What we're generally going to do is we're going to open up another bucket called the income bucket.

And it's going to be money that's there. that is going to shoot out a monthly income, and it's really very much like a pension, and it is a pension because it's going to shoot out this monthly income and that is guaranteed from the insurance company to last the rest of your life.

So and when we got two people involved, which A lot of people that come to us are couples. They're just as concerned after the first one dies. of having the same amount of money Coming in from this annuity, and the one that we're talking about today does that. And the example that we have is $2,000 a month for life. For two sixty four year old people.

who are turning sixty five pretty soon. And we just put together the numbers as what would it create talk take to create a pension that starts paying them two thousand dollars a month next month. And then it continues. The $2,000 a month. as long as just one of them is alive.

until they're both gone. And that could be thirty five years. or more. Yeah. So it's a pretty unique thing.

And then, what we're going to talk about in the second part of the show. is how we Put two annuities together. to get him even more money by the month. Yeah, and the other thing that is always laying out there is You know, if both people pass, or if it's just one person that's doing it. You know, before the money's used up, that the money's not gone.

Like, You know, in the old days, if you had a pension, as I recall, you know, I know my father did with Buick, and when he passed away, the pension just stopped, and it didn't matter how much money was in there, it's gone. But in this case, because there are annuities, if there's money still in the annuity, am I right, that it goes to the heirs? That is absolutely correct. And that's usually the first piece of person. The first question people ask us Is, or they make it in a statement, they say, I don't want to buy this annuity, I don't want to throw in $300,000.

Into something that's going to pay me for life, and we're both killed in an auto accident. It's all gone. Um and that with this thing That's not the way it works.

So we'll go through in the example, and I'll give a couple examples. how that's going to work. if both people were to pass at certain points in time, what kind of refund the heirs would get out of this thing? Right. And so it is really, and I'll never forget that, you know, I didn't, you know, I'll be first to admit when I first started talking to Hans, I don't know if it was four or five years ago at this point, might be longer than that.

Because, like, wow, it was a while ago. But I had no idea even what the word annuity meant. You know, that was my ignorance. And as I have come to understand this, you know, I can assure you that, you know, in my own case, You know, I've instructed my wife many times, you know, once. If I were to pass suddenly for whatever reason, take my life insurance, go see Hans, have him talk to him about this idea of an annuity with some of this money so that you never run out.

And that's another thing that can be done is to me, instruct your widow ahead of time that here, this stuff's going to come and you need to know how to turn it into an income for life, right? We just did that for one of our clients He passed away and she survived. She's six years younger than him. She's seventy four. And she had a big bunch of life insurance money.

Come at her.

Okay, and it scared the daylights out of her. And it seemed like a lot of money, but she understood the math. That her mother is still alive and is 92. And in fact, she's supporting her mother. and has been for several years.

she and her husband, so we had to factor that in there. And so we just part and parceled all that money. It was great to have one point four million bucks to work with. And we just credit up an income for life and we set up a savings account that's tax deferred. You know, it's actually, it's not fun that he died, but it's fun doing this stuff when you're us.

At this point, it's a good time to remind you that this show is brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, You know, very, very cool. They have these seven worry tabs, and one of those is income. And so, today's show, you're going to find in that income section all kinds of wonderful show notes, these examples drawn out on a board, along with a video with instructions and all sorts of interesting information. Of course, You know, that's so you can see it for yourself, but also, you know, to me, the all-important contact Hans and Tom page, because you know, it's always my opinion, I'm not going to try this at home because I don't.

have access to understanding annuities and all that kind of stuff. But also Hans' book, which explains these things also well as well, which is called The Complete Cardinal Guide to Planning for and Living in Retirement. And so it's all there at cardinalguide.com. We'll read you right back to how to purchase a monthly income guaranteed for life. 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. Welcome back to Finishing Well with Certified Financial Planner Hans Scheil.

And today's show is how to purchase a monthly income guaranteed for life. And if that doesn't sound like fun, I don't know what that does, right? And it's amazing to me that such things are available. And the more I understand them, the more genius I see in this. But, you know, there's a whole strategy, just like the widow didn't have all that oil in one bucket, right?

It takes more than one, right, Hans? Yeah. And so what we're doing in this video, and I would encourage you to go find that at CardinalGuide. com or go on to YouTube and just search. It's the one that just came out.

And The price, so we got two people sixty four, almost turning sixty five. They're buying Medicare insurance from us. And then we are working with their IRA and their regular savings and their Social Security. which they're going to delay a little bit. till they get to full retirement.

But we wanted to just set up a monthly income and we wanted to start drawing money out of their IRA and just every month, and we wanted to guarantee that it's going to last for the rest of both of their lives. And so the price of that for two thousand dollars a month, which is twenty four thousand a year, which could be for you know, thirty thirty-five Years or more is $331,000. Yeah. That's the best we can do. where you would transfer to the insurance company, then you'd actually be buying two policies.

And which really isn't a lot of concern to the people that are buying it of why, and we're going to get into why you buy two policies. But just understand between the two policies, you're going to put $331,000 in there. And then if it's coming out of an IRA, you're going to do a transfer.

So you're only paying a tax free transfer and you're only paying taxes on the two thousand dollars a month. that's coming out of that.

So okay, let me try to understand. Mm-hmm.

Okay.

So, you got this IRA that you have not paid income tax on.

So. When you do this transfer over to this annuity, because this is a tax-free transfer. it doesn't affect your income at all at the point that you do this.

Now and I know based on what you're going to talk about here in a minute, that it's going to be a little bit down the road after this thing bakes that the income begins to come out of it, right?

Okay.

Well, it is, but remember, you're buying two policies.

Okay.

So, and one of these policies is going to send you a $2,000 check.

next month.

Okay.

You're going to pay tax on that two thousand dollar check. And then the next month after that, they're going to send you two thousand dollars. And every month for the rest of both of your lives, that $2,000 check's coming in. And if this was originally out of an IRA, So that's going to count. for income tax.

So we're going to have to withhold some taxes out of that. But if this is all you got, Coming in and Social Security, you're not going to pay a lot of tax at that level. Barring that, it is going to be taxable. But not near what it would be if you paid tax on the transfer in one year's income, right? Oh yeah.

Oh, that's just We seldom do that. unless they're a beneficiary. I'm just trying to clean the account out and pay the taxes and Be left with the remainder and go to Vegas or something. Right. So this is for people that are sitting here staring at retirement, which is kind of scary.

And the price of buying a pension of two thousand dollars a month. covering two people. Right at sixty five is three hundred thirty one thousand dollars. Yeah. Of that three hundred thirty one, one hundred nine thousand is going to go into a thing called a SPIAS, a single premium immediate annuity.

And $222,000 is going to go in the deferred annuity.

So and when we go through this arrangement, People ask us, why do I have to buy two policies? Why can't I just get one policy? that sends me two thousand dollars a month. And my answer to that is you can't. In fact, I got a choice.

is you can buy one of them is going to cost you about three hundred seventy thousand. versus three hundred and thirty one where another one's going to cost you about three hundred sixty thousand.

So if you really want a policy and you just want one policy and it's going to pay you two thousand a month starting next month and it's going to pay for the life of both of you, and you want that in one policy, it's going to cost you more.

So another way of putting this is we because we represent So many companies. that sell these products in all different varieties. And we figured out a way to put two policies together. And sell you a two thousand dollar a month pension, for less money. Does that make sense?

Yes. Absolutely.

Okay.

So So let's talk about the second policy first, is you're going to put the two hundred twenty two thousand in there. and it's going to sit there for five years, and you're going to take nothing out of it. And then at the beginning of the sixth year, you're going to start taking the two thousand a month out. and you're going to take the two thousand a month out as long as Both of you are alive.

So even if you die and then your spouse lives on. your spouse is going to collect that two thousand a month until they go. And that policy guarantees If you put two hundred twenty two thousand in it now, Beginning the sixth year, is you're going to collect the two thousand a month for that for life. And you say this now comes in. The first policy.

and the first policy starts paying you two thousand a month next month. And it's going to do it every month for five years or sixty months. And that policy costs you $109,000. Other church. And so it may sound a little goofy and make conversation a little crazy, but you're getting two thousand a month From the one hundred nine thousand dollar policy for five years.

And just when it runs out of money and it ends, The very next month. The policy for life kicks in at $2,000 a month for both of you and pays for the rest of your life.

So I did this in units of $2,000 a month just because some people may have more money and they may want more income. And you can double that to 660,000 if you're the same age. Yeah. Um You know, you're going to get $4,000 a month.

Now keep in mind as you get older So if people are listening and you're both 70 years old. You're 70 and your spouse is 70. These things are less expensive the older you are.

So this is one insurance product that you pay less when you're older. because the rest of your life is a shorter period of time. Make sense? Yeah, but I I never even thought about that. It's kinda interesting.

So I don't want to guess. I mean, I'll run a proposal. If you call me um So I really don't want to guess on the air, but it's going to be substantially less if you're both five years older than my example. But we're just using sixty five because that's kind of middle of the road. And conversely, if you're you know, if you're sixty-two, and you want to get one of these things started and you want to retire now.

Um Then it's going to cost you more. And probably a lot more, but more, because there's a longer period of time they're paying out $2,000 a month, at least statistically. Right. So. So that's the two policies smushed together.

And I actually gave examples how you could buy if you just wanted to buy one policy, if you wanted to simplify this, They're in the video and I don't really want to go over them. on the radio because it's just going to take up precious time. But if you go watch the video, you can see how I proved that. If you take the one policy, the SPIA, and use it alone to pay you the example I gave is if you put the same three hundred thirty one thousand in there, you're going to get one thousand eighteen thirty four a month.

So Um Anyhow, that's in the video if you want to look at the To look at the other examples. I want to talk about some more features and benefits in this thing. If you were to die, you and your wife bought this, or you and your husband bought this. And you start collecting the $2,000 a month, and you were both. Killed in an accident or something at the same time in the third year.

Well, what's going to happen is the two thousand a month is going to pay out to your heirs for the rest of the first five years. For another two years, And then the bigger policy that paid for life. is just going to pay out its cash value. Two. um all your named beneficiaries.

It's just that simple. And so. What people don't understand about this type of annuity is. you are guaranteed the income for life, but your principal is not gone. and it's going to not run out.

Until you're about let's say eighty, eighty two, eighty three. I mean, if you live if one of you lives past eighty three or eighty four and you're still collecting checks, and then you die at like eighty seven, there's going to be nothing left Thank you. Pay off the beneficiaries because you've gone through it all with your monthly checks. But if both of you die in your 70s, or both of you are gone by your seventies sometime, there's going to be something left in this policy. because you didn't collect on it long enough, and it's going to be paid to your heirs when you die.

That's beautiful, really. When you think about it, it really is, like I say, it's just a wonderful. idea for that whole purpose of you know, having a guaranteed income for life. And so, another number I want people to understand is. The three hundred thirty one thousand that this couple put in here They are going to They're going to collect a cash flow of seven point two percent.

of that three hundred and thirty one thousand Now I didn't tell you the interest rate is seven point two percent because There is an inherent interest rate inside of these things But you're robbing the principal down. And you can't rob it to the effect of your income evers. That's the idea of, you know What we're talking about, and this opportunity of providing that income for life is a great opportunity, for my opinion, to go to cardinalguide.com, who's the sponsor of this show, CardinalGuide.com. And there, again, you're going to see Seven Worries tabs. And I know that for most of us hitting into retirement, income is like, oh my goodness, it's one thing to have savings, but turning that savings into income and finding a way to spend the money is gigantic.

And you go to that income tab on the seven worries tabs at cardinalguide.com, you're going to find the video, which is wonderful, along these with the same title, along the same lines with the board that gives these examples and show notes and all. It's all there at cardinalguide.com, as well as Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. And, you know, very critically, the contact Hans and Tom page, because it isn't a cookie cutter thing. And and I've noticed that they rarely ever just put money in annuities. They have different ways of making sure that you do finish well in all sorts of different um Tools, but this is just one of them in their arsenal.

And again, I pray that you will consider it and humbly ask for help, however, that works in your own life. And once again, thank you, Hans. What a great show. Thank you, and God bless you. 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. 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 Well is designed to provide accurate and authoritative information with regard to the tax. 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 Well, 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 Han's 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 Han's book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word.

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