This is the Truth Network. Um 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, IRAID, long-term care, life insurance, investments, and taxes.
Now, let's get started with Finishing Well.
Well, welcome to Finishing Well with certified financial planner Hans Scheil and today's show amazing how can you create a lifetime income that never runs out. I know that's one of those things that a lot of us consider is like, oh no, what if we run out of money while we're in retirement?
Well, Here's the good news. We've got tools today that are going to help you see that God will provide no matter what. And you know, one of my favorite stories here lately that I've been studying is Elijah at the brook. of charith. And what happens there is God creates this famine in the land, but he tells Elijah: if you go to this brook, That the ravens are going to bring you your daily bread, so to speak.
They actually come in the morning and they bring bread and they bring meat and they come in the evening and bring bread and meat.
So God doesn't back up a great big trailer full of bread and meat. What he does. is he provides it when he needs it. lifetime income as it would be for Elijah and You know, Elijah even gets fed by an angel later on in the story.
So the point is, no matter what, it's what you need when you need it and having something that you go, okay, I can count on this. That's what we're talking about today, right, Hans? Yeah, I and I'd much rather have God feeding me through the Ravens or through the Angel than I would an insurance company sending me a check every month. But if I've got to settle on the second thing, I think I'll take it. I understand.
Um I mean We're this Oh.
solution, because we're talking about a solution here or a product. which is uh an annuity that pays you an income monthly or annually that can't r doesn't run out until you die. And so you have a guarantee from the insurance company, you're going to get a check every month. for this amount and this amount's going to come in And it's not going to stop.
So you're deceased. And then you can buy these as a couple So it doesn't stop until both of you are deceased. And I take a lot of comfort in that. did my own planning. that I own these things.
And I was specifically the one we're talking about here today. You know, let's say I go at eighty. and my wife lives till a hundred.
Well, I just know that the whole time I'm gone And she's living on, she's going to be collecting a check every month without any concern with an account balance or whether it's going to run out. I mean, how's that? Yeah. Yeah, the word is annuity, which I had no idea when I started working with you eight or nine years ago what an annuity was. But the the more I've come to understand it, the the more I'm like, man, these things are an amazing tool.
In the toolbox, right?
Well, they are. do with People that come to us for financial planning, and what we recommend in many situations.
Well, first, I'm going to say they're not right for everybody. But as nothing is, no financial product. Stocks and bonds are not right for everybody. I mean, you know, what we do as financial planners is we. we solve problems.
And people that come to us are worried about Several things. You know, they're worried about Medicare and they're worried about a long-term care event wiping them out and having to rely on their family. And they're worried about running out of money, they're worried about their stocks going down. I mean, they're worried about when you're in retirement. and you're no longer working.
and you're dependent upon uh your social security and then you're dependent upon the income that you can generate out of your assets for your spending, it's a very vulnerable place because you're not working anymore. Yeah. you always figure well during your working years, You know, if you lost your job. then you could just get another one or open a business or do something. You really can't do that in retirement.
So What I want to get clear with people is what we typically do. Is we don't put all your money into these annuities. I mean, we're going to put you know, 10%, 20% of your assets into these things. Really at most, maybe 30% in some situations. And where we're getting that money Is from your fixed income allocation.
So let's say somebody has an IRA of $700,000 or a $401K. And that's pretty much most of the money they have And when they retire, Now we got to take Social Security and we got to live off of the income that that can generate. PN where people are real concerned. is you know, if I start drawing out of that seven hundred thousand dollars, I mean, sure, if it's growing up and growing up and growing and growing, there's nothing to be concerned about. But what if we have a year where we draw out what we need to live, and then the value goes backwards because we have a stock market.
Crash or reduction or something. I mean, these are the things people are worried about. Um And most people that come to us don't have all $700,000 invested in stocks. They're going to usually have. you know, maybe something like five hundred thousand Yeah.
in stocks and two hundred thousand in fixed income. And it's from the fixed income that we usually pull the money to buy these annuities. Does that make sense? Right.
Well, I think by fixed income you're talking about stuff like bonds, right? Talking about bonds. Yeah, it is bonds. government bonds, company bonds, I mean, when they talk about a sixty-four portfolio, or I just described to you About a 70-30 portfolio. Um you know, which would be 70% stocks.
20% bonds. PM I mean, frankly, we have a lot of clients that never buy these annuities. They just have this IRA money that's over there, and they want our help with it. And we're We're going to sit down with somebody that's retiring and we're going to say, you need to make this a little less risky. I mean, some people that come to us have got all seven hundred grand.
It's all in stocks and growth stocks. That's how they got it where they are. And they've been fine with it the whole time they're working, but now they're going to get ready to retire. And we start showing them what could happen. They're usually already aware of this.
two, three, four, five years from now or next year, is all of a sudden their $700,000 count. They wake up. And it's a $530,000 account. Because We've had a terrible year in the market. Uh or some significant political event.
environmental who knows? And so It's a scary thing and a risky thing to have too much of your money in retirement. invested in the stock market and then you're relying on that performance. Yeah. Oh.
some of the people coming to us they're all one hundred percent stock. Many of them are More like 70, 30, 60, 40. And maybe they actually got there. Um And and so at throughout your retirement, you generally are going to want to have more money in bonds, a greater percentage And as you age, the percentage of bonds In other words, you might retire at seventy, thirty. And then by the time you're 75, you might be down to sixty forty, and by the time you're eighty, you might be fifty fifty.
Is this making sense to you, Robbie? Yeah, yeah.
So then, what you're saying is the part that you would have in bonds is the part you're talking about using towards the annuities to actually have an income coming out of that because. It's not just a matter of amassing wealth, it's a matter of sometimes distributing that wealth, right? Yeah. And I want everybody to understand. All annuities are not the same.
I mean, sometimes people just throw out the word annuity. And they think They're gonna paint a broad brush and We sell several different types of annuities, and we don't really sell annuities, we put them in financial plans. to accomplish a goal.
Okay, and the one we're talking about today, and we're going to get into the details of it in the second part of the show. Um a little bit. We're going to get into the details But it's designed to produce an income That can never run out.
So it it it is an income-based annuity. Yeah. So what we're going to do is a bond is just like a bond. A typical bond is going to be like for ten thousand dollars Yeah. is going to pay like four percent interest.
And so It's just like a C D. I mean, you're just you have this bond. and you get your 400 bucks a year. And you get that every year. And if interest rates go up, the value of the bond goes down.
If interest rates go down, the value of the bond goes up. But if you hold it to maturity, you just get $10,000 at the end of the thing, and the interest is over. I mean, it's a very... It's a safer investment than stocks. But they pay pretty low interest rates.
I mean, you know, 4%. There's nothing to write home about. But Still, if you're a retiree, you need to have twenty percent, thirty percent, forty percent. of your portfolio in something like that. and you're getting a lower return.
That's the thing that retirees don't like. but it's safer. Again, I'm going to just check in. Am I making sense? Absolutely.
Absolutely. Perfect. Ah so What we do when we do financial planning With many people, is we sit down and we solve for how much income do we need, how much social security do we have. And then in addition to Social Security, How much do we need by the month? And You know, whether that's $2,000 a month or $3,000 a month or $1,000 a month, and we come up with a number.
based on your spending, based on your anticipated spending.
Some people it's much larger than that. Yeah. With most people, the only place we can go for that money is into their IRA because that's where they have a hunk of money. And taxes come into play We got all kinds of things to think about. But what I want you thinking about is that when we're doing this financial plan, we're going to create a way that we're going to have your Social Security check plus an additional income.
And then once we start that additional income, we're going to use an annuity to guarantee it for the rest of your life. That's beautiful. This would be a great time to remind you that this show is brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, as we discussed, they have the seven worries tabs. One of those is income.
So this one is definitely where you're going to find loads of information on exactly what we're talking about, including a beautiful video done with exactly the same title, How Can You Create a Lifetime Income That Never Runs Out? It's right there under the Income tab at seven worries tabs at cardinalguy.com, as well as Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement. And of course, my personal favorite, so they can kind of look at. What your goals are and what your income is, and etc., is if you go to the Contact Hans or Tom page, you know, just the contact page there at cardinalguy.com. We'll be right back with a whole lot more of how you can create a lifetime income that.
never runs out. 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. Today's show. How can you create a lifetime income that never runs out? That's an amazing question.
I can hardly wait for the rest of the details on. In the first part of the show, I positioned. Are we positioned how this fits in your financial plan. We're going to create this income, the need for the income. And so, on the second back half of the show, I'm going to.
specifically talk about The product that we're showing here. And this might be one where you may want to go to cardinalguy.com. Yeah, or onto YouTube. and find this video because I'm looking at the board right now that and the video will walk you through this with numbers that you can look at. But this is just we took one hundred thousand dollars And put it in one of these annuities.
on a person who's 65. And then we did the same thing on a couple. Who's 65?
So one of these annuities with $100,000 would cover two people. The other one would cover just one person. And you say, well, And so the annuity fundamentally is the same it's one hundred thousand dollars that you put in there. It's going to grow very slowly. I mean, it just, you know, I'm looking at our example, like this 65-year-old, by the time they're 75, The cash value of this annuity is just going to be $132,000.
So it's not This is not a real Um valuable investment just looking at the pure cash value thing. But you're not buying it for the cash value, you're buying it for the income. And then as an example, this couple that are both sixty five, they put one hundred thousand dollars there and they start the income immediately. It's going to pay them six thousand nine hundred and ten dollars a year or by the month, that would be Around six Seventy a month. for the rest of both of their lives.
But if they wait just one birthday, Of the youngest one.
So, like, I'm buying one of these on. Both my wife and me right now, and she has a birthday in October.
So if we bought this, And we were both 65, which we're not, but um Just giving as an example then Too easy. And we didn't start the income until October, late October, early November. It would be seven thousand six hundred A year. or that would be about six hundred and forty dollars a month. Um And so there's a benefit to waiting until you start the income.
And what we do with a lot of these people is they wait five years. or they wait till the sixth cycle. And so this same annuity on this 65-year-old couple. and they waited five years and they started the income, it's eleven thousand one hundred and thirty is the income.
So almost $1,000 a month. Yeah. So we sit down with planning and we we use these as a tool to create an income and they're best if we let them bake for a while.
So I know I'm throwing a lot of numbers at you, but the whole concept is starting this income And then once it's coming in, It's guaranteed.
So to last as long as both of you do. In in this example, you know, is is a I'm thinking there's a pretty good chance that my wife is going to live to a hundred I mean, it's just no nobody knows this, but she has several relatives that made it past a hundred. And just a lot of people into their nineties.
well into their 90s, almost all of them.
So I'm just thinking that we start the income on these things, when we're about seventy, seventy one, seventy two, Um She's still going to be getting checks 30 years later. Yeah. Um it's those people that really beat the insurance company on these things. Robbie? Mm my immediate question is uh and it When you Purchase the annuity, and you set it up, and you guys have planned this out just exactly like you just described to start the income in five years.
What happens if Hans dies in the third year? And Rhonda's like, wow, I need that income now. Can she turn that on in the third year? Absolutely she can. She can Turn it on.
And it'll actually be more. You know, in other words, Because now Except for so she has two options. One option is she could just take the money that's in the annuity.
So this example Like if Hans died at in the third year At sixty-seven. And his cash value in the annuity would be like one hundred ten thousand dollars.
So she would have the option of just taking the one hundred ten thousand with no penalties And then starting over another annuity that would be one option, or just doing whatever she wants with the money. But the second option would be she could start the income Now And We would go over and it would be a higher amount.
So instead of 83.60. a year, it would be $92.40. for the rest of her life, because it would start based upon a single life expectancy. A little complicated to your question.
So, in other words, she would have a choice between income for life. or a cash settlement. Yeah, absolutely. And what you know, inside that same question is Say you know, after the five years you guys Or like Wow. You know, we don't I turned out I'm going to work another couple of years.
Can you lea let it continue to bake and then turn it on? In other words, is that decision that flexible? Oh, it very much so is.
So we use the example for the couple. At seventy, turning on the income, it's eleven thousand one hundred and thirty. a year like more like nine hundred bucks a month or thereabouts. But if they waited two more years, To turn it on, that income is $13,460.
So they've gained 2300 a year. Right.
By waiting two years, $2,300 a year for life. Hello. They've done without the income for two years.
So, I mean we would have to sit down and we do this for clients. that come back in on these things and they say, well, we're considering taking it or not. And so we got Tom and his calculator and his Excel spreadsheet and all the software, you know, and then my brain and Tom's brain. And we this is what we do for widows and orphans. You know, this is you know, has not only designed this stuff on the front end, but help beneficiaries on the back end, okay, or retirees.
Yeah, that's what I'm doing in my I'm going to let this thing grow as long as I possibly can. I have about six of these things. And you know, I could turn them on now. If I wanted to, but I'm going to keep working and I'm going to let them grow. as big as they can get.
Because I don't really need the income while I'm working, and then I'm going to have a much larger check. for the two of us and then for the survivor Rhonda, which is a probably thing. Um she's going to have a check that's never going to run out. I love it. It's just it's really it's really an amazing tool And so Flexibility-wise, again, if somebody wants to buy one of these that's 300, 400, 500, right, you can do that.
Or how small? You can go as small as twenty five thousand. and the numbers all play out. There's not really any cost for buying a smaller annuity. But if we took this to five we have a lot of people put five hundred thousand dollars in one of these things.
We have a lot of those. Um because there's a lot of millionaire IRAs out there and four hundred one Ks, this is what the stock market's done. people retiring at 65, 67, 68. And they've got million or multi-million dollar IRAs. And so we're taking a piece of this thing.
Um And all of a sudden, the 20% of a two million dollar IRA is 400,000.
So let's just use 500,000 as an example. And it's a couple.
Well, we just multiply these numbers by five.
So if they waited till they're seventy, They put 500,000 in here. It would be 11,130. times five So the the check would be about sixty five grand a year. like five grand a month. fifty two hundred a month, fifty four hundred a month.
and they turn it on at 70. And it goes for life. And then, you know, when we get people that say, well, I don't want to wait five years, I want the. $5,500 a month now. Then we stick another type of annuity in there that starts immediately and pays them $6,500 a month for five years.
So I don't want to get her $5,500 a month. I overstated that. I mean, I don't want to get too complicated on the radio where I can't draw this stuff out. But I'm just explaining that a lot of people that want income to start now. but they want to have the benefit of waiting five years.
or till the sixth year to start this because it's very beneficial to wait that long, we put two annuities together and start the income immediately.
So then the next question is, say You have a $700,000 Iray. And you put $500,000 of that IRA money in it. Is it stay in the IRA? In other words, you don't take the income until you turn the income on? As far as tax wise?
So you're you'd move the money from one IRA to a new IRA at the insurance companies.
So this is an IRA annuity. Tax-free. And there's not going to be any withdrawal charges or taxes Actually, withdrawal charges or taxes when you start the income. Or there will be taxes when you start the income. I'm mixing myself up here.
is during the five years that you're waiting for income, you still haven't paid any taxes on the IRA. is when you start the income that you then we'll have to pay tax on that income. Because you're making a withdrawal out of an IRA. The options are beautiful when you begin to look at these tools and how they would fit your particular situation. And so all the more reason, I would say, they go to cardinalguide.com.
That's cardinalguide.com. And there The contact Hans and Tom page, right, to give them your numbers, et cetera, so they can begin to work these plans. It's amazing to create a lifetime income that never runs out. And again, if you want to study it more, you just go to the Seven Worries tabs, look at the income tab, and there you're going to find Of course, there's a wonderful video there, and they have show notes again, which the with the hard details on exactly the interest rates, everything you want to know from a standpoint of details if you want to do that before you contact Hans and Tom. It's all there again at CardinalGuy.com under the Seven Warriors tabs, this one being income.
And then. You know, another great way to just understand all these pieces and how they fit together in your plan is to buy Hans's book and a workbook. How to, you know, the complete cardinal guide to planning for and living in retirement. Again, it's all there at cardinalguide.com. Great show, Hans.
Thank you, and God bless you. Index or fixed annuities are not designed for short-term investments and may be subject to caps, 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. Please refer to our firm brochure, the ADV2A Item 4, for additional information. 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 investor.
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 subject covered. Investment advisory services offered through Brookstrone 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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