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Multi Year Guaranteed Annuities

Finishing Well / Hans Scheil
The Truth Network Radio
September 5, 2020 8:30 am

Multi Year Guaranteed Annuities

Finishing Well / Hans Scheil

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September 5, 2020 8:30 am

Hans and Robby talk all about MYGAs, what they are, and why they might be right for you, especially if you have a lot of money just sitting in your savings account!

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Welcome to finishing well brought to you by Cardinal guy, certified financial planner belonged to child best-selling author and financial planner helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started.

Finishing well welcome to this certified financial planner on island today show is actually being titled a financial planner, prayer with our prayer being that all of us would come to understand some of these investments better and that God would so in the us and we have our financial planner here on child health. As you learn today that what am I getting is so don't let that stop you for now it's working it right in the prayer in them and then will go on Mina's in micas and said oh Jesus, thank you for the investments that you've made in us not only financial but in the many gifts and talents and all the different ways you have provided for us in Lord, we pray that you would help us be a good steward of those things that we wouldn't be fearful like the evil wicked students to word and that we would trust your heart that you connect give us interest. You're going to give us power over the things that you made is fully capable to understand them fully capable to invest in. So when it comes to this very specific thing that were learning today.

Lord, give us wisdom. Give us your understanding to know how we can be good and faithful stewards that you've entrusted us with little and that you would feel comfortable to entrust us with more and we ask this in Jesus name, amen. So you may be familiar with the story.

The mean is in the Bible. Some people call the story of the talents depend on the translation that you, but for today's episode because were to be talking about micas and the minute you need to know about Mina. Okay so am I gonna him. Why G a multi-year guaranteed annuity in first off, I've known about micas and work with micas for well over 20 years and is is is just a terrible name committed to an acronym or a name is supposed to be descriptive than understandable and people. I won the world, even people in the insurance business and financial businesses like with that. So we were going to change it, but I think that's I can accomplish anything and so it's up multi year guaranteed annuity and for the purposes of understanding it it very closely resembles a CD or a certificate of deposit at the bank there some clear differences in them and point them out, but I just did a video that's out and it's generating a lot of inquiries. We have a lot of money, it's moving into these products as small amounts large amounts, and I really so notable that there's a real demand for this because it's just paying up a better interest rate than the CDs which are which is in a very hard to beat them now and in the maintenance and so those are for the probably created this right of the spirit about so that Jesus referred to the mean is it's money invested in a noteworthy Adam is the story of the mean is when we forget the micas you might remember that in a Jesus both in Matthew and Luke. The stories told in the gospel several places where he had the servants, and he called them altogether. 10 of the many gave all 10 of these Mina's and told them in her to go invest them that he was getting off to a far country and and and and he called them all in at the end of the deal and in the first guy said oh you know I invested your 10 Mina and I got 10 Mina Moran he was like oh well done good and faithful servant give you 10 cities to be in charge of it was wonderful. Same thing. The second guy he got five minutes back for his you know 10 Mina's and it was you know he's come a given charge of five cities. Then there was the poor guy that honestly I find myself in many times it just said well you know I knew that you are a hard man and that you replayed and so so I'd I took the safe route and I didn't invest the money.

I hid it in a handkerchief and you know here's your money back and course.

He was met with a horrible rebuke and and and you can't help but wonder why was Jesus. Why was his master. So angry with the servant well because he worked out of fear and and there was no faith that that he had what it took to invest the money or no faith that the masterwork would hold them up. You know, no matter what happened, but in other words, worked with and so as we get into this show today and we are all entrusted with Mandy talents Van Minas right and so how will we invest in those for his kingdom. In other words, you know how or we gonna be able to say with what you entrusted me this is this is this is how I trusted you back by investing it wisely by using it for the kingdom know what exactly does that look for and so you know I'm excited about AR prayer that God can answer it and be how you know Hans has a bit to share along these lines, because we a lot of people that are not a lot of money right now. Yeah okay so the synthesis so there isn't a lot of boring financial content for the show. In fact, there is not enough content. Really, if we just can explain what my gut is so let me just give you an example of what were offering right now and what people are buying a lot of is a five year annuity and one name. The insurance company because it just brings home and since a large well rated insurance company and so what what you're doing is if you put hundred thousand dollars into this thing and you agreed to leave it there for five years so very much like a five year CD you can earn 3.35% interest for every year. Those five years, or another word you can have close to 18% increase her accumulated and have to be hundred thousand to be 20,000 could be as little as 10,000 some of local as low as five. This particular company and stand and weave sold several of these in the amount of half million dollars.

When I say several more than two or three.

I don't have the exact number do that, but it's get some. We had a lot of people. The maximum that you can put in any one of these is $1 million but when we have somebody that wants to put in more than that will just move around a few companies, but hundred thousand dollars as a this is a typical amount 50,000 200,000 and were not suggesting for a second that people put all her money in this thing, no way, and were also not suggesting that 3.35% is something you can go up and climb the hill and stand up with the top and rejoice and throw party over a minute really doesn't sound like that much but when you really compare this to what the banks are offering on CDs. Now there is real big difference between an annuity or a Micah and a CD in that year to pay taxes on the low rate that you're earning on CD. You're not on an annuity interest rate until you draw it out sooner or later you have to pay the taxes on his gain, but you can postpone or long time. It's what we call tax-deferred so she did put 100,000 and there the end of the five years if you got close to hundred and 18,000 all that's can be in there and you will have not pay taxes on that 18,000 so if you cashed it all in. You know the tax right then if you rolled it over into another type of annuity you can do that for the rest your life. Let your kids pay the taxes for long-term healthcare in a home healthcare program that there's a lot of reasons that we talk on the show all the time.

Economics of why interest rates are so low and I simply wanted to just tell a few stories about clients, but you these stories are not.

I'm telling them because it not that unique.

I mean the balances that I see in checking accounts and I learned amount of money people have is in doing financial planning for a lot of my client or at least talk about it and do it you get in the facts early starting that where we have a Medicare supplement plan or long-term care insurance client and then works moving down that direction. People have 50,000 90,000 yell for stories for my clients is been with me for now seven years and the whole seven years she's had between 55 and $60,000 check okay and you I check in with her about every year and I I helped her take a fairly large inheritance that really affected her net worth and I really structured everything so that she could really change zero income tax just put stuff in annuities and tax deferral and we paid off the mortgage out of her on her house so that she she didn't have that payment anymore, but she didn't have to worry about the mortgage interest deduction is just what a complicated stuff but we did all this in the whole time she's just got this 55 to 60 grandson in the check just out to see her a while ago and she had withdrawn $20,000 out of an annuity discounted because she could. She wanted spend and do some nice things for kids, which is her right her prerogative, but what it did is shed pay taxes on this withdrawal or is the portion of it through all her financial plan a whack when she could've just taken his $20,000 out of her checking account and then she would've gone from 55 to 35 in the might still be in the annuities would add to paying taxes and 35 still too much for the slamming or cash flow very month-to-month. She bought a new car. She financed that I helped her do that. So it's just it is is a real universal problem that I want talk about and I'd really like to have an effect on some people that I think of stewards of your money you know if you got some options that can get you 2 to 3% 3.35% and you've got large balances sitting there at less than one and it's not money that you need to get tomorrow we have a conversation about how your listing to finishing well, a certified financial planner Hans Schild today show or talk about investment prayer and is a prayer for all of us that we would be good stewards and see the best possible use of the money that he's entrusted us for the kingdom and courses is all available in constant book the complete cardinal guide to planning for living retirement which is and go to cardinal to hear from email him when we come back more stories and more wasted. We can be praying stewards of our financial Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group.

Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to cardinal and contact to schedule a live recording of finishing well your church Christian or civic group. Contact time to cardinal that's cardinal welcome back to finishing well, a certified financial planner Hans Schild today show is in really at a financial prayer that we would all be good stewards and work. Comparing this to mean as to my guess is which and I just found out from Hans again that that means multiyear guaranteed annuity, my God, as opposed to that mean that which we dug about the beginnings of which I've is money invested in a noteworthy atom it anyway, so I know you guys low as we are talking about these you know the great news is you got this 3.3535% in and out compared to the story. I was tone for the break of the lady that's maintained between 55 and $60,000 whole seven years of working with her and whenever I start talking about that money in my house. Let me rest my life and you know will okay looks like it's doing pretty good and you made it through the last seven years and there hasn't been a dent in it and you also, even learning, earning 1/10 of 1%, so 1% of that would be 500 bucks right 560 bucks 1/10 that you hundred and 56 bucks a year on your 5580 and you get total liquidity.

You can go get that anytime and I watched her look up her balance on your smart phone.

This is related claims that begin with technology success.

So I understand that respect that there is a certain satisfaction as I know about that money is there and go get it is my security. What I would propose to her, and I'm going to propose to her when I get over there and do it that little take half of 30,000 and put this in one of these markets. Okay and if we took 30,000 and put it in this 3.35% interest. Micah then you would only have 25 to 30,000 available that you could go put your hands on quickly, which is still up substantial amount of money and then you would have 30,000 earning you a substantially more interest about a thousand bucks a year and to boot. You don't have to pay taxes on the thousand right now so over five years. That's going to give you a $5000 increase on the 30 hearing to you have 35 and that if the five-year thing got Teresa contract for two years just to see how that feels and roll that over into the five your dealership so that when our yet it kind of scares me to offer that to her because she would definitely update you if you got when you hear about a six month deal and she doesn't need that much money is with my advice to her is and my guess is, is that many of you fall in the same equation. I just have tons of seniors in the amount varies a little bit. I have another client or clients about nine years. She has between 100 and hundred and $50,000 in your checking or somewhere between a checking account or money market widget. That much different. That's been the same. The whole time unknown are in fact if that ever dips down to the low end of that range. She's on me. You want to know how she can draw some money out of her other investments of the stuff in managing for sleaze very well to do this is a privilege, but is just you look at the opportunity cost of that money sitting in the bank.

It's just struggling now.

She also is a candidate for these, because she has within her investments that were doing for her. She is a very conservative allocation and she's coming in. Give me a hard time about those because she's earning in a 1 to 2% and then they can actually lose money bond allocations and that's over on our investment side, but we have several people on the investment side that if liquidated stocks moved into cash and so they have large amounts of cash or large amounts of low yielding bonds of the conservative part of their investment portfolio has gotten smaller.

She's made Scott larger the conservative portion adjacent non-cash and that's where these large migrants are coming from his people that were either taken on his new clients in the Medicare long-term care area were starting to handle their finances and their to open up with. But there cash or some other cash in one of these migrants maybe spreading amount laddering and like I'm in a two-year three year for year and a five year so that you get a little money coming due every year a lot of money coming to are some ways you can deal with a link to these things, you know it's it's it's something that I really want to make the whole world out there aware of is just another alternative.

It's not something were pushing on every valuator say put all your money here at BASIC this this is where you move idle cash in hard times, or a change in a minute was at one point in time, you sure this is where you would put your savings are this would let you where you have SED you put it in a CD that that's rising say is this. That's where this money is and a lot of these folks that have these large balances have them because CDs are so unattractive, so years past, as they develop this as they accumulate money every so often they'd go down put that $30,000 into a CD just so they get a little better interest rate, but the rates are so low they're just saying what's the use. They live in the checking account. Even within IRAs in this this this. These annuities will take IRA money.

So if you have a bunch of cash in your IRA or you have a bunch of just low yielding safe investments that are very low and you don't really have any guarantees with them that they could they could go down as well. This can't go down. This is just all laid out like a CD you you you give us a call. Did you know will will will talk about some essentially I wasn't one of his people have IRA money but that is very low yield as well. Okay you can have cash in IRA that there's a lot of people that cash out of the market at different times of people that have high amounts of cash in their 401(k) because the market scared him at some point I got stories in my book about that we run into that all the time people coming into us to get IRAs and they got other investments and with in the scheme of things they got way too much cash and now they haven't been getting very much on their cash for a long time but now it's even less than not very much. Because of the current time.

Interest rates are so low that almost 0.

In these insurance companies are willing to tie up your money for the specified period of time to give you a good rate doesn't really cost much to issue the policy you not to have to pay any commissions to the insurance company pays us a fee to to essentially promote this in explain it to you.

That doesn't come out of the 3.35%. We need to talk about some of the downsides days before do that when one last question. So if I had done that I I have a 401(k) and market scared me and I drew out 300,000 and it's sitting there. I am pay tax on and and so that is something that's available to to roll into this.

This type of of my gut, but it needs to be Ira and Micah that we can handle that for you so what happens if I want to get my money in the interiors you asked me this question and it's really funny if I want to be a smart Alec. You know the lady in the story. She hasn't she hasn't touched the money in seven years so mean but yet what happens if you want to get the money you have a penalty just like you and the CD now if that concerns you. First of all, don't buy the five year by a two-year three year. If you think there's a high probability. But if you just lightly concerns you like, you might want to get in to your money then don't put all your money's just put like I gave an example. Put half your cash or put 40%. If it wasn't a way that you could actually buy some margin on that to where you get 10% out per year is and take a little bit lower rate if if you knew you were up against something like that.

There are several riders that you combine these policies and the way you buy them is by accepting a lower base lower interest rate.

So what is 3.35 if you bought a 10% surrender rider on here is to get 3.35. You get 3.25 by taking .1 last for five years, you could take 10% of your money every year felt okay I want to call things that you mentioned that this and it's a downside. Or maybe it's upside is that since you know this money of the income that 3.35 is taxable.

You can set it up so that they send you the interest every month and attract you and it'll make it taxable. If you leave it in there. It's not taxable until you drawn out, but if you wanted to just get a check for the interest every month you have take a little bit less interest on average give up about 10 basis points are .1 3.35 or go down to 3.25 and for that you can get a check for the interest every month for the full five years so that would that that's an option. Another situation is a death warrant on these things, which is to simply stating that with with with most annuities. If you die your beneficiaries can get all of the money if you die before the term of the annuity ends your beneficiaries are the neck and incurring penalties. With these. My guess if you lock your money up for five years and you get the 3.35% and you die in the third year the your kids if they want to get that money are going to either have to wait out the five years and then cash it in or pay a penalty so you can buy for 10 basis points something on this. This is if I die during the five years then my kids look at the whole amount there be no penalty. So there's a there's a whole bunch of features that come at a cost that are available to make this thing very liquid.

Many of those things on longer-term annuities come for free just part of the deal payoff in full at death and you can make 10% withdrawals every year.

So a lot of the features that come for free on longer-term annuity you have to pay for, and Micah and some people do some people don't want to explain the cost of all those things and we get the appropriate money clips and finalizing the for five years and if I died or in the meantime, the kids can just wait really can pay the penalty and surcharge, and again, as is your listing to this adventure like mandolin. I don't think I want to try this at home. My cousin Ira is in the me so the good news is it's all available) Cardinal right. He is survived, financial planners, their fiduciaries are working your best interest of an Abbott anything as well. There's a lot to that that by listening today show.

He knows and answered our prayer. The gods given us all more information as to what we can do with with S. It's is it becomes available to us in an different options and at least getting advice to what we might could do with it and see know what the downsides are somebody had a really is looking out to make sure that if you need liquid money.

You know that's available when you need it. It's again Cardinal don't forget to guide after Cardinal and you know his current Hans's book the complete Cardinal guide to planning for living retirements all there but again the to me.

One of the most precious resources just simply Hans's email address and he would love to hear from you. If you have questions or some way that he could help you along these lines, because now that's answer to his prayer that that that the whole reason he doesn't show invest in what he does is he really wants to see people finish. Well, yeah, was to make good decisions so that the Philistine today.

Look for the next week. We hope you enjoyed finishing well brought you by Cardinal visit Cardinal for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as constant 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 you get Hans book go to Cardinal if you have a question, comment or suggestion for future shows.

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