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Mult-Year Guaranteed Annuity

Finishing Well / Hans Scheil
The Truth Network Radio
April 16, 2022 8:30 am

Mult-Year Guaranteed Annuity

Finishing Well / Hans Scheil

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April 16, 2022 8:30 am

Hans and Robby are back again this week with a brand new episode! This week's show is all about MYGA, or multi-year guaranteed annuity. Is this the right course of action for you and your loved ones? This show has the information you seek to make that determination.

Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!

You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at  Find us on YouTube: Cardinal Advisors.

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Causes reward your mental grid your podcast. Our mission is to break down the walls of recent nomination, your chosen truth radio broadcast will be starting in just a few seconds. Thank you. This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner belonged to Shiloh 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 with finishing well, finishing well is a general discussion and education of the issues facing retirees partner advisors on trial CFP some insurance this show does not offer investment products or investment advice are welcome to finishing well is certified financial planner Hans Shiloh today shows that we work on a word, you may not have heard before. I certainly never heard prior to meeting John.

But it's one that I've come to really appreciate and so were to work on appreciating this word, which is my gut which is spelled MY GA and so that's a multiyear guaranteed annuity but you know in the history of Robbie in the Christian car I've always liked acronyms were going to call this a multiyear guaranteed arc right here is the idea that that since Adam and Eve took on the curse for us when they ate the apple. They realize that they were naked. And since that time we've needed to be covered in some way that really is the purpose of the ark and Jesus's blood to some extent, but I want to think about when you're feeling ashamed is when you tend to cover sometimes with the wrong thing and so Satan definitely uses this against you in this you might rewrite this tag is to me this is a real nugget Satan and Satan knows your name because you by your sin.

God knows your sin, but he calls you by your name and and in that you can see when Satan starts to call you by your sin, you immediately reach for something to cover you know which is certainly the idea of shame, but what God would have you do is say wait a minute I got you covered. II died. You know my blood is here for that very purpose. And so I like the idea of a multiyear, and this goes on a noninfected eternal guaranteed, absolutely guaranteed arc and maybe fear that you can get the idea of the multiyear guaranteed annuity so I'll let you take it from there. John yes no multi-year part year is a term so it it in whole units of a year in the multiyear talks about two years, three year four year five year six year. We don't sell that many 789 10 year Mike is, but you can buy these in terms all the way from 2 to 10 and we will determine that we sell the most of his five year term. So your time and your money up for five years and so bad. Some people don't like that.

Some people love it because once we tone the interest rate because interest rates on these of gotten be about 3.33.4 percent just of the last few weeks on a five year Mike and so what is that you put $100,000 into this thing. You agree to leave it there for five years and then at the end of the five years you're going to get when you get credited every month but you're going to get credited at 3.4%. Now what's nice about this is you don't pay taxes currently on the interest you getting towards with call tax-deferred. So that's an even sweeter thing when you have a CD at the bank, even though the money is tied up for five years.

If you get credited interest every month you pay taxes on that interest, even though he didn't really get it because it's stuck in the CD with these things stuck in there but you're not paying taxes. Dante drawn out and then at the end of the five-year term you can just roll over into another one and you can postpone these taxes all the way to the die so it has a lot of advantages so you multiyear the M and the wind just talk about.

You can choose your term all the way from 2 to 10 years guaranteed part means that the insurance company states the guaranteed interest rate for the whole. The term, so if you buy a five year Mike with a 3.4% interest that guaranteed for the whole time it's not something that can change and then the last letter is annuity or Robbie characterized it as an arc, and so the annuity part throws some people because they think all all of a sudden always complications of annuity. This is the simplest annuity that we sell. It's just no more complicated if you put $100,000 in their elected there for five years and five years you know she got 3.4% for compounded and cumulative for five years, you have $27,000 added to your hundred thousand dollars at the end of the deal hi which is and you will not pay any taxes on that $27,000 of accumulated interest and there's no fees. Nothing.

It's just it it's it's literally just accept and it's as though it's a big issue right now because right so many people are holding so much cash and this a great solution for that right.

Well it is one of the reasons people hold cash is they want available to cash at the most liquid thing that there is a bike cash. I don't necessarily mean paper money in there under the mattress on talking about money in your checking account and demand deposit or a money market account. So one of the reasons they leave it there as they can go get, but the problem is that what would be appropriate to have 20,000 or 30,000 or 40,000 money to go lay your hands on this people that we run into all the time that have 100,000 hundred and 60,000 $200,000 of cash that there holding in various accounts in the reason for that is interest rates have been so low for so long that the banks on time deposits or even CDs or paying much less than 1% and so people think development again is 3/10 of a percent or 2/10 of a percent or less.

Why tied up in the first place, but it just that there market is been volatile is crazy.

Some people are doing math well and you know when you talk in your example in your lesson.

Talk about shame me. People are ashamed of this but wake you when they come in to see their shallowness polish Dr. Jonathan money but they have and what it done with the part of the part of the incoming process and then their eyes don't saying about this, but I got this amount. People are not real pleased with themselves that they have these large amounts just sitting there that they feel like it needs to be something done and this is clearly an option so that is one group that were talking to people is that non-cash second crew that were talking to our people that are invested have a brokerage account and 401(k) and IRA. They have money outside of an IRA unit invested in because there developed some years is not all in stocks. A lot of it in fixed income and then fixed income itself is not been yielded very very much as well as that people are really bummed about it here in a 60% stock 40% fixed income asset allocation there in like 2% or maybe even losing money or 1% on their bond allocation or their fixed income allocation is another group that were talking to and were not suggesting taking all that money but many of our clients that are invested with were taking a portion of their fixed income money, which is not making much on and putting it into my weather getting more interest and they still have access to the money and that's basically had to get better yields on the southeast better yields obviously been a CD or something and is guaranteed right so you don't have to worry about it like an animal volatile stock market and and the interest rate is really pretty good right now and get better yet would come up with it. It rock-bottom five year Mike is two years ago we were paying people for percent. We were seldom a lot of people were locking in 4% for five years and then they dropped and it like 3.83.6. We still hold a lot of and then we were trying to catch people at the last minute into the 4%. Then, when the coronavirus thing here and all that liquidity was thrown into the system and just these companies lower their rates on the five-year migrant were the best am working on my 3% or 3.1 and now that's great event for a couple years and we still sold quite a few because that's looking pretty good compared to no .2 .3 to the cash people. The people that are set non-cash and so with capital.

The last couple weeks as he sings of come up to about 3.33.4 percent on the five-year deal and work were just seeing up Russian.

These things were. People are starting to come through me tell you little story. I'm going after the break, tell a story about that one particular client and worker needs were, and it may be a little bit like some of you. You may find some similarities down. It's a wonderful story. So as a good place to pause and ceiling of the show is brought to you by Cardinal don't forget the guide after and it's also it's also available on their YouTube channel which is Cardinal and so there you can find a Cardinal The website as well as Hans's complete book. That name is the complete Cardinal guide to planning for and living in retirement. Some of the organic Cardinal so when we come back will share more of this whole idea of the market, multiyear guaranteed annuity as the case may be right back. Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic room. There's a chance for you to advance the kingdom through financial resources by 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 Tom to schedule a live recording of finishing well at your church, Sunday school, Western Pacific contact on the Cardinal guide.that's Cardinal welcome back to our certified financial planner Hans Schild called him John a little bit earlier because he actually goes by John XXV, but his book is written by Hans and so we know them is that as well as often, you might hear me make the mistake is when were talking between friends of the job. I don't think I've ever told Mather on the air. Have I Hans but anyway Hans's room is isn't kinda name you don't forget and so that was how he authored his book which that was the name you were born with right Hans exactly right name. My mom and daddy gave me failure to call me Johnny. So there was my dad statement my dad was a German immigrant and so back in 1949. You could have a real name and then you could go by something else and that worked great until they invented the computer and the Internet now you know your CFP you have an insurance license, your name is Hans you got a hot the public, go back John above, you probably yeah all right. Well getting back Hans Juergen sure story about an example of where this Micah thing and in the latter strategy which we get into absolutely awesome yeah we talked about the client before she been a long time client of mine and she came into five or six years ago, about $400,000 through the sale of some land that was owned jointly by her deceased husband with some of his brothers and sisters and parents and I Say she gets $400,000 and I helped her literally to pay zero income tax on the sale of substantially appreciated land. She is very grateful. Then we we really convince the relatives to buyer out because we need to put together a long-term care plan. We get the money when the first things we did is we paid off her mortgage and then we spent about 60 grand sheet in about 40 grand of the money she just us of things to bring her some joy in the present application. The family and then at leftist with about $200,000. So we ended up using the annuities to as deferred annuities that do have some enhanced long-term care benefits, and there's no health questions sale. That's the past she had a bunch of annuities. Everything is going along just fine until she lands in an assisted living because she couldn't be taken care of at home and so now she's an assisted living and it's time to take all these annuities turn on the income pretty much balanced budget in the sense where we could pay for the assisted living care.

Other expenses out of her Social Security check in the income that she was getting out of these annuities, but it just left her with no access to the principal and she and her daughter were planned Monday morning quarterback and the guy look at what you put us all these annuities we can get the principal on it out and in saying that we can't work their way through that and what we're looking for the future. Like of her expenses go way up.

She's got a problem because she still owns her house. Once she knew that she could be in this assisted living or something like it permanently. We decided I just already got a cell house and that took us a long time and then when we got the house for sale. She got over $700,000 for this house and land and so in some ways, all dollar financial problem that now she's got all her bills.

With the income from these annuities and then she's catching as you get all that money she had to pay some commissions and expenses, but nobody get all said and done about 650,000 others which he netted and so she's in to see me in figuring out what would you do about them or they were they were not interested in hearing about annuities and more in her 20s, and so where we can and that was where you keep hundred 50,000 in the bank. Plus my she's got the bank so we got plenty of liquidity to be be be able to pay the bills run into some problems, and then she want to invest the other 500,000.

Mrs. Wright will the market is starting to go sideways back in January and February were were talking about it but didn't seem to waiver.

She's just she's ready put 500 grand and so we do all the proposals and then when she finally came in here after she closed the house and she's got the money to do this. She all of a sudden has little cold feet and going into the market. She says how about if we just do 250,000 in the market and then when we get to do with the other 250 another, posing the question we ended up on these market and so what we set up for her is a Mido which is a multiyear guaranteed annuity and we set up five separate micas one for two years when for three years, one for four years, one for five years and you guessed it six years so every so the end of two years. She's going to have $50,000 coming due. That's completely available to her. Plus the interest so she needs to cash she can just take out that $50,000, which is not currently to cash which is Goodyear the end of the two years is just by another five year Micah and roll the interest she had paid taxes on yet to the seventh year. She doesn't need images, roles on paying her a very good rate of interest compared to other guaranteed things goes on forever until she passes away that particular time, with interest rates on the horizon look like they would be short-term and of the two-year deal isn't all that unattractive because no one two years interest rates hopefully will be substantially higher in you when you roll it over your role in it into something even bigger yeah and you can roll the two-year into a new five-year which is effectively that said year you go back to the beginning that just keeps going on. Yeah me give you some leverage on that and I haven't talked to you about liquidity rights on these annuities so she was very interested in this because there is a 10% penalty free withdrawal each year on all five of these annuities so she had a total of $250,000 and all five $50,000 each and during the contract year at any time. She can take up to 10% of the value so she can get her hands on $25,000 is like immediately anytime she wants to and then after March rolls around, she can get another 25,000 because now you're into a new year so that liquidity is something is very unique to micas.

That's not on CDs is that you can pull out 10%. You can do it selectively on whatever ones you want now some companies you have to buy that or another, which take a little less interest for that. Some of them just give it so that would be something you'd learn about when you're shopping for these things with us is also that's called a writer from understand like regulator as a writer immediately to optional riders on these things.

One is the liquidity writer of the 10% withdrawal penalty free withdrawal writer. The other one is the beneficiary payout if she's to die during the term of any of these annuities or beneficiaries would have the option of either leaving the money there till the end of the term, and then collecting that the interest or just taken a settlement of what is worth now.

So if she dies during the term beneficiaries will receive a full whole payout if they want that in both of those are riders or things that are added on time and stuffed it again when it's really good to have a CFP somebody that understands certified financial planner who understands all the different options because you even describe some I hadn't heard earlier, when your talk about when you reach when she originally came to you that there was something about long-term care that was also involved in one of her original ability and our awful ideas were under just regular annuities you can purchase a long-term-care enhancement. You don't have to answer any other questions.

So we do these for a lot of people who are in poor health what she was vacated traditional long-term care insurance or hybrid long-term-care insurance but they can buy these and what they do is they offer enhanced income or doubled income is really what it is: enhances double when you're either in an assisted living. Are you getting care at home that meets the requirement. And so we just turned on those double amounts and what would they were both a little bit upset about is, they wanted their cake and eat it too. They wanted access to the money and the doubled income and you can have both of you pull the money out you don't get the doubled income to get the doubled income. You can have the money it wanted yeah I can understand that, and so the micas don't have that feature on there because they're not set up to pay income there set up to be a term deposit for a time to pause here is a period of time. The interest rate. Interest is credited much higher rate than your find out on the market and then the interest accumulates if you know pull out you don't pay taxes on until you actually pull it out of there use it for some so you have all the benefits of an annuity but so with the second group money she just wants her money and she wants possible access to it. But she also wants a high yield and those two things don't go together as we want to get her a high return will then we can invest all that the stock market wish he needed the money.

When stocks are down so this whole thing look really good to her and just the fact of having access to 50 grand. Optionally every year over a period of five years look really good to her, combined with a little bit of liquidity access on some of the longer-term ones. I think there's a good chance that when I go back and deliver these policies to her she may lose the stock market, ideas, and she may take the other 250,000 that she invested with by the way, is a 250,000 anymore. It's like 243 so she's been successful in losing like seven grand over the last two months because it's been a worse time to be in the market magister timing and force limiting trawler money in there, but I can see her now just doubling up and taken that second lot of money and put near the same thing so is usually run on a show before we ran out of time before he ran the show, but as you can hear there is much to learn and so the shows brought you by Cardinal

We got Hans's website. The and you can find his book the complete Cardinal guide to planning for and living in retirement as well as his YouTube channel. Cardinal advisors so thanks Hans another great show. Thank you. Finishing well is a general discussion and education of the issues facing retirees Cardinal Cardinal advisors upon trial CFP some insurance this show does not offer investment products or investment advice. We hope you enjoyed finishing well brought you by Cardinal visit Cardinal for free downloads of the show or previous shows on topics such as Social Security, Medicare and IRAs long-term-care 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 what you get.

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