Selecting the Best Annuity & Retirement Income Advisor

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Tony Robbins Video on The National Debt and Federal Budget Deficit.

Annuity Guys® Video Transcript:

Dick: Today, we want to talk about a lot of the things, Eric, that we hear from all over the nation; folks are concerned about Social Security. Will Social Security be here? They’re concerned about this economy and what if it continues and isn’t a strong economy? How would an annuity fit into that scenario?

Eric: I guess, let’s start with what led us to this topic.

Dick: Okay.

Eric: We were watching . . . we got an email sent to us, had a Tony Robbins video, the motivational speaker Tony Robins, and he took a little time to reflect on the state of the economy, and really, the state of the national debt.

Dick: He really takes quite a bit of time; almost 20 minutes.

Eric: Long by our video standards even. He did a very interesting analogy of . . . when you think about the national debt, you think in terms of trillions, and really, what really what a trillion is.

Dick: How do we fathom $1 trillion?

Eric: How do you wrap your head around it? He starts out by saying, “If you think about a million seconds . . .” we’ll use time in here. If we were to say, “What happened a million seconds ago?” How long ago was that?

Dick: Since I already know the answer; about 12 days.

Eric: 12 days. All right. Then he takes the next step, 1 billion seconds. If you want to go back 1 billion seconds . . .

Dick: You’d think if it was 12 days for 1 million.

Eric: A couple of days, a couple extra months.

Dick: Maybe extra few years or something?

Eric: 32 years. There’s your . . . all right. 1 billion seconds is 32 years.

Dick: That’s huge.

Eric: Jimmy Carter was the president. We were waiting in line for gas then, too. You have this national debt that’s in the trillions of dollars; now trillions of seconds. This gets . . . 1 trillion seconds. How long ago was a trillion seconds?

Dick: If a billion is 32 years, then we maybe think it would be, maybe if we were stretched out, 320 years?

Eric: Keep going.

Dick: 3,200 years?

Eric: How about almost 32,000 years ago. See, when you start to put that in proportion . . .

Dick: That’s just 1 trillion.

Eric: That’s just 1 trillion. We’re in multiple trillion.

Dick: We’re in debt how much?

Eric: Is it $3 trillion?

Dick: $15 trillion. Our national debt . . .

Eric: As you say, just one year.

Dick: Our budget is, I think, $3.9 or something, and then about $1.2 million of that is borrowed money.

Eric: Right. That kind of put the whole what started this topic for us in perspective. There you have it, 32,000 years of seconds.

Dick: Let me just say, folks, we’ll make the video available. We’ll give you a link out to our website with the video on it, and I do think it’s worth your time to watch this, it really puts things in perspective. We wanted to put some things in . . . I can’t quite say perspective.

Eric: I’ll critique it: The first couple of minutes are very good. After that it kind of gets . . .

Dick: It’s a little long-winded, but it’s a good exercise to understand just what we’re really up against. Then from there, Eric and I want to put a little perspective on annuities and investments that people are considering in this day and age.

Eric: Right. When you take into consideration what’s going on with our economy, what’s going on with the world; how many times have we had to sit here and go, ‘What’s Greece doing today?” Are they going to pay their debts? Are they not going to pay their debts?

Dick: How’s that going to affect our market?

Eric: Then all of a sudden the trickle-down is, how many of our banks own bonds in Greece or in Euros? If the European Union falls apart . . . all these things, all this uncertainty into today’s global economy, because we’re no longer . . .

Dick: We look at Greece, how Greece is affecting all of this, and Greece is one of the smallest economies on the earth. Not the smallest, but it’s a very small economy in relation to industrialized nations.

Eric: I don’t want to say this wrong, but I believe someone once told me that if you took all the cash Apple had on hand, they could actually pay off Greece’s debt.

Dick: There you go.

Eric: It gives you a proportion of what Apple is in relation to Greece. Yet, all this turmoil globally is caused by a nation the size of Greece.

Dick: I think that the big question here is with all of the headwinds that we are going to be facing with our country and its debt . . . because we said $15 trillion of deficit, and the other estimates for the unfunded liability such as Social Security and Medicare go as high as $120 trillion; somewhere between $90 and $120 trillion that we owe. We have to decide carrying this kind of debt forward, not just in the United States, but all of the European nations, a majority of the European nations have similar problems. It takes time to deleverage; it takes a long period of time. It’s a sacrifice, its difficulty. If we look at how this might affect the economy over the next 10 or 20 years, how will an annuity work in a person’s portfolio? How much of their portfolio should be in annuities?

Eric: Obviously, we’d always say you have to divide and conquer here. Nothing should ever be all in one spot.

Dick: Correct.

Eric: You have multiple spots for your allocation.

Dick: A good portfolio is well-balanced.

Eric: That’s exactly right. It’s looking at things that are market related and things that are not market related. If you cannot stomach the ups and downs, find your investments elsewhere; that’s the secret. It doesn’t have to be in annuities necessarily; CD’s, money markets, life settlements, whatever that other bucket may be.

Dick: Something that’s a little less correlated with the markets. I do find that when we’re putting together portfolios and balancing portfolios, that the annuity becomes more of the foundational portion. It’s usually more slanted towards the income, future income need, or the potential income need; sometimes, it’s an immediate income need. That is where the annuity seems to be well-suited. Sometimes safety in growth of assets, but less in that area.

Eric: One of the reasons we particularly like an annuity in this kind of market, we believe we’re going to have a boom and bust.

Dick: A lot of volatility.

Eric: Ups and downs. It’s the stair-step approach. If that annuity locks in your gains . . . and here, we’re talking about fixed indexed annuities, we’re not talking about variables. If you lock in a gain, and then the market goes up, you relock in the game at your anniversary date or whatever that period is.

Dick: Typically annually, sometimes further out.

Eric: Bi-annually. Then all of sudden if the market goes down, you’re still on that step.

Dick: You still held where you were that prior year.

Eric: Right. Then we move straight across on that level step. If the market comes up, even though it’s down here, you’re going to step up with market.

Dick: Correct. It’s possible in a flat market, or even a down market, to have increases in an indexed annuity or what’s called nowadays a lot a hybrid annuity. It is a way to have safety, have some growth, and be able to function in a market that really could take a drastic turn for the worse, unexpectedly. I think I’d like to just say, folks, from Eric and I’s point of view, we’re not doom-and-gloom or pessimistic on the economy that we’re going to go into anarchy or everything’s going to fall apart. We do take the outlook just to make it pretty straightforward that we see things being somewhat flat over the next decade or two, maybe up a little, maybe down a little; but somewhere in that area.

Dick: My personal perspective right now is until the economy recovers, people start getting more jobs; rising tide lifts all the boats. In this case, there’s nothing out there. I see the market gaining without a reason for it to be gaining, and it’s the ‘irrational exuberance’, is what I kind of term it. Everybody wants the market to go up, so we’re all kind of wishing and hoping.

Dick: The emotional tide. It’s time for the recovery. There’s been a lot of money pumped into the economy and into the markets, based on quantitative easing and that type of thing.

Eric: Exactly. We’ve pushed it that way, but I don’t see a reason for it to keep going. Unfortunately, that’s my biggest fear right now. I’ve got a lot of people in the market, and my biggest fear is there’s no hope for where we’re going to go future, in the next couple of months, the next couple of years; I don’t see that continuing. Obviously, the election is going to have some kind of bearing as to which direction we go in the economy, but my biggest fear in the meantime: We’re doomed. We’re set for a fall. I don’t want my retirement people that are very close to retirement to experience that. How do you protect their foundations?

Dick: That’s where we do use annuities in that area. I think what you just described is a very good picture of what we’re going to see over and over again, over the next decade or two. That is we’re going to see the market have a rebound, we’re going to see it up, then we’re going to see it drop. What’s the net effect, maybe over a period of 10 to 20 years? We don’t like to think it’s going to be that 50-year history of the market, or 60-year history of 8% average gains. We’ve seen one decade, from ‘99 to 2009, we call it ‘the lost decade’.

We’re just saying that we feel that if this happens, no one can really predict it, but if this happens that we have a pretty flat market, down market, or slightly up market, that a portion of your portfolio could be well served to be in annuity.

Eric: Secure the foundation. With whatever vehicle you do, make sure you’re protecting your retirement. Put it in some place that’s not subject to market risk. If you can’t afford to lose it, don’t put it someplace where it can be lost, and that’s the simplicity of the planning stage here. We’re not saying the stock markets your only other alternative besides annuities. There are lots of options out there. Do your homework, and make sure you’re picking the pieces that’ll basically serve you best for where you want to go.

Dick: I think an answer to our question that we’ve got up on the monitor today: Are annuities best in a struggling economy? I think for a portion of your portfolio in many situations, not all, but in many situations, a portion of your portfolio, it would be best to have in annuities.

Eric: The strange thing is annuities are going to perform better than typical equity-based options in a struggling economy.

Dick: Correct. We haven’t even talked about the contractual **guarantees of income riders. Maybe we’ll save that for another session.

Eric: There you go; a reason to come back next week.

Dick: Thank you.

Eric: Have a good day.

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