Guaranteed Income Archives | Annuity Guys® https://annuityguys.org/tag/guaranteed-income/ Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes. Thu, 04 Jul 2024 21:27:46 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.5 Turning Your 401k into Retirement Income https://annuityguys.org/how-do-you-turn-your-401k-in-to-retirement-income/ https://annuityguys.org/how-do-you-turn-your-401k-in-to-retirement-income/#respond Tue, 02 Jul 2024 06:00:14 +0000 http://annuityguys.org/?p=20572 “If you fail to plan, you are planning to fail!” While Benjamin Franklin was probably not referring to what he was going to do with his 401k when he retired, his words of wisdom ring true for our modern day retirees. Unfortunately, for most nearing retirement, establishing their income number is often the biggest stumbling […]

The post Turning Your 401k into Retirement Income appeared first on Annuity Guys®.

]]> “If you fail to plan, you are planning to fail!” While Benjamin Franklin was probably not referring to what he was going to do with his 401k when he retired, his words of wisdom ring true for our modern day retirees. Unfortunately, for most nearing retirement, establishing their income number is often the biggest stumbling block to getting started with their retirement plan.

When we query clients on “how much monthly income they think they will need in retirement”, it is not uncommon to hear a client say “I have no idea”, but in reality they do. Clients typically know what they are earning now and their current earnings can be scaled as a baseline to help determine their retirement income level amount.

Once a projected income amount has been estimated, it is time to match up sources of income to satisfy their goal. Typically, we start to solve the income need amount with projected amounts that should be received from Social Security and/or pensions. We view these amounts as being core components of most American’s  …. [continued below video]

Video: Annuity Guys, Dick and Eric, discuss turning your 401k & savings into retirement income.

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


 

…retirement income planning. Unfortunately, after doing the math many clients are left with a “lifestyle gap” in income. The “lifestyle gap” is the difference between what will be coming in from the core sources and their desired income goal. Most Americans don’t look to significantly change their lifestyle once they retire – while some will eventually downsize or move to warmer climates – most of our clients don’t expect to start eating spam instead of their normal diet to cut retirement costs!

So, how do we close the gap between our core income components and our retirement income goal? — with 401k’s, IRA’s and all the other savings stashed away for retirement. One of the biggest challenges most retiree’s face is the transition from savings to spending. Retiree’s typically are not used to spending out of their investments or savings accounts – not surprising as they have been savers, not over-spenders their entire lives. They are accustomed to receiving a regular paycheck and the thought of losing that check makes many near retirees uncomfortable.

Making up the income gap can be done in a variety of ways, but for numerous retirees, one of the primary financial products they consider to solve their income gap is annuities. They turn to annuities for many reasons; however, for many it is the simplest answer to securely eliminate their income gap. Many clients appreciate the ability for an annuity to provide a regular source of income somewhat similarly to paychecks they were used to receiving when they were in the workforce. For many others the purchase of an annuity provides an additional assurance by taking one of life’s great unknowns out of the equation – by removing the uncertainty of knowing just “how long will I live?” and “will I run out of savings?” For many clients, this is a source of stress annuities can remove from their lives.

Annuities can provide income that you cannot outlive — no other financial product can do that!

Turning a portion of your 401k or IRA savings into lifetime income has been linked to an increased likelihood of retirement success in several recent studies. However, we are not advocating for placing all of your 401k, IRA or retirement savings into annuities. All good retirement plans must prepare for contingencies and should have retirement dollars in areas other than annuities. Annuities do a great job of providing income, but can have limitations on liquidity.

Retirement planning relies on setting out the best course based upon a realistic set of expectations. Your plan will most likely have changes over time; hence, having flexibility within any plan is important.

Sound complicated? It is true that retirement can be complicated; however, retirement with a plan is better than hoping for the best without a plan.

Just remember what Ben said earlier… “If you fail to plan, you have made a plan to fail”.


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


Here is a related article from CNN/Money that you might enjoy.

How do I turn my 401(k) into reliable retirement income?

It’s not surprising that you’re uncertain about what to do. Most of us focus our time and attention on growing our nest egg during our career. By the time retirement draws near, many of us find that we’ve given little, if any, serious thought to the critical task of turning that nest egg into income we can count on to support us the rest of our lives.

As for 401(k) plans specifically, many fail to provide much in the way of meaningful guidance or practical help on this issue. Indeed, a recent Government Accountability Office (GAO) report found that only a third of 401(k)s have any kind of retirement-income withdrawal option and only about a quarter offer an annuity.

Which is why whether your savings are in a 401(k), IRA or a combination of retirement accounts, you’ll need to develop a viable retirement income plan before you retire..

The first step toward creating such a plan is to get a handle on how much income you’ll need once you make the transition from the work-a-day world to retirement. Relying on a rule of thumb that says you’ll require between 70% and 80% of your pre-retirement income may be okay for estimating how much you have to save during your working years. But in order to assess how much income you’ll really need when the paychecks stop — and whether the nest egg you’ve acquired is capable of generating that level of income — you want to get a more realistic fix on the expenses you’ll face after you retire.

You can do that by going to BlackRock’s Retirement Expense Worksheet. Once you have a decent idea of how much you’ll spend in retirement, you should think about how much spending you would like to have covered by Social Security and any other sources of guaranteed income. You can see what size Social Security benefit you’ll qualify for based on your earnings record by going to Social Security’s Retirement Estimator tool. Remember, your benefit increases roughly 7% to 8% for each year you delay claiming Social Security between age 62 and 70, so you may want to consider waiting to qualify for a bigger Social Security check later on. Financial Engines’ Social Security calculator can show you how much you might be able to boost the amount you collect by postponing a few years.

If the amount that you’ll receive from Social Security and any pensions covers all or most of your essential living expenses in retirement, then you probably don’t need any more guaranteed income. You can rely on withdrawals from your savings to cover any essential expenses your guaranteed income doesn’t cover, as well as discretionary expenses and any unexpected expenses that may pop up.

But if you find that your day-to-day living expenses exceed what you receive from Social Security and any pensions, you may want to consider filling the gap with additional guaranteed income. That is where an annuity might be able to play a role in your retirement income plan.

There are many different kinds of annuities that can convert savings to lifetime income. But if you’re looking for income that will start as soon as you retire, then consider an immediate annuity.

The premise behind this type of annuity is simple. You hand over a lump sum to an insurer and in return you immediately begin receiving monthly payments that will last as long as you do, regardless of how the financial markets perform. Today, for example, a 65-year-old man who invests $100,000 in an immediate annuity would receive about $545 a month for life; a 65-year-old woman would receive about $505.

You can see how much income you (or you and a spouse or partner) might receive for life at different ages for different amounts invested by going to this annuity payment calculator.

As attractive as the prospect of guaranteed lifetime payments may be, however, you also want to be aware of the drawbacks. Once you purchase an immediate annuity, you no longer have access to those funds. You can’t dip into that money for emergencies or unanticipated expenses, nor can you pass it along to heirs.

If your 401(k) plan is one of the relatively small percentage of plans that offer an immediate annuity, you may be able to buy the annuity within the plan. Before you do that, though, go to an annuity calculator to make sure your plan’s annuity offers a payment that’s comparable or better than what you can get elsewhere.

If your 401(k) doesn’t offer an immediate annuity — or it’s payment isn’t competitive — then you can buy one from an insurer outside the plan. In that case, you’ll want to buy the annuity within a rollover IRA and fund it via a direct or trustee-to-trustee transfer from your plan.

If you decide to invest some of your savings in an immediate annuity, you’ll still be counting on withdrawals from the rest of your savings to fund any expenses that aren’t covered by Social Security, any pensions and your annuity payments. And, of course, if you decide against an annuity, then you’ll be relying on withdrawals from savings to cover all of your expenses not covered by Social Security and any pensions. [Read More…]

 


 

Using OutCome Based Planning™ for Your Retirement

We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.

"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available.
"Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"

This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.

When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.

Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.



Fiduciary Retirement Review


Priority Mail - Free Shipping! Our Gift to You


After confirming your request for help and shipping address by phone, we will immediately send your FREE personally signed Library Edition of our popular Annuity Reference Book "The New Retirement" plus Fact-Filled, Full Video Access!


Selecting the Best Annuity & Retirement Income Advisor

Are you willing to work with one of our retirement and annuity advisors based on their experience and expertise as a first priority rather than being limited by a local or regional area? The good news is that technology has forever eliminated our geographical limitations and leveled the playing field for everyone! As a result of today's technological advances, all of us can now work confidently with experts in any field including personal finance. We are no longer confined by regional or local boundaries limiting our choices and ultimate success. A high quality advisor is now as close as a click or phone call away.

Video:"Choose a National or Local Advisor"?
"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."
When you think about it, your money is almost always in some other state with a custodian; whether invested in the market or with an annuity insurance company, the advisors competence is primarily needed when positioning your money initially. So working with a specialized expert in a financial discipline like investments or retirement planning is imperative. There are no undo buttons in retirement! Once the annuities get set up correctly, it is customary and more efficient for owners to benefit by having direct access to the issuer instead of having to go through the agent. And, of course any reputable advisor, local or national, is more than willing to assist their clients if needed after they are implemented.
Video:"Why These 3 Types of Annuity Advisors are Not Created Equal"
"There are no undo buttons in retirement so it is vitally important that you do it right the first time!"

We are fortunate to have a select few who we believe are truly the highest qualified advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best options available for your retirement planning.

Video: "How Much of Your Money Should You Consider Placing into Annuities"?
"It takes an experienced expert to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage."

"Anyone can sell you an annuity; however, it takes a truly qualified and experienced advisor to know how to structure them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an advisor structures multiple annuities in balancing your total portfolio that makes it possible to achieve your most important retirement objectives."

Video: "How to Choose a Great retirement Advisor"?

Why Searching for the Best Annuities on Your Own Can be so Frustrating...

Almost everyone nowadays turns to the internet for answers on everything - from buying new widgets to researching just about everything under the sun; and finding the best annuity is no exception! At first, it may seem that researching will be straightforward but the more time you spend researching them, the more frustrating it can be. Why is this? First of all, it does not take long to realize that gimmicks abound - such as warnings and alerts from salesmen who just want your attention so they can sell you one or the "too good to be true" claims of 8% to 14% **guaranteed interest and of course the claim that you can get the full market upside with no downside risk! If you have done any research you have heard all of these claims in advertising which are mostly half truths and not fully explained. So how can you find the best annuities on the internet? The truth is... you can't! And what is even more frustrating is all the conflicting points of view from so called experts. There are well over 6,000 different annuities - all designed for different reasons, so is it any wonder that the deck is stacked against the average researcher or do-it-yourselfer. Add to that the fact that they pay high enough commissions to attract a plethora of both good and bad agents. This does not make annuities good or bad; they are simply a financial tool that truly benefit those who use them correctly. How can you find the best annuities for your unique situation?
  • Use the internet cautiously;
  • Work with a vetted and experienced specialist;
  • Do not settle for that one dubious best plan. Compare multiple Outcome Based Plans to decide on the one that is truly best for you;
  • Be keenly aware of scare tactics and hyperbole - avoid those advisors and websites;
  • Avoid websites that are focused on rushing free reports, rates and quotes to get your contact information they are rushing you to speak with them, instead, take your time and choose someone you are more comfortable with that works on your time-table;
  • Know the Five Vital Factors (listed above) that an experienced specialist must answer before helping you select the best options for your situation;
  • Watch this telling video "Avoid Annuity Gimmicks, Amateurs and Charlatans"...


Video: "Avoiding Gimmicks, Scams & Charlatans"

  ** 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. Annuities are not FDIC insured and it is possible to lose money.
They are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)




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The post Turning Your 401k into Retirement Income appeared first on Annuity Guys®.

]]> https://annuityguys.org/how-do-you-turn-your-401k-in-to-retirement-income/feed/ 0 Exposing an Advisor’s Annuity Bias! https://annuityguys.org/is-your-advisor-biased-against-annuities/ https://annuityguys.org/is-your-advisor-biased-against-annuities/#respond Tue, 25 Jun 2024 06:00:27 +0000 http://annuityguys.org/?p=5404 Would you allow your general practitioner to perform heart bypass surgery on you in their office? Since, after-all, he or she is your trusted doctor who has helped you through many belly aches and sore throats, kept your blood pressure in check, and monitored your good health, you trust them! You might think this analogy a little over the […]

The post Exposing an Advisor’s Annuity Bias! appeared first on Annuity Guys®.

]]> Would you allow your general practitioner to perform heart bypass surgery on you in their office? Since, after-all, he or she is your trusted doctor who has helped you through many belly aches and sore throats, kept your blood pressure in check, and monitored your good health, you trust them!

You might think this analogy a little over the top but some investors do allow their “general financial practitioner” who helped them grow their retirement accounts to now perform “financial bypass surgery” on their life’s savings by creating their critically important retirement income plan. Advisors who specialize in asset growth often have a difficult time transitioning out of asset accumulation mode due to their lack of; income planning knowledge/training, guaranteed** income options, experience, and even potential conflict of interest quotas imposed on them by their broker/employer to sell investment products that are more risk oriented!

Video: Annuity Guys Dick & Eric discuss how your advisor’s bias can harm your retirement.

**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.


 
Retirement Savings = Delayed Spending

If your goal for accumulating dollars during your working years is to provide you with an income for the rest of your life in retirement, there should be a gradual change to a point where you significantly reduce risk and put in place a strategy for a secure lifetime income.

Since annuities do provide lifetime income **guarantees, annuities should at least be sincerely considered in the retirement income conversation. Unfortunately, many growth oriented advisors have not worked in this space and choose to ignore or denigrate annuities and the advisors who use them (annuities).

Some advisors are selfish. If you asked your growth oriented advisor for a referral to an advisor who specializes in retirement income, I would bet 90 percent would start babbling about how they can do this with the proper mix of stocks, bonds and alternative investments or their limited access to a few annuities they are allowed to offer you. Remember, it’s your money and you are relying on them for their expert advice; and if you’re not completely comfortable with their strategy for accomplishing your income goals, get a second opinion from a retirement income specialist.

Read an article that helped inspire this weeks blog:

Is your retirement tied to your adviser’s bias?

Like all kids, I couldn’t wait for school to end and summer to arrive. The thing that I looked forward to growing up in New Jersey in the ‘60s was going to day camp. This was an opportunity to meet new friends, swim, and play lots of different sports for two months each year.

One of the activities I enjoyed was tetherball. For those who may not be familiar with this sport, allow me to give you a brief overview. The equipment is simple, consisting of a volleyball hanging from a rope, or tether, that’s attached to a stationary metal pole. Two players stand on opposite sides of the pole, hitting the ball in opposing directions. The game ends when one player wraps the ball all the way around the pole so that it’s stopped by the rope.

Ever since I began specializing in retirement income planning, I’ve seen the tetherball visual surface from time to time. It was inspired recently while I was reading an article, “Advisor Retirement Product Picks Vary By Channel, Survey Says,” in Financial Advisor magazine. The article cited a study by Cogent Research that concluded that the specific retirement income products offered to clients are dependent upon their investment adviser’s particular “channel,” i.e., their bias.

The study found that broker-dealer advisers are far more likely to recommend products offered by insurance companies, such as variable annuities#. Registered investment advisers, or RIAs, on the other hand, lean toward investment products offered by a mutual fund^ company. Finally, the study found that independent and wire-house advisers tend to favor insurance company products.

The average investor isn’t aware of the fact that investment advisers play in different sandboxes, let alone understand the differences between them. Unless it’s explained, which it rarely is, clients aren’t aware of potential limitations of individual retirement-income planning strategies recommended to them by a particular adviser, or of the impact of those limitations on their ability to experience and maintain a successful retirement. Furthermore, the availability of alternative strategies that may be better suited to their needs may never be discussed. [Read More…]


Using OutCome Based Planning™ for Your Retirement

We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.

"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available.
"Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"

This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.

When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.

Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.



Fiduciary Retirement Review


Priority Mail - Free Shipping! Our Gift to You


After confirming your request for help and shipping address by phone, we will immediately send your FREE personally signed Library Edition of our popular Annuity Reference Book "The New Retirement" plus Fact-Filled, Full Video Access!


Selecting the Best Annuity & Retirement Income Advisor

Are you willing to work with one of our retirement and annuity advisors based on their experience and expertise as a first priority rather than being limited by a local or regional area? The good news is that technology has forever eliminated our geographical limitations and leveled the playing field for everyone! As a result of today's technological advances, all of us can now work confidently with experts in any field including personal finance. We are no longer confined by regional or local boundaries limiting our choices and ultimate success. A high quality advisor is now as close as a click or phone call away.

Video:"Choose a National or Local Advisor"?
"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."
When you think about it, your money is almost always in some other state with a custodian; whether invested in the market or with an annuity insurance company, the advisors competence is primarily needed when positioning your money initially. So working with a specialized expert in a financial discipline like investments or retirement planning is imperative. There are no undo buttons in retirement! Once the annuities get set up correctly, it is customary and more efficient for owners to benefit by having direct access to the issuer instead of having to go through the agent. And, of course any reputable advisor, local or national, is more than willing to assist their clients if needed after they are implemented.
Video:"Why These 3 Types of Annuity Advisors are Not Created Equal"
"There are no undo buttons in retirement so it is vitally important that you do it right the first time!"

We are fortunate to have a select few who we believe are truly the highest qualified advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best options available for your retirement planning.

Video: "How Much of Your Money Should You Consider Placing into Annuities"?
"It takes an experienced expert to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage."

"Anyone can sell you an annuity; however, it takes a truly qualified and experienced advisor to know how to structure them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an advisor structures multiple annuities in balancing your total portfolio that makes it possible to achieve your most important retirement objectives."

Video: "How to Choose a Great retirement Advisor"?

Why Searching for the Best Annuities on Your Own Can be so Frustrating...

Almost everyone nowadays turns to the internet for answers on everything - from buying new widgets to researching just about everything under the sun; and finding the best annuity is no exception! At first, it may seem that researching will be straightforward but the more time you spend researching them, the more frustrating it can be. Why is this? First of all, it does not take long to realize that gimmicks abound - such as warnings and alerts from salesmen who just want your attention so they can sell you one or the "too good to be true" claims of 8% to 14% **guaranteed interest and of course the claim that you can get the full market upside with no downside risk! If you have done any research you have heard all of these claims in advertising which are mostly half truths and not fully explained. So how can you find the best annuities on the internet? The truth is... you can't! And what is even more frustrating is all the conflicting points of view from so called experts. There are well over 6,000 different annuities - all designed for different reasons, so is it any wonder that the deck is stacked against the average researcher or do-it-yourselfer. Add to that the fact that they pay high enough commissions to attract a plethora of both good and bad agents. This does not make annuities good or bad; they are simply a financial tool that truly benefit those who use them correctly. How can you find the best annuities for your unique situation?
  • Use the internet cautiously;
  • Work with a vetted and experienced specialist;
  • Do not settle for that one dubious best plan. Compare multiple Outcome Based Plans to decide on the one that is truly best for you;
  • Be keenly aware of scare tactics and hyperbole - avoid those advisors and websites;
  • Avoid websites that are focused on rushing free reports, rates and quotes to get your contact information they are rushing you to speak with them, instead, take your time and choose someone you are more comfortable with that works on your time-table;
  • Know the Five Vital Factors (listed above) that an experienced specialist must answer before helping you select the best options for your situation;
  • Watch this telling video "Avoid Annuity Gimmicks, Amateurs and Charlatans"...


Video: "Avoiding Gimmicks, Scams & Charlatans"

  ** 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. Annuities are not FDIC insured and it is possible to lose money.
They are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)




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  3. It is recommended that site visitors should work with licensed professionals for individualized advice before making any important or final financial decisions on what is best for his or her situation.
  4. Website comments are not considered investor testimonials those shown only relate to an insurance agent referral service, customer service, or satisfaction with the purchase of insurance products and are never based on any investment or securities advice or investment or securities performance.
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  7. Income is guaranteed by annuitization or income riders that may have additional costs or fees.
  8. http://www.annuityguys.net & http://www.annuityguys.com forward to https://annuityguys.org. - Further all disclosures and information are to be considered as one and the same for any and all URL forwards, and these same disclosures and information also apply to all YouTube videos featuring Dick & Eric where ever they are viewed.
  9. MarketFree™ Annuity Definition: Any fixed annuity or portfolio of fixed annuities that protects principal / premium and growth by remaining market risk free.
  10. Market Free™ (annuities, retirements and portfolios) refer to the use of fixed insurance products with minimum guarantees that have no market risk to principal and are not investments in securities.
  11. Market Gains are a calculation used to determine interest earned as a result of an increasing market related index limited by various factors in the contract. These can vary with each annuity and issuing insurance company.
  12. Premium is the correct term for money placed into annuities principal is used as a universal term that describes the cash value of any asset.
  13. Interest Earned is the correct term to describe Market Free™ Annuity Growth; Market Gains, Returns, Growth and other generally used terms only refer to actual Interest Earned
  14. Market Free™ Annuities are fixed insurance products and only require an insurance license in order to sell these products; they are not securities investments and do not require a securities license.
  15. No Loss only pertains to market downturns and not if losses are incurred due to early withdrawal penalties or other fees for additional insurance benefits.
  16. Annuities typically have surrender periods where early or excessive withdrawals may result in a surrender cost.
  17. Market Free™ Annuities may or may not have a bonus. Some bonus products have fees or lower interest crediting and when surrendered early the bonus or part of the bonus may be forfeited as part of the surrender process which is determined by each contract.
  18. MarketFree™ Annuities are not FDIC Insured and are not guaranteed by any Government Agency.
  19. Annuities are not Federal Deposit Insurance Corporation (FDIC) insured and their guarantees are based on the claims paying ability of the issuing insurance company.
  20. State Insurance Guarantee Associations (SIGA) vary in coverage with each state and are not to be confused with FDIC which has the backing of the federal government.
  21. This website is not affiliated with or endorsed by the Social Security Administration.
  22. *"Best” refers only to the opinion of Dick, this site's author; or the opinion of Dick & Eric in videos and is not considered best for all individuals.
  23. *"APO” refers only to the Annual Pay-Out of annuities in the guaranteed lifetime income phase. *APO is NOT an annual yield or an annual rate of interest.
  24. AnnuityRateWatch.com, is only a linked to subscription service, which is not affiliated with this site, it supplies and updates all Annuity Rates, Features Ratings, Fees and Riders. AnnuityRateWatch.com's information is available in the public domain and accuracy is not verified or guaranteed since this type of information is always subject to change.
  25. Dick helps site visitors when help is requested. Dick may receive a referral fee as compensation from an advisor for a prospective client referral. This helps compensate Dick for time spent assisting site visitors and maintaining this educational website.
  26. Eric Judy is both insurance licensed and securities licensed. Eric offers securities as an investment adviser representative through Client One Securities, LLC.
  27. Eric purchases prospective client referrals from Annuity Guys Ltd. and may be compensated by commission for helping prospective clients purchase. Eric may also recommend these prospective clients to an advisor and earn a referral fee or a referral commission split.
  28. Vetted advisors refers to advisors that are insurance licensed and recommended based on referral experience from satisfied clients.
  29. Any recommendation of an advisor is only one aspect of any due diligence process. Each site visitor must accept full individual responsibility for choosing a licensed insurance agent/advisor.
  30. In the event that a recommended licensed advisor/agent is not considered satisfactory, Eric will make reasonable efforts to recommend other advisors one at a time in an attempt to satisfy a site visitors planning or purchasing needs.
  31. Dick is the website author and editor, Annuity Guys Ltd. is the website owner; Eric is a guest video commentator. Videos gathered from other public domain sources may also be used for educational and conceptual purposes.
  32. There is NO COST to site visitors when they are given an advisor referral or recommendation.
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  34. Accuracy of website information is strived for but is not guaranteed.
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  36. Use this website like the vast majority of websites at your own risk. No risk or liability of any type are accepted by any business entity or any of the information providers for this website.

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]]> https://annuityguys.org/is-your-advisor-biased-against-annuities/feed/ 0 Market Volatility is Back! Are MarketFree™ Annuities an Answer? https://annuityguys.org/market-volatility-is-back-are-marketfree-annuities-an-answer/ https://annuityguys.org/market-volatility-is-back-are-marketfree-annuities-an-answer/#respond Fri, 22 Jan 2016 07:00:07 +0000 http://annuityguys.org/?p=16456 Timing is everything. Unfortunately, 99 percent people who say they are only in the stock market when it is going up and then get out just before it goes down got lucky once, are delusional or lie! The level of recent volatility makes even the most staunch buy-and -hold investors take notice; and for those counting on their investments to fund […]

The post Market Volatility is Back! Are MarketFree™ Annuities an Answer? appeared first on Annuity Guys®.

]]> Timing is everything. Unfortunately, 99 percent people who say they are only in the stock market when it is going up and then get out just before it goes down got lucky once, are delusional or lie!

The level of recent volatility makes even the most staunch buy-and -hold investors take notice; and for those counting on their investments to fund an impending retirement, it can…[continued below video]

Video: Annuity Guys Dick and Eric talk about the roller coaster ride the market has experienced lately and how MarketFree® Annuities might help smooth out the ride.

**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.

…create extreme anxiety and sleepless nights. For near retirees who have enjoyed the recent bull market run and feel positive about their ability to fund a comfortable retirement. Now may be a great time to secure that retirement by protecting some of those gains.

In 2008 and 2009, we spoke with numerous pre-retirees who were distraught because their retirement plans were decimated when their IRAs and 401ks lost 20-50% over the course of just a few months. Discussions went from talking about traveling and spending time with family to serious deliberations about working longer and downsizing homes. Now, does volatility of this level imply that a correction or bear market is imminent? We are not so bold as to predict it; but would it be nice to not  have to worry about it at all?

Some of the best conversations we have ever had were with clients who had allocated a portion of their portfolios to annuities in 2007. These clients were able to protect their gains by using MarketFree® Annuities thereby eliminating the market risk. By allocating a portion of their assets into annuities, they were able to smile knowing that they did not lose any of those annuity dollars during the severe market down turn of The Great Recession. In contrast to those who were  directly in the stock market of 2008-2009 who lost their money our MarketFree® annuity clients were actually making money!

One of my favorite phone calls of all time was in 2010 from a client concerned because his annuity payment had increased and he wanted to make sure he could keep the money. What he had forgotten was that his annuity contract provided for an increase to his income when his annuity grew. He was ecstatic – not only did he survive the recession with all his assets intact, he actually benefited from the market downturn which allowed his indexed annuity to reset to the lower level in 2009 and produce gains without having to overcome the 30% losses of the stock market first.

Using a MarketFree® Annuity to protect principal and provide modest interest gains coupled with for life can be a solid strategy for both retirees and pre-retirees. This strategy removes the uncertainties of requiring market performance and replaces it with safety of principal, income predictability and some interest gains from upward market movements .

 


 

The post Market Volatility is Back! Are MarketFree™ Annuities an Answer? appeared first on Annuity Guys®.

]]> https://annuityguys.org/market-volatility-is-back-are-marketfree-annuities-an-answer/feed/ 0 Do Not Waste Time Considering Annuities, If You… https://annuityguys.org/do-not-waste-time-considering-annuities/ https://annuityguys.org/do-not-waste-time-considering-annuities/#respond Wed, 31 Oct 2012 20:33:47 +0000 http://annuityguys.org/?p=5060 Do not waste your time considering annuities if you cannot find one of the following Annuity Profiles that matches your situation. Annuity Profiles 1.    Security Oriented – Reached a stage in your life when market risk is not appealing. 2.    Value Freedom from Oversight – Want money to grow securely but do not want to […]

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]]> Do not waste your time considering annuities if you cannot find one of the following Annuity Profiles that matches your situation.

Annuity Profiles
1.    Security Oriented – Reached a stage in your life when market risk is not appealing.
2.    Value Freedom from Oversight – Want money to grow securely but do not want to be bothered with constant monitoring. Set it and forget it!
3.    Want a Pension Style Income – Can appreciate a reliable stream.
4.    Like Avoiding Probate for Heirs – Knowing that money can transfer efficiently and IRAs can be stretched over your children’s lifetime.
5.    Your Healthy and Plan to Live a Long Life – Longevity makes annuities work in your favor.

The above scenarios do not have to be an all or nothing strategy. Having specific amounts of money allocated to specific purposes allows for a blending approach when accomplishing retirement objectives.

The above attributes are not as well suited to variable annuities# where securities risk and higher fees are typical.

Dick and Eric discuss the above Annuity Profiles in more detail.

[embedit snippet=”video-specialist-button”]

 

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. 

Case Study Example from the Insurance Information Institute:

Is an Annuity Right for You?

Click a Star to rate us as you watch, we love your feedback!!! Click video once for play or to pause.

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Why should I consider purchasing an annuity?

Annuities can serve many useful purposes.

If you are in a saving-money stage of life, a deferred annuity can:
Help you meet your retirement income goals.
Help you diversify your investment portfolio.
Help you manage your investment portfolio.

If you are in a need-income stage of life, an immediate annuity can:
Help protect you against outliving your assets.
Help protect your assets from creditors.

Read more from the Insurance Information Institute.

Annuity Guys Video Transcript:

Dick: You know annuities really aren’t for everyone and Eric and I…

Eric: Shock! Oh my god.

Dick: Eric and I’d like to kind of tackle that today, and just be maybe a little bit blunt and explanatory, on those that an annuity works well for and those that don’t.

Eric: You’re just saying “Don’t waste time, either yours or ours if…”

Dick: Well, now we don’t mind to waste a little of our time, but it’s their time that they’re concerned about.

Eric: Okay, their time. So if you don’t fit the annuity profiles that we’re going to talk about, probably not best to invest too many more hours pondering, whether or not an annuity fits your situation.

Dick: Right, and many times folks, someone has recommended an annuity to you. Could be an adviser, it could be a friend and it’s really wise to look at your options, and consider what does make sense, what doesn’t make sense, whether it’s an annuity, or an ETF, a mutual fund^, whatever it is that you’re thinking about. However, there are some things about an annuity that make them good for some and not good for others.

Eric: Right, so we always talk about **guarantees safety, **guaranteed growth, , those are some of the things. So if you’re a mutual fund^s stock picker and you like that security as being in the market, you like that aggressive growth profile, an annuity’s probably not.

Dick: Right, an annuity wouldn’t be the right thing. I mean you’re less security-oriented. You’re more willing to take risk. Another thing would be that you would really look at this market, and you would say to yourself that over the next decade or two, that you think things are going to really rock and roll. They’re going to do well. If you’re the type of person that really believes that we’re in for a tough couple of, the next 20 years then you may find yourself thinking that an annuity is pretty appealing.

Eric: Yeah, or if you like to be actively involved.

Dick: Right.

Eric: You know if you’re one of these hands-on, you want to be the trader, you want to have your fingers in everything. I flash back to the Ronco commercials of yore, you know? The little toaster, where it used to say, you know, “You set it and forget it.” If you’re that mentality, then maybe an annuity is kind of an appeal, because it’s one of those things you want that **guarantee, that aspect of the annuity. You want that regular check coming.

Dick: So folks, if you like the idea of freedom from oversight you don’t have to be involved in the day to day activity, the monthly ups and downs of the statement coming in. If that appeals to you then yes, you’re probably going in the right direction.

Eric: Yeah, if you run to the mailbox get that investment statement and go, “Yes,” then that’s probably not an annuity person, you’re more of an investment person.

Dick: Right, exactly.

Eric: So pension-styled income, we talk about you like the idea of getting that check every month. If that appeals to you…

Dick: Well, it’s quite different. There’s nothing else out there, there just literally, is nothing that gives you income **guarantees like an annuity.

Eric: Well, a pension.

Dick: Well, and that is an annuity. I mean Social Security it is a form of an annuity type arrangement. Pensions are annuity type arrangements, and so if you have a lump sum of money, and you want to know that you’re never going to run out of money, never going to run out of income and you value that, then an annuity really is in that line of thinking.

Eric: Right, if you’re more of a person who says, “You know what? I’m just going to take out a fixed. My investments I’ll manage them. I can pull out 3.0-4.0-5.0% every year and I’ll be happy. I don’t need that **guarantee aspect. I’m comfortable with a little.”

Dick: Right, and if inflation goes crazy, and you start getting into your principal that type of thing that you’re comfortable with making those adjustments along the way.

Eric: You can flex up and down.

Dick: Right, right. Again, you’re kind of out of that mode of auto-pilot or set it and forget it. You’re a hands-on, do-it-all.

Eric: Hands-on, right.

Dick: And we have to realize too, this is another issue that I’ve run into with clients and I know you have. Is that as we age, as retirement progresses along we have less and less tolerance or we see our clients have less and less tolerance, for being right on top of things and manipulating it themselves. They really want a lot of times, more of that auto-pilot setup.

Eric: Right, exactly, and I think people start to feel more secure. When you don’t have a salary check coming every month, all of a sudden that regular flow of income that you’re used to getting, if you’ve been in one of those jobs where you got that check every month, then all of a sudden switching to something that’s a little more uncertain.

Dick: Right and you have to make those decisions.

Eric: And they may have been a little bit more aggressive and had tolerance of the market’s ups and downs, at that point in time in their life, but all of a sudden, now they have to get that monthly paycheck. Those ups and downs become a lot more painful.

Dick: It makes a big difference in your ability to sleep well at night and to feel comfortable with what you’re doing.

Eric: Exactly. Speaking of feeling comfortable one of the things, probate comes in. Everybody’s suing everybody these days, but one of the nice things about a lot of states is that annuities are protected, basically from creditors.

Dick: From creditors, that type of thing, and yet even for probate it’s such an efficient way to take money around the probate court, because it goes directly to the heirs, and so that’s good. Also folks, if you have an IRA, that IRA can be stretched, stretched out to your heirs. And insurance companies are one of the few financial institutions that really do that effectively. They are just set up for it. It’s the way they work. So in effect, you can transfer an IRA. Give your children maybe, the equivalent of their own retirement in the future from your IRA, if you don’t need to spend it.

Eric: Exactly. Yeah, and kind of the last profile that I would say that really is key for an annuity, if you think you’re going to have some longevity. You’re going to live a nice long life and you don’t want to have to worry about running out of money, that’s it. That’s the sweet spot right there.

Dick: Right, right. Well, and you know Eric, we’ve always said and we tell people all the time, look we’re not trying to beat the insurance company or beat up on the insurance company.

Eric: Occasionally, I like to beat them, but…

Dick: But if our clients can win. Obviously, we’re always going to err on our client’s side. So if someone has longevity, they really believe that they have the possibility of living that longer life, they really will actually, statistically come out ahead, and win against the actuaries at the insurance company. So then the rate of return isn’t just decent or acceptable or reasonable, it’s very good, and so that’s where we like to have that conversation. There’s also a flip side to this, which I just might want to mention because there’s a few of you folks out there that are just the opposite. You actually believe you’re going to live a much shorter life, and yet you want to know that you can maximize the money that’s coming in to you, never run out and spend all you want while you’re still here. The thing you want to do there is look at an immediate annuity, that’s medically underwritten, because you’ve got some medical condition that you believe will shorten your life, and we can actually do a medically underwritten annuity.

Eric: Right, you may have a condition that basically says, “You know what? Statistically, it takes a couple years off your life expectancy.” Then they rate that based off of that new age that they calculate.

Dick: Right, right. So Eric, is it possible that some people are wasting their time considering annuities?

Eric: Well, most definitely. I mean you always want to look at all your options.

Dick: You do.

Eric: Obviously, the answer is annuities are not for everyone.

Dick: That’s true.

Eric: So hopefully our little five points here, that we’ve got on this page, will help you determine whether an annuity is right for you.

Dick: Exactly. You really have to weigh your situation over and when you go over these points, if a lot of them sound like you, and make sense to you then go forward, do your research, go consider an annuity, and if it’s the opposite?

Eric: Right, if you can’t hit one of the items on the checklist.

Dick: One or two, yeah, just sayonara.

Eric: Thanks for checking us out today.

Dick: Thank you.

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]]> https://annuityguys.org/do-not-waste-time-considering-annuities/feed/ 0 Hybrid Annuities have too many moving parts… Says Who? https://annuityguys.org/hybrid-annuities-moving-parts/ https://annuityguys.org/hybrid-annuities-moving-parts/#respond Fri, 26 Oct 2012 20:23:54 +0000 http://annuityguys.org/?p=5056 What makes a Hybrid Annuity different from a Fixed Annuity? Answer: index strategies, an income rider, and the contractual **guarantees associated with the income rider. What makes a Hybrid or Index Annuity better than a standard fixed annuity with an income rider? Answer: the opportunity to participate in the potential upside of index gains that can […]

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]]> What makes a Hybrid Annuity different from a Fixed Annuity? Answer: index strategies, an income rider, and the contractual **guarantees associated with the income rider.

What makes a Hybrid or Index Annuity better than a standard fixed annuity with an income rider? Answer: the opportunity to participate in the potential upside of index gains that can exceed the interest earned by a fixed interest only annuity.

The **guarantees may not be “sexy” but they form the foundation of why someone should consider a hybrid annuity. We all like the “potential” to do better — Dick and Eric tackle the moving parts of a Hybrid Annuity in this weeks second segment of this two-part series.

[embedit snippet=”video-specialist-button-hybrid”]

 

**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.

Enjoy our short Fog Lifter video…

“The Power of Indexing and Contractual Income Guarantees”

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Are Hybrid Annuities too Complicated?

A common complaint leveled at hybrid annuities is that they are too complicated and have too many moving parts. The Annuity Guys®, Dick and Eric, discuss why many folks in the media and investment world like to hobby-horse this point while missing the real reasons why these financial products work so well as a foundational allocation in thousands of retirement portfolios. The secret is “the non-moving parts otherwise known as contractual **guarantees.”

Contractual Guarantees – absolute **guarantees, no-moving parts.

Hybrid/Fixed Index Annuities – allow for upside potential of specified moving parts in addition to absolute contractual **guarantees.

Income Rider – addendum to an annuity contract **guaranteeing a future lifetime income plus additional benefits in some income riders (this is a contractual **guarantee).

Features, Benefits, and Facts:

  1. Annuity Owner Remains in majority control of the annuity’s cash account value during the surrender term and has 100% control after the surrender term.
  2. Full account value of the cash account passes on to heirs with no surrender or penalty charge.
  3. Guaranteed growth in deferral **guaranteeing a minimum future income. Example: Initial Premium $100,000 + 5% bonus **guaranteed growth of 7.2 percent deferred for ten years = $210,000 income account value producing a of $12,600 per year at age 70 with a single life payout.
  4. Payout percentages from the income account are based on age and a single or joint income need. Example: age seventy single payout 6 percent or joint payout 5.5 percent
  5. Fees for riders can be based on the cash or income account value and are charged to the cash account. Fees typically range from half of one percent (.5%) to one and a quarter percent (1.25%). This does not reduce the **guaranteed growth of the income account.
  6. May have a death benefit allowing the income account if it is larger than the cash account to be distributed to heirs over a five-year period.
  7. May have an increasing income as an inflation hedge.
  8. May have a Long Term Care Benefit.

Index Strategy Moving Parts:

(Index examples: *S&P 500, *Dow Jones Industrial, *Trader Vic (Commodities), *Barclays Capital Aggregate US Bond, and literally any third-party index may be specified as a measure for crediting interest).

[Read More…]

Annuity Guys® Video Transcript:

Eric: Today, we’re going to talk about hybrid annuities. Do they have too many moving parts? Sounds like a flashback to maybe a previous episode.

Dick: Like one last week that we said ‘are they too complicated?’

Eric: This time, we talked about at the very end, all the moving parts. Now we’re going to get a little bit more detail as to, do they have too many moving parts?

Dick: That’s a good question, and I think that some folks would say, yes, it’s too complicated. There are too many moving parts. I think that you have to really weigh over who’s saying it and why they’re saying it; what their motive is.

Eric: Yeah. The first thing we should start out is where we started last week, in saying, why does somebody buy an annuity to begin with? It’s contractual to **guarantees.

Dick: Right. Exactly!

Eric: Safety, security, predictability. That’s why we like the hybrid annuities, is for those contractual **guarantees.

Dick: The moving parts, as we discussed last week folks, the moving parts are those things that are in addition to the contractual **guarantees; so those are the potential of the annuity. If you can be satisfied, and this is what we do with our clients, we help them to see where the contractual **guarantees actually do meet all of their concerns and their objections. Then if they can get some additional potential on top of that, then that’s a win-win.

Eric: Right. Let’s start with the base here. Typically, we’ve got this fixed indexed annuity as the base.

Dick: Right. That’s our chassis.

Eric: That’s our chassis. What then goes into making a fixed indexed annuity a hybrid annuity?

Dick: Typically, it will be an income **guarantee, and that income **guarantee will give a lot of different benefits, primarily knowing what your income is going to be at some point in the future that will help to offset inflation and know that you’ve got some type of increasing income at some point in time.

Eric: Right. We talk about that income rider quite a bit because of what it offers. It’s one of those things that’s attractive to people because they remain in majority control.  We’ll go into detail in the article about what majority control means. It’s also a way of taking assets and being able to pass it on to a beneficiary or heirs.

Dick: Yes. It’s not like the immediate annuity where you give the lump sum away. There’s a count value.

Eric: Too often, people want the annuity, but they don’t want to give up that control.

Dick: Correct.

Eric: That’s what that hybrid aspect brings to this chassis.

Dick: It does.

Eric: Payout percentages, as good, better than . . .

Dick: Payout percentages, as compared to an immediate annuity, if you’re starting an immediate annuity today and you’re starting a hybrid annuity today, the payout percentage will typically be a little bit less. The beauty of it is, the immediate annuity pretty much has to be started within 12 months of the time that you’ve signed up or been approved for your immediate annuity. However, with a hybrid annuity, the idea of deferral says that it’s going to pay out a lot more at some point in time.

Eric: Right. If you’re just looking for the most money you can get right now and you don’t care about anything else, then look at an immediate annuity.

Eric: If you’re wanting flexibility plus those **guarantees, that’s where the hybrid comes in.

Dick: Not only that, but there situations where the immediate annuity isn’t that much more.

Dick: Folks are more interested in that account value, if they don’t use it all up, going on to the heirs.

Eric: Right. That’s been one of the biggest reasons people are drawn toward the hybrids. The income rider tends to be the first piece that we highlight. Is it a moving part?

Dick: No. That’s what’s good about the income rider, is that it is a contractual **guarantee. That is part of that chassis that is **guaranteed.

Eric: I would say, if you’re looking at a fixed indexed annuity, what makes it a hybrid is, again, is adding that income rider component, that **guarantee of income in deferral. Basically, you’re building that account base in deferral.

Dick: Another aspect that lends itself to the hybrid aspect of the annuity is the idea that you can get some upside potential without the downside risk. You’ve got a little bit of that variable annuity# flair to it with that. That’s where the confusion tends to come in.

Eric: Yeah. We’ve talked about this before, too. People will call up and we’ll talk to them and say, “I’m interested in a variable annuity#.” In the mindset of somebody, the variable aspect is because it has the potential of having varying rates of return.

Dick: Right, some increased potential.

Eric: Right. In this case, an indexed annuity has varying rates of potential, sometimes based off of, basically, those indexed components.

Dick: In the early days, Eric, of indexed annuities and what we now call hybrid annuities a lot, they were sold and people purchased them, or wanted them, based on these indexes that did have all of this fluctuation and movement in them. The reason for it was because it did protect the downside, it did give them upside, and the fact of the matter is, there have been many time periods when this type of an annuity has out-performed the stock market, but it was never intended to do that in the first place.

Eric: We’ll tell you right now, if your intent is to go out there and beat the market, don’t buy one.

Dick: Don’t buy one.

Eric: That’s not the purpose for a hybrid annuity.

Dick: It’s possible that you can do it.

Eric: Over a period of time.

Dick: But it’s not the reason. It’s not the purpose.

Eric: Right. Because what you’re trying to do with a hybrid is limit your downside.

Eric: You’re taking away that downside risk of being in the market because your principal is protected.

Dick: Exactly. Eric, we’re not doing a very good job of getting to our list here.

Eric: I was going to say, we’re going to get to the second point here very soon. It’s talking about some of the moving parts that are truly involved in the indexing components.

Eric: Dick’s done an excellent job of laying out an article here, so if you haven’t had enough time to watch us, you’ll see below, or in the links below.

Dick: Read it more in-depth.

Eric: We’ve got some additional details. Caps.

Dick: Caps, okay. My cap’s hanging right there. Let’s tie the caps into; first of all, what’s an index? Most of you folks understand that when we talk about an index, this could be any type of index. It could be an index . . . let’s use the popular ones.

Eric: S&P, NASDAQ.

Dick: Dow Jones, The Trader Vic’s. You could use a gold index. You could use a bond index; any degree of creativity.

Eric: Exactly. The index could be literally the temperature outside each day. It’s a benchmark on which you can measure something. The most popular ones are those that are tied to the stock market.

Dick: They do buy call options on these indexes, so that is the purpose, why we choose an index. When we look at the caps, folks, if the market goes up 10% in a given year, and your cap is 3% or 4%, which is about where caps are now. We have some exceptions, where caps are higher, but somewhere in that 3% to 4% range, market goes up 10%, how much are they going to get, Eric?

Eric: If the cap’s 3%, you’re going to get 3%.  That’s the limiting factor. You have no downside risk. If the market’s down 10%; 0. You’ll hear a lot of people talk, “Zero is your hero,” because you don’t have that backslide in case you had multiple down years. You don’t have to worry about recovering from a backslide. The worst that’s going to happen is that you stay on a level plane.

Dick: Right. One of the things that we didn’t really touch on, which I will just drop back to for a second here and then move on, that is one the income rider. Typically, that will have somewhere in the neighborhood of maybe a 7% **guarantee; 6%, 7%, we’ve even seen 8% for some time periods, which was a **guarantee. Even though you might have a 3% cap on the indexing for your cash account, your index account could be significantly higher.

Eric: That’s why that income rider is so popular, because while it’s in deferral, you can get those **guaranteed growth periods.

Dick: Right. If we move into the spread?

Eric: Personally, I’m a big fan of the spread; and that’s not peanut butter and jelly, necessarily. I like spreads because with a standard fee, you have typically a percentage that’s pulled out every quarter, of your account, period after period. Let’s just use a round number.

Dick: You’re referring to the income rider.

Eric: Income rider fees.

Dick: Right. Okay.

Eric: You could have fees for other things, but the income rider fee, which is what makes a hybrid annuity really a hybrid, is having that income rider. There’s typically a fee associated. If that fee is ½%, that ½% is going to be pulled out on a regular interval, ir-regardless of whether or not you’re getting a gain.

Dick: Whether you had any interest earnings or not.

Eric: That’s correct. Spreads on the other hand, are typically higher than fees. A fee may be 50 basis points, ½%. You may see a spread of 1½% to 2%. The deal with the spread is the company only takes their portion if you have a gain. You’re giving up the first portion of any kind of gain that you could receive.

Dick: Right. Your account value cannot go backwards if you’re not earning with a spread.

Eric: That’s right. If you had 12 consecutive, or 10 consecutive, years of getting 0 return, whatever you put in principle-wise, would be **guaranteed to be that same level.

Dick: Right. I think that the spread has a definite place, and it should be considered in the overall picture. As we’ve experienced with certain annuities that don’t have a spread, their contractual **guarantees are so much higher for the income. Since that’s the client’s primary objective, then it makes sense to go with the fee over the spread, using that particular annuity. You have to weigh it against all those factors.

Eric: Exactly. Typically, you’ll see the spread number being higher. It’s just attractive when you’re looking at predictability, that you know that you’re not going to have any kind of negative impact just because you don’t have a return.

Dick: Another idea of using the spread is when the market has . . . when you’re using it in indexing, and maybe you’re doing an average of a year’s worth of indexing, and they will say, “If your average growth of the index for the year was 10%, you’re going to have a 3% spread.” That means that first 3% of that 10%, you don’t get.  On the other hand, if that year there was a 5% negative growth, or 10% negative growth, then your 3% spread would not be applicable, because there’s no earnings, no growth there.

Eric: Right. Where we typically see the spreads are on something that have more upside potential a lot of the time.

Dick: Right. Did I actually do the math where I said, “If you’re up 10% and you have a 3% spread, you would have 7% gain”? Let’s move on and talk about participation.

Eric: That’s the easiest thing, in the sense of it’s taking a percentage of the growth and you get a participation percentage, typically. Back in the good old days, it might have been 50%. If the gain was 10% of the market, you would get ½.

Dick: I was always a fan of participation, but because of the financial crisis we’ve been through, the Great Recession, we’ve seen all that pare back to where participation rights are now down around 25%. The market goes up, let’s use that 10%, it’s easy to figure. If the market goes up 10% and I get 25%, what did I earn?

Eric: 2½.

Dick: 2 ½%, okay.

Eric: I got my calculator in my pocket.

Dick: You’re good, Eric. Okay. We already touched on the average a little bit, in using the spread, so maybe we’ll move on to the next one. This one’s very interesting. This one, I see messed with a little bit. When I say messed with, folks, I see you messed with a little bit, unfortunately, from advisors that overstate this particular strategy.

Eric: Are we talking about the monthly sum?

Dick: Monthly sum. The monthly average.

Eric: Look at the potential.

Dick: It does have good potential. It just doesn’t usually work out, Eric.

Eric: 2% a month. There’s 12 months in a year.

Dick: If I get 2% each month, and I add those together, that means I’ve got 24% potential. If the market goes up 24%, and it does at 2% a year, I get all 24%. Is that correct?

Eric: 2% a month.

Dick: A month, yeah, keep me straight.

Eric: For the whole year, I’ll get 24%. That’s my potential in a given year.

Dick: What’s the worst thing that can happen in that year? If you’re going up 2% every month, what’s the worst thing that could happen maybe in that 10th or 11th month?

Eric: That’s where the market loses 20% in one month.

Dick: That couldn’t wipe it all out, could it?

Eric: Yes, it can.

Dick: It can?

Eric: There’s no downside protection.

Dick: Folks, that’s the problem. The monthly sum and the monthly average has a cap on the upside, but it has no cap on the downside. The companies have figured out that, yes, there are some years where you really do capture and you get those big, big returns, and it feels good and it looks good. There are times to actually use this strategy.

Eric: Now is probably one of them, actually.

Dick: It very well could be.

Eric: I always call it the homerun versus the single. We talk about annual point being the single. You get lots of singles, but the monthly sum is truly going for the homerun. We have seen returns out there in the 14%, 15%, 18% range.

Dick: Right. More often than not, what do we see?  A big 0. We may see a client go for 3, 4, or 6 years before seeing any interest crediting to their account, and that’s pretty tough for people. They’re not going backwards.

Eric: Right, and we should qualify that. While you’ve got not downside protection on the month within the index, that doesn’t apply to the account value. The account value, the worst it’s going to do, again, is 0. Even if your index finishes down on the year, what will be applied to your account is basically 0 gain.

Dick: Okay. Now we come to a very interesting one, Eric, called the blend.

Eric: The blend, the blender.

Dick: We put it in the blender. We’ll do one of these. Here we go. Let’s make this real simple. A blend is like a balanced portfolio: You put 50% in stocks and you put 50% in bonds. However in this case, what we’re doing is we’re putting 50% in some popular index. It’s not really going in the index, as we’ve discussed many times. It’s using it as a measure. We’re putting 50% in towards an index and we’re putting 50% into . . . I’m just using 50%, folks. It could be 30% or 40%, but it all equals 100%. 50% into a fixed rate of interest. We’re just saying ½ the account goes into fixed rate of interest, ½ the account goes into stocks.

Eric: Right. Then you dump them both in the blender.

Dick: Right. Exactly. There’s no cap on the 50% where the stocks are at.

Eric: Which is what makes it attractive to [inaudible: 16:08]. You’ve got unlimited upside potential on the blend side. They all have limiting factors.

Dick: It’s tricky.

Eric: What’s in that fixed rate bucket is typically, right now it’s at 1% or 2%. The best that 50% is going to do is 2%

Dick: Yeah, 2% or 1½%.

Eric: You can get 10% or 20% over here, but it has to be then blended with that fixed rate bucket.

Dick: Typically, you could take, in a year where you had the market up 10% and you had a 2% bucket and you had a 10% bucket, and they were both equal in this case. You put in the blender, you stirred it all up, what are you going to come out with?

Eric: 6%.

Dick: About 6%. Boy, you are good. Folks, we’ve done the math for you on these. When you’re on this website, we’ve got some formulas, and we broke it down in simple terms so that you can read it slowly and get a good understanding of what we’re talking about.

Eric: We try to give you at least a cursory idea of what to expect when you’re seeing some of these terms flown about.

Dick: We’ve probably . . . hopefully, we have not. Hopefully, we haven’t thoroughly confused you. What we really want you to take away from this is that these are the moving parts that give you greater potential. These are not the specific reasons, for most of you, why you would actually buy or choose to allocate to a hybrid annuity.

Eric: If you’re buying for these bells and whistles, the fit’s probably not right.  If you’re buying for the base chassis, and you can live with that **guarantee from the income rider and from the annuity aspect and the income side, or the estate planning side, whatever that need is, if this fits your need and you can just understand that there’s the potential for a little bit more extra.

Dick: This is where a good advisor comes in, because they can look at the potential, they can look at what’s going on in the economy in general. Folks, they can help you make a good decision on which way to go in this indexing. Even if the indexing really produced nothing and you had good contractual **guarantees, which is what you should have your sights set on, you’ll be satisfied.

Eric: Exactly. Buy for the basics, and be happy with the extras.

Dick: Right. Exactly.

Eric: Hope we’ve broken down and explained to you the ‘says who’ portion.

Dick: Yes, ‘says who’. Look behind the veil a little bit and see who’s telling you that they’re too complicated, because maybe from that person it is too complicated. For someone who understands a hybrid annuity and what it does for the client, it can be very effective as a good retirement financial tool.

Eric: Thanks for tuning us in today.

Dick: Thank you.

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