Episode Transcript
[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
[00:00:26] Speaker B: We don't just build wealth, we build legacy.
Welcome to the Retirement Income for welcome Back to Life show with Doug Vincent. For over 30 years, Doug has helped families right here in the D.C. area turn hard work into lasting income, helping you protect what you've earned, provide for your family, and retire on your terms. This is where preparation meets opportunity. This is the Retirement Income for Life show. Here's Doug Vincent.
Annuities demystify clarity, confidence and cash flow in retirement.
How to understand the products, avoid the pitfalls, and unlock guaranteed income that lasts a lifetime. Welcome to the show and shout out as always to our DMV listeners. Washington, D.C. maryland, Virginia. Thank you for tuning in and thank you for scheduling those complimentary consultations. We're here to help with any financial situation for you, your family, your business at no Obligation.
Also, continue to join us for our podcast, subscribe and listen to this episode and others on our YouTube channel, retirement income for Life.
And once again, just don't hesitate to reach out to us in this, in these current, this current environment, which is unpredictable. And you know, we're, we're helping people with their retirement income for life. Every day doesn't happen by accident.
And so one of the things we're going to talk about today is building steady income, okay? Dependable income streams that let you enjoy your retirement without second guessing every headline. Okay? We want to make sure that you have predictable income no matter what the market's doing, no matter what your situation is. Predictable income can provide a lot of confidence, clarity, peace of mind, right? Always. You can reach us locally here at 301-242-3950. Also, our website is www.retirementincomethenumber4l I f e dot com.
We look forward to helping you with all your retirement planning needs. All right, so an overview for today's show.
We're gonna really dig into annuities, the role of annuities today, what they are, what they aren't.
You know, annuities are no longer old fashioned.
You know, they're no longer one size fits all. So we've got to go over those pros, those cons, different things, different definitions of myga and FIA and fixed and variable. We're going to break down all the major types of Annuities going to give you that in plain English and explain who they're best suited for and in some cases, who they're not suited for. All right. Also, we'll talk about how annuities protect you from market volatility and they buffer you from, you know, those market downturns. We want to look at some case studies, okay?
Two retirees, two different outcomes. You know, we're going to compare the all in the market versus some of your money out of the market that might include a fixed index annuity. So it's a good case study. We'll walk through then. Also answering some of those common questions about what's right, what's wrong. You know, we want to separate fact from fiction and answer these most common questions. Retirees are always asking about annuities. Okay. And finally, we will wrap up today's show talking about your vision, your vision for retirement. Those things you need to be considering, especially if you're retiring this year or if in the next one to five years you need to ask yourself a number of questions and, you know, prepare yourself wisely for your retirement. Okay? The financial wisdom quote of the week comes from Jane Austen. And Jane Austen says people always live forever when there's an annuity to be paid them.
Wow.
What does that mean? Well, thank you, Jane. And we're going to jump into a lot of that particular quote of the week, that financial wisdom. We're going to talk all about that today so that you understand exactly what that means. All right. The role of annuities today. Okay. Annuities once had the reputation of being your grandfather's retirement tool. Right. You know, that's that you know, thought of as old fashioned. Okay. Now today, you know, you know, once this was thought of as being, you know, predictable income. That's outdated. Right. You know, we, we need to be in the market. You know, annuities today are one of the most in demand. Watch this. Ways to balance that security and that flexibility in retirement. You need security in retirement. You need flexibility in retirement. Annuities a lot of times can balance that out. Okay, so what's bringing annuities today back in style?
Okay, how has the retirement landscape changed? I'm glad you asked. Well, number one, pensions are disappearing. Think about it. Right now you're listening to me.
As you prepare to retire, is a pension being replaced with a 401k or 401k match? Or maybe you don't have anything at all? Okay. But what we see is that that longtime pension that a lot of our parents Grandparents utilized is disappearing. So pensions are disappearing. Number two, Social Security faces long term uncertainty. You hear it all the time. Security, Social Security is not going to be around or Social Security is going to be reduced or the Social Security pot of funds is running out. So they're back in style. Annuities are back in style, number one, because pensions are disappearing and there's a lot of uncertainty with Social Security.
And then finally, market volatility feels like the new norm.
The stock market up 20%, the stock market down 20%.
You have no idea from one day to the next how this market is going to react. And so retirees often ask, how can I create my own pension like income stream? Let me say that again. Retirees are trying to figure this out. We're doing it in my office every day. But they're trying to figure out how do I create my own pension like income stream. Okay, so let's look at some statistics. Okay. Limra, they're projecting that 400 plus billion in annuity sales. As they look back on 2025, it was a record high of $400 billion in annuity sales. Okay. Now why you think that would be? Because once again, pension is going away. Social Security uncertainty, and we don't know if that million dollars in the stock market is going to be 500,000 one day or 800 the next day.
400 billion in 2025, a record high number went into annuities last year. Also, they're younger buyers, not just grandpa. Okay, so retirees or pre retirees or mid career professionals in their 40s and 50s, they're jumping into annuities to lock in these guarantees earlier. Okay. This is very important that you look at your portfolio and you want to diversify as it meets the risk tolerance that you have. Right. Another reason why is the products are very innovative now. Okay. The modern annuity products are no longer cookie cutter. There's so many variations that you can look into related to flexible, you know, withdrawal options, inflation protection riders, long term care add ons. Right. Legacy plan, you know, the, the, the mom and pop annuity is no longer in existence. The way that our grandparents looked at them. These products are very innovative and they're providing real value for a number of Americans.
400 billion in annuities in 2025. You know, I'm curious to see what that'll be this year. I believe it'll be higher, but the real value for annuities is peace of mind.
Research shows retirees with guaranteed income streams from annuities or pensions have a Higher level of peace of mind. Okay? They know where the money's coming from, right? They know how to set their budget. You know, these stats are saying that annuity or pension holders in retiree retirement are, you know, retiring a lot happier in retirement. They're a lot happier. They don't have to stress about the volatility in the market, and they are experiencing a lot lower levels of financial stress than the peers that they're talking to, okay? The, you know, you're sitting and you're talking at your community center or after you finish playing golf or at your church, wherever it might be.
And your friends stressing out because they don't have annuity, so they don't have a pinch. All they have is Social Security and maybe a good 401k. And so think of annuities as the foundation of your financial house. Okay? Market investments equal walls and windows, and they add value and variety. Annuity income equals the concrete base, okay? Sturdy, predictable.
It keeps the house upright. Let me say that again. The annuity is the financial foundation of the house, okay? That's the concrete base. That's. That's that income. That predictable income provides that sturdiness and keeps that house up, right?
But once again, we don't want all of the money out of the market. We do want to hedge against cost of living and inflation. And that's your walls, that's your windows, right? It adds value, and there's a variety, you know, but it does not act as that firm foundation. So if you're wondering if your retirement could use that strong foundation, let's talk about how an annuity might fit into your overall plan. Okay? How might an annuity be a part of that foundation that you need, that you know, you don't have a pension, or you do have a pension, but you want more guaranteed income, Give us a call. 301-242-3950.
Get on our calendar, on our website, register for 100 100% free consultation. It's complimentary at retirement income. The number 4L I F E.com at our website as well. We do have a retirement Income for Life survival kit. You can download that absolutely free. We've put that together to basically package up a number of modules for you to begin this process of your retirement income for life journey. All right, so let's do some defining of some of these different annuity types and all the innovation that is taking place in our market today.
And we want to define what a MYGA is. We want to define what a FIA is. A fixed index annuity. And we want to define fixed annuities and variable annuities. Okay?
This, at this day and age, with all this innovation, it can seem like Alphabet soup.
And with all these different titles, all the, all these different names, I'm going to give you that cheat sheet today and we're going to talk about exactly what they are. So if you had a fixed annuity, just plain and simple fixed annuity, that's going to give you a steady guaranteed interest rate, okay, that's going to vary from contract to contract, but you know it's going to be a fixed rate of return each and every year, steady and guaranteed. That's going to, going to be one of those simple predictable amounts. So think about like a fixed index in the. I'm sorry, think about a fixed annuity like a CD alternative.
Think about a cd. Now think about a fixed annuity. That would be your CD alternative. All right, now let's, let's go into the second one. Now a variable annuity. This is invested in market sub accounts.
So you are in a position now to receive the upside, the growth of the, the market, while also knowing that you should expect it to go down as well. The up and down. The volatility of the market is within a variable annuity. But you get the best of, well, you get sub accounts that you can invest in along with the annuity components.
And that's how a variable annuity is going to work. Now a multi year guaranteed annuity, or your myga, is you lock in a set rate for several years. Okay? This rate is often Today, let's say 5 or 6% in today's market. And this is something that is a multi year guarantee. It might be three years, five years, seven years, something like that. And it's great for people who want that stability.
With a defined term, the variable account is going to be up and down, whereas the guaranteed multi year is going to be fixed but for a longer period of time that you can guarantee that that income will be there and that growth will be there. Now the fixed index annuity or fia, that principle is protected. Okay? So just think about the movement into an FIA as you've moved your money out of the market into an account or where you could not lose your principal. Right now the gains are tied to an index. Something like one index I could mention that you're probably familiar with is the S&P 500.
So principal protected, your gains are tied to the index and the, the, the advantage here and in some cases people feel like a Disadvantage is for that principal protection for that insurance from the company that you're working with. With the fia, you share in the market upside. So for instance, this is in general, you, the index went up 10%, you made five, the company made five, right? There's caps, there's petition participation rates that are tied to these. And so they're variables on how you structure fia.
But you can guarantee that your principal is protected while you share in the gains with the company that you're working with. Okay? So the key here is with all this innovation, all these different types of annuities that are in the market today, is that you match the right product with the right person, okay? You are.
The annuities that you might be attracted to are unique to you, okay? You might be conservative, you might be risk averse, okay? That would mean you're looking for a fixed or maybe a myga, right?
You're more of a moderate, let's say, you know, you, you can balance out the ups and the downs. You know, you want growth. But I also want protection. You know, that's where the FIA comes in. Okay, Your fixed index annuity. Now, if you're comfortable with market risk, okay, you got a long term horizon, okay, A variable annuity would possibly, you know, fit the type of person that you are. So the thing that trips people up a lot of times is, hey, why do I have to share in the, you know, gains? You know, they, they have my money and now they've capped me at a certain amount or my participation rate, you know, I don't like that. Well, your principal was protected.
So how the company is going to make money for giving you that guarantee is a share with you in those gains. And so it's up to you then to, as a part of your diversified portfolio, understand the possibilities of, okay, hey, if I have a 9.25 cap here and the market went up 20%, hey, I made 9.25%, which far exceeds cost of living and inflation, and my money has gone up by 9.25%. Just give me an example. With no risk of my principal going down, okay? So you have to fully dig into the pros and the cons. Why would I do this? Why wouldn't I do this? Okay, Some people like short term surrender periods, okay? Whereas an annuity might allow you to, for the long term stay with that contract for 14, 15 years, okay? Whereas they have them as surrender periods as low as one year, okay? So you want to know the timeframe that you want to have this annuity and not get tripped up by a timeframe. Also there are a number of riders that are attached to the contracts that most of the time some of those riders are going to cost you a fee. In other cases, let's say for death benefit or, you know, something of the like, it may not be a rider fee, whereas if you needed a long term care rider or an inflation rider or an income rider that might cost you an annual fee. And you need to understand the pros and the cons of why I would want to pay that fee and to get that rider, get that benefit, you know, on top of the annuity that I chose. So these details which you have to look into them, you know, and this is gonna frustrate you or bless you, okay. If you don't have someone that can really dig in with who you are personally, what your goals are, you know, you can really be frustrated. But we have a lot of people that are really, I really feel blessed. Buy the annuities by, you know, they've talked it through, they understood it and watch this. The other good thing about walking through an annuity analysis is you can determine whether it fits you or not. You, I mean you can take all the chips off the table and leave your money in the market. Never do an annuity once you fully understand them. But what I find oftentimes is most people don't fully understand the options and might be conservative or you know, moderate and really want that protection, but didn't understand that annuity was right for them. So just don't learn the product acronyms, learn the timelines, right? If you need money within five to seven years, avoid annuities that have long surrender charges, okay? If you're gonna need to take big amounts out from these annuities early on, then you're gonna wanna have this as a short term surrender period. Even though you don't have to end the contract, but you end the surrender period ends early and you're able to take more out. In a lot of cases you can take out a percentage each year after the first year. In a lot of cases and in some cases even in the first year that provides supplemental income, doesn't disrupt the contract, doesn't cost surrender on charges, and now it becomes just a part of an overall four legged stool. If you, if I could say that where now you're getting money from the first leg which is your pension, second leg is your Social Security, third leg may be from your 401k, fourth leg may be your annuity. Okay? And hopefully we can get another Leg in there as well. But the bottom line is you don't want to be confused by these annuity acronyms. You don't need to memorize them. And try to do this on your own. As I say all the time. Give us a call. 301-242-3950. Set up your annuity analysis, your retirement consultation, right there at our website. You can log in at www.retirementincomethenumber4l I f e.com and we'll walk through all those specifics with you so that you don't have any confusion as to whether annuities are good for your portfolio. All right, so let's shift gears here, and let's look at the basics of an fia.
The basics of a fixed index annuity, okay? And not too risky, not too boring, but just right. Okay? It's not too risky, it's not too boring, but just right. Let's see how they work. So you invest a lump sum, okay? It's going to be a single premium investment.
For the most part. That principle is guaranteed. So what does a guarantee mean? You won't lose money when the market falls, okay? It's right there in the contract protected principle. You do not lose money if the market turns against you. Right. The earnings are going to be tied to an index. Okay? An index such as the s and P500. Right. And now your growth, and this is why the research is important, is going to be connected to what is my caps, right? What's my maximum percentage of index gain that I could earn? Okay. What's my percentage participation rate? Okay? How much of the index gains do I share in? Okay. How am I participating within this contract? Those are going to vary, okay? They're going to vary based on risk. They're going to vary based on economic conditions, you know, and if the market drops below, let's say you had a negative year in the market in that index, guess what happened? You didn't earn anything, but you didn't lose anything.
You would not have negative returns. Okay? You earned zero for that period, but you don't have negative returns. How does that sound for a lot of people?
They want the satisfaction of having an investment to where I know my principal is protected. But I also want to have the opportunity to do better than banking instruments. I want to also have the opportunity to compete with the stock market while having that risk taken off the table. That's why we say it's not too busy or I'm sorry, it's not too risky, but it's not too boring, okay? These are FIAs are a lot of times right there in the sweet spot. So why do they appeal? You sleep well at night, okay?
No 20% losses that you can see happening because, oh, the market, you know, now is in a bare market, okay? And hey, the market went down 20% and now your portfolio was a million. Now it's 800,000, okay? You, you can sleep well at night and know that the money that has been moved into an FIA is 100% protected. Secondly option, you have optional income riders that guarantee a lifetime paycheck.
You can have a rider that can begin to send you a lifetime paycheck, just like Social Security, just like a pension. You've now customized this as your own pension plan.
And then finally, one of the appealing things is you can customize these as an inflation protection hedge, right? You can put in their legacy rider. So how you want the money to be given to your beneficiaries, you know, there's flexible payouts that could be set up, okay? And so let's look at an example. And you know, two retirees, let's take two retirees that invested 200k each in an FIA in 2014.
This was during the, you know, during the COVID crash. You know, the stock market dropped 30%, okay? And now that's six years later from when they put that money in there and their fi didn't lose a dime. And, and they've captured partial rebounds when the market recovered, okay? You captured market rebounds when that market went down. Covid down 35, 40% in some cases. All right, now that's an example of a good thing. Now, a drawback now more complex than traditional fixed annuities. Just a standard guarantee, right?
There's typically gonna be surrender charges if you withdraw too soon, okay? If I'm going to give you 100% principal protection as a part of the analysis and setting this up and why it's not a drawback for anybody that works with me is because we're not going to put money in a place to where you're going to need to now give back some of the returns or give back some principal, because now you're subject to surrender charges, okay? That money needs to be planned in other places, okay?
The growth is capped. That could be a drawback.
And you'll never get all the market, you know, upside.
But that's only a drawback if you haven't done diversified planning, because we want market upside in another place. But when that volatility kicks in, you've got your FIA in place to where? Now that principle didn't go down.
You see why this is has to be a balanced approach. Retirement income for life has to be something that you do planning around. Annuities take a very, very important place there. And FRAs, they're not about chasing the hottest returns. They're about creating a steady middle lane on the retirement highway. Right? Market upside when it's there, principal protection, principal protection when it's not. Okay? So think of an FIA as the middle ground between too risky and too safe. Okay?
Starting with working with us today, one of the things that you can do is, as I said, set up a free consultation. Okay? Start working with us and this is something that we can do a full portfolio analysis on. We take a hands on approach on working with our clients, making sure that it's about your goals, your vision for retirement. Okay? We examine your current plan, you know, your portfolio of assets, you know, we walk through, you know, the things that you already put in place, things that you want to put in place, and then we begin to map out a game plan. We'll make some recommendations for you. We answer all your questions about, you know, what you want your retirement to look like. All of this is done 100% free. It's a consultation that we do, you know, 15, 20 times a week.
Reach out to us. Get started with a customized retirement plan today. Just go to our website, www.retirementincomethenumber4lif.com.
You can call us 301-242-3950. This is a no obligation consultation.
The Retirement Income for Life show will be right back. Remember, you can listen to the show anytime, subscribe, wherever you get your podcasts.
[00:28:21] Speaker A: The heat is likely not the only thing making you sweat this summer. I'm Matt McClure with the Retirement Radio Network, powered by Amerilife.
With energy prices soaring and record breaking heat waves across the country, the cost of cooling your home could set you back a pretty penny this year. And air conditioning can make up a big chunk of that total, especially in hotter and more humid areas of the country. Sarah Baldwin is with the think tank Energy Innovation.
[00:28:47] Speaker B: Because we have a confluence of factors. The increased price for both gas and oil, as well as natural gas in homes and buildings. And an extremely hot summer and likely to record heat all over the country as well as the world, largely due to climate change. We're feeling the pressures on both sides,
[00:29:08] Speaker A: but if you think there's nothing you can do to ease the pain, you'd be wrong. Baldwin says there are some Things you can do that'll cost you only a little, if anything at all.
[00:29:16] Speaker B: Paying attention to when you're turning on appliances, when you're turning on the ac.
If you have a thermostat that you can program, setting that thermostat to a modest temperature instead of going straight to really, really cold.
Looking at what kind of window coverings
[00:29:35] Speaker A: you have, other improvements may be a bit more costly.
[00:29:38] Speaker B: Update your air conditioner to the most efficient unit. A heat pump air conditioner is going to be your best bet. You can also look at replacing windows and doors. Those can be a bit more costly but can have huge benefits in the long term.
[00:29:53] Speaker A: And don't overlook your power company. It could have some programs or incentives to help you back on energy use and save yourself some money in the long term. Baldwin says renewable energy is the way to go since prices are much less volatile than things like oil and gas.
[00:30:08] Speaker B: The sun, the wind, geothermal, hydroelectric, other carbon free sources like nuclear are all generally very cost stable relative to their more volatile and spiking fossil fuel counterparts.
[00:30:20] Speaker A: So how will you survive the summer heat and its impact on your wallet as you plan for retirement? And that's a key question to consider as the mercury and inflation keep going up. With the retirement radio network powered by AmericanLife. I'm Matt McClure.
[00:30:38] Speaker B: Welcome back to the Retirement Income for Life show with Doug Vincent. Helping you turn your savings into income you can depend on.
Let's understand multi year guaranteed annuities, right? M I G A myga. Let's understand what a multi year guaranteed annuity is. And this is the simplest way to lock in steady growth without worrying about the market. Okay? Market volatility can trigger knee jerk, knee jerk decisions.
You know that you may feel real smart for the moment, but now it's costing you, you know, in the long run. Okay, so how do these multi year guaranteed annuities work? So you invest in lump sum, okay. And you set that number for the number of years you want that guarantee. 3, 5, 7, 10 are familiar time frames where mygas are set up and the insurer guarantees a fixed interest rate for that entire period. Okay.
At maturity you can take withdrawals. Okay? So on a yearly basis, if you want to take money out, you know, you, you are able to, to do that at the end of the term. You're able to do that, you renew for other, for new terms, you know, and you can also annuitize for a lifetime. Okay? You get a fixed rate of return, a fixed period. When it matures, you take Withdrawals, you can renew for another term or you can annuitize for life. Okay. Why is this appealing? Predictable growth, okay? You may like the interest rate that's attached to these guarantees over the course of those three, five, seven, 10 years, right? You can predict what you're going to earn year after year.
You know, right? Now some of those attractive rates over, you know, 5, 17 year period are 5 to 6%, you know, and as you compare that to a CD, you're gonna like that percentage, you know, better. And so that's one of the appealing things for the myga. Simple structure. No caps, no participation rates, no moving parts, guaranteed fixed rate of return. You know what it is, it's cut and dry, right? It's, you know, for the short to midterm timeframe. You know, works well for retirees who want growth but need access in that, you know, three, five, ten year period. So let's give you an example. So Jane, she invested $100,000 in a seven year MYGA at 5.5%. Okay? After seven years, she earned $42,000 in guaranteed interest. Okay? No market risk, no surprises. And if you compare that to a CD, let's say that's on average 3%, she's going to come out, in this case, in her case, $20,000 more. Okay? Now what's the drawback? Early withdrawals. If you didn't wait to seven years, Jane, you know, the early withdrawals, that could trigger a surrender charge, okay? You agree to a certain period. This is why all the money does not need to be there if you needed it earlier. It needs to be taken from other places. And so this money, you got to know it's going to be tied up. That conversation needs to be had, right? And if that's not the best option to tie a hundred thousand dollars in this case into that fixed period, then you're not going to want the myga. It's going to, you're going to have to go another direction. Also, it's limited upside, okay? There's no market participation. You know, it's 5%, 6% or wherever that might be. And for you, that's, you know, more moderate, aggressive, you know, more of an aggressive investor that might not be appealing to you because you like the volatility. All right, so here's some key takeaways. Mygas are about certainty and simplicity. It's very straightforward and they're best for people who don't want surprises, are comfortable with a solid guaranteed rate of return. You know, for the most part, in my view, if you're going to look into a myga, make sure it exceeds cost of living and inflation, okay? You're going to need to make sure that you're somewhere in that, in my view, somewhere in that 6, 7, 8% range, you know, because you're going to have to commit to leaving this money untouched. But when that money frees up and you've gotten that rate of return, now you're going to need that money to have kept up with inflation and cost of living. Because seven years later, the cost of living, cost of goods, service is going to be higher. Okay? So got to take that into consideration and you know, always, you know, you know, just a quick tip, know the surrender schedule and how that schedule fits into your, the flexibility you need related to withdrawing money or allowing money to stay where it is. Give us a call, 301-242-3950.
Go to our website, set up a free consultation. We can discuss mygas with you at Retirement Income. The number four L I F E dot com. All right, so how annuities protect you from market volatility? How do annuities protect you from market volatility? Think about annuities acting like those shock absorbers, right? This smooths out the ride while the market is swinging, while the market volatility is going up like a roller coaster, your annuity is providing those shock absorbers, right? So market, you know, swings, you know, it feels like you got whiplash sometimes. You know, one week your portfolio is soaring, next week it's slipping, you know, real fast. And for retirees who depend upon that steady income, they don't want the volatility. A lot of times they don't want that stress. You know, this can be dangerous, right? And you know, annuities, I might run out of money if I'm not careful. A lot of our retirees are saying, and so annuities can help in a lot of cases smooth out the ride. Okay? So here are some, some things to just consider, and we touched on them a little bit earlier. But annuities provide stability, you know, why? How can you say annuities provide stability, whereas guaranteed income, okay, you want guaranteed income, annuity can, you know, cover the essential expenses, you know, regardless of how the market performs, you know, this amount's coming in, you can set up guaranteed income along with that principal protection, okay? So you don't have to worry about waking up. One day the market went down 30% and your portfolio is now 30% lower. No, the principal is protected along with the guaranteed income. And you can diversify into how you want to balance out who you are as a person.
And is it, hey, you know, am I, do I have a stock heavy portfolio over here with a per. A portion of my money and now I can go over here and put this portion of my money in an annuity that has more, you know, guarantees and protection.
You really can balance it out. While that diverse, that, while that diversity is put in place, this reduces that stress we've been talking about. Okay, Retirees, the last thing you need in retirement is to be stressed out because you don't know if your income is going to be secure.
Then you start panic selling. Okay? The market went down 25%. You did have a million, now you got 750. And now you sell everything, right? And then in 45 days, the market turned around and you, if you hadn't done anything, your account would have been a million and one. And so now you really stressed out now, okay? So these type of mechanisms, the diversification needs to be put in place so the money that you do keep in the market you don't have to stress about. You can allow the market volatility to ride its course at. While you don't change your lifestyle because you have the other guaranteed income tools like the annuities in place. All right, here's what the headlines are saying, okay? For quarter number two. In 2025, annuity sales were 116. 6 billion.
Okay? That was the second quarter of 2025, and this was the highest quarterly total ever. Now we've just come out of Q2, 2026, and if I had, if I was a betting man, I bet you that that number is going to be higher. Stay tuned. We'll have those statistics soon and I'll be able to report that to you, right? More employers are adding annuities to workplace retirement plans and they're embedding that protection at the core of people's retirement savings. Okay? Annuities don't eliminate risk 100%. They help you manage it, right? Giving you that steady income, you know, it reduces the resilience, you know, that you have to have, you know, with your money in the market. And it keeps you making, you know, keeps you from making those costly emotional decisions. You don't want to be at the roller coaster ride whim of the stock market. The stock market goes up and it goes down and it's very hard to predict the market. Okay, Build out a retirement plan that can help you with steady income, you know, help you ride out the market volatility. You know, help you do all the things that you're going to need to sleep well in retirement. All right, 301-242-3950. Get in touch with us. Go to our website schedule, get on the calendar, get on our calendar through calendly. We do Zoom meetings. We do in person meetings right here in Greenbelt, Maryland. Work in all the states. You can, you know, be helped free of charge, right on Zoom or in our local office. It's time for this week's problem solver.
Let's look at a quick case study of two retirees. And here's two outcomes from this. Them, you know, you, you, you want to look at some differences and, you know, see how you might fall in these categories. And I want you to meet Mark, and I want you to meet Linda. So Mark invests everything in the stock market, okay? He loves the growth potential. He ignored all the risk. I don't care. I'm keeping the money in the market. All right? Linda, she split her savings between the market and the stock market equities and a fixed index annuity.
And you know why? Because she wants growth, she wants that upside, but she also wants that protection. Okay? So when the market drops, okay, 25% in Mark's portfolio, it plummeted, okay? And you know, he's taking money out, so withdrawals are now tape being taken. So he start, already started his withdrawal plan in retirement. So he's getting supplemental income from a portfolio that's 100% in the stock market. And so now he's not only still taking it out withdrawals, but he's taking it from a shrinking balance, right? So now his confidence is shot. Okay?
Mark's not a financial advisor. He's a retiree that wanted to keep taking risks because his accumulation strategy that he had in place before he retired, he just kept seeing this money go up. He continued to get matching from his employer. He kept putting money in and he just believed this ride was just going to continue even when now he shifted to stage two and income plan. Okay? Accumulation strategies and income strategies are two different things. And so his confidence plummeted and his long term plan is now derailed. Okay, now let's take a look at Linda. Linda, she had, you know, when her equity portion fell, remember, she had some in the market as well.
Her fixed index annuity, it held steady, right? Her withdrawals then watch this, came from the protected funds. That's where she's taking her withdrawals. Because the market's down. You don't want to be drawing 5 6, 7% out of a account that just went down 25%.
Right? And so for Linda, it keeps income intact and it avoids the panicking while the market goes down. Her. Her decisions don't have to be impulsive or emotional or she doesn't have to panic now because the plan was in place already before the volatility set in. Okay? Confidence still intact, clarity still intact.
Nothing is derailed. Okay, so now what's happening to Mark during the recovery?
Right, during the recovery, his account is struggling to rebuild. What if this account took three years to get back to even? Okay.
Now you're still taking her on withdrawals, right? And in a lot of cases, because that account has to recover from losses, you take a look at it. And so now you gotta take out less money because you, you know, people are living longer. And so you retire at 65 or 70 or 60. And you want this money to last 30 years. But you did some analysis. It's going to run out in 14.
Okay?
You struggle to rebuild when you're taking money out at the same rate you were taking it out when it was 25% higher. Okay? You cannot expect the market challenges that you're going to have to absorb while you're taking that money out to be sustainable. Right? So the fia, it's going to keep providing that reliable income during the recovery. This is what happened with Lynda, Right? The equity side, you know, it's going to rebound eventually and that portfolio is going to regain strength, but we don't want to be taking the money out during that time. Okay, so let me give you some research. Right? 61% of advisors report using annuities to help clients manage market risk. That's six out of 10. Okay? As a diversified portfolio, as a good advisor, you should be exploring all the different retirement tools for your clients. Okay. It doesn't mean they have to. You have to do it, but it should be explored. Okay? So number two, retirees with guaranteed income streams are less likely to panic sell during downturns. Okay? No, gotta panic. You know, I know it's gonna recover. I'm taking money out of my fixed index annuity or other places that I've already earmarked to not touch. You know, I don't want to touch the, the, the money in the market, but I've already earmarked other places where money is gonna come out. And studies show that, you know, they re. They report this is reported that there's higher retirement confidence when a person has taken this risk off the table compared to those Persons, those people in retirement that don't have these guarantees, right? The same dollar amount can lead to two different very retirement, two different retirements, okay?
Linda and Mark had the same amount of money in retirement and they're experiencing now two different outcomes, right? Adding that annuity for Linda, because it was the right decision, it was the right planning tool, right? Gave her a mix of steady income, less stress and a stronger long term outcome. Okay? This is the retirement income for life show, okay? We don't want you running out of money, you know, when you get into your late 70s and 80s, okay, so you're still unsure about this. You know, you don't know what's a fact, you don't know what's fiction, okay? When it comes to annuities, you got to work these things out. You got to go through all of the scenarios and as we say all the time, give us a call. We're doing these consultations every day in my office, Monday through Friday, right here in Greenbelt, Maryland. You jump on zoom, come in, you know, to see us in person. Retirement income for life.com.
just, just log in and set that up.
And we, we'd be happy to, to assist you.
Come on down.
As we test your financial knowledge in right or wrong.
Okay, let's run through some of these right or wrong common annuity questions that we hear all the time. You know, myths, you know, buzzwords, you know, stuff that we, we hear all the time. And they're easily answered. And here's one. You know, these annuities are too expensive, okay? My expense ratio and annuities, I'm paying too much for them. Wrong. Okay, that, that's wrong. Okay? Now, variable annuities, okay, yeah, that can carry fees of up to, you know, in general, 3%.
But MyGas and FIAs often cost little to nothing. Unless you add the riders. I just mentioned it to you. Unless you're adding on riders, that would be a fee. No riders, no fees. Okay, so that's a myth Number two. Annuities lock your money up forever.
No, most contracts are going to vary as short as three years, let's say up to 10 years, right? You know, after that, 100% of your money is accessible. Although during that period of time you with a good plan, the money that you wanted to take out yearly didn't push you into any surrender charges.
And you just allocated a supplemental amount while you were still in that surrender period. While you were in that so called locked period. You're still taking penalty for free withdrawals. And it's not costing you a dime. All right, number three, many annuities can act as a buffer against inflation. Yes, many annuities act as the buffer against inflation that you are looking for. Right. Particularly fixed index annuities with inflation riders or even variable annuities in certain situations that have these different income features. It can help buffer against inflation by offering growth tied to market performance or cost of living adjustments that we've dug into.
However, not all annuities include these protections. So it just depends upon the specific products. All right. Annuities are too complicated to bother with. Wrong.
You know, we've dug into a lot of the complexities today. We can dig in more if you want to talk personally. The fine print is what matters. You know, professional guidance is what you need. Annuities can be understood in very, very simple terms. You know, the complexities that I've seen over all these years, they never outweigh the benefits. All right, number five, here's something else. Annuities can help me balance growth potential with protection and guarantees. Absolutely corre. Correct. Okay.
While annuities often emphasize protection and guaranteed income, many types, like the fixed index annuities we've been talking about, variable annuities, they still offer that growth potential.
Yes. We're going to have some caps we're going to have to deal with, in a lot of cases, participation rates. You know, there's different trade offs to why you would want to do an annuity instead of just direct market investing. Okay. So before you buy any annuity, ask three simple questions. Okay, three simple questions. What are the fees? Okay. Are there any fees?
Are there some fees? Okay. What's guaranteed? Okay. My principal guarantee or not? Right. What's the surrender schedule? Okay. Was there a surrender schedule tied to this? 1 year, 3 year, 5 years? How long does the surrender schedule ask? Get those clear answers and make sure you understand that or you should just walk away. Okay. If someone can't provide those clear answers that I just provided, you do not need to be putting an annuity in your portfolio. Okay, here's some quick historical facts about annuities in the United States.
Way back in the 1790s, Ben Franklin, he left money in his will to fund annuities for Boston and Philadelphia, supporting apprenticeships and civic projects for over 200 years.
Check that out. All right, first US annuity provider was in 1812. That was the Pennsylvania Company for Insurance on Lives and Granting. Annuities became the nation's earliest issuer, offering contracts to provide guaranteed income for widows and families. All right, here's A couple more. ERISA boosted annuity popularity in 1974, and the employee Retirement Income Security act encouraged employers to use annuities to provide guaranteed retirement income, expanding the market nationwide. That was in 74. Then in 1995, that's when the fixed index annuities arrived. And FIAS introduced a new option by combining principal protection with market linked growth. And these quickly became one of the fastest growing retirement products that are in our nation today. All right, so smart vision for you.
As you look towards retirement and you cast the vision, you put your daily mission in place.
What will retirement look like in your future? Okay, you're planning, as we've said, oftentimes you need to plan potentially for a 30 year retirement.
A clear vision now with goals attached to them.
You know, and as you are planning towards this, you want these, you know, this vision put on paper. You want this, this mission of your dream retirement mapped out. Okay. Statistically, 37% of Americans feel they need more educational retirement planning. I understand.
So 4 out of 10 need that education. You know, this is why we're here, one of the reasons why we're here to provide that 5 out of 10 or 52% of Americans wish they had more education on how to invest. Okay, this is one. Once again, while we recommend a sit down with you, your spouse, your family, your business partners, you know, consider how you're going to plan into your golden years on things like Social Security. Okay, when are you taking Social Security and why? Okay, you have to have a plan on when you're going to take Social Security. Okay, how about taxes? Is your tax bracket going to be lower in retirement? The same in retirement or higher? Okay. Have a lot of clients that are making more money in retirement than they were when they were working. How in the world could that happen? Because the streams of income have been set up and structured to pay them and even more, more of an amount than they had while they were working. Okay, that takes planning. All right, what else? Medicare. You know, some retirees assume that Medicare covers everything, you know, from hospital stays to regular, you know, doctor visits, even long term care. It's not the case. Okay. Basic Medicare plans cover hospital stays and physician visits. Okay. You can add prescription drug coverage, but there is no long term care. Add on for Medicare. Let me say that again. Long term care is not covered by Medicare. Okay, You've got to do some retirement planning for that. As you get older, you know, one out of two in the state of Maryland over the age of 74 are going to experience some type of Long term care need. Those statistics vary, those ages vary. But more than likely you're going to, you know, put some money towards long term care. Think about a mother, father, aunt, uncle, your grandmother, somebody in your family. You might be taken care of now. And we all know, and you can agree with me, that is very expensive. So you want to factor that into your retirement planning. Also life expectancy, okay, you're going to get hit by a bus at 62 and you retired it at 62. Yeah, you need to take Social Security at 62. Okay, just joking.
When do you think you are going to die? No, we don't have a crystal ball, but how old is your mom? How old is your dad? What kind of health are you in? Okay, you want to plan out, you know, some type of, you know, planning as it relates to how healthy you are. Because if you live to 100 years old your life, inspect to see if you retired at 65, you might have more retirement years than you had working years. So as smart vision related to retirement, a smart way to plan and all these features is to sit down with someone, do a complimentary consultation with us, do a overall retirement plan with us. Taking off the table, longevity risk, Medicare risk, Social Security risk, your income planning risk. You want all these risk taken off the table, years, hopefully before you retire. Okay? Now if you're retiring this year, you do definitely need to sit down with someone to make sure your retirement planning, your retirement income plan is protected. You know, that you have confidence that you're going to, you know, stay on track. Okay? And if these shows are helping you, right? And specifically today, if this show is helping you and has helped you, annuities, they're not really confusing, you know, they're not products that you want to avoid getting the education on. You know, it's rather, it's a practical tool that can really strengthen your retirement, right? You're already ahead of the game because you're listening. You're already ahead of the game because you've done, you know, a little bit of planning. But with the right mix of guarantees, with the right mix of growth potential, with the right mix of professional guidance, you can create a retirement plan that's built to last through any of these market cycles. Any other volatility up or down, you can have a plan that takes all that risk off the table. Schedule that no obligation retirement income review with us today.
You know how to get in touch with us at 301-242-3950.
You know our website www.retirementincome the number 4L I F E.com Help us help you build that confidence. You know, help us help you with the clarity you need with your vision and your daily mission as you're moving towards our retirement. Also, don't forget we do have a free resource Retirement Income. We have Retirement Income Survival Kit for you that you can download absolutely free.
And once again we look forward to helping you with all of your retirement income planning needs. Stay protected. Stay the course, Stay confident. Get that wisdom you need related to annuities. Do not hesitate. Reach out to us today. We look forward to helping you with all of your retirement planning needs.
Thanks for listening to the Retirement Income for Life show at Greater Washington Retirement Income Solutions. It's not just about retirement, it's about building income, protecting your family family and creating a legacy. Learn more at RetirementIncome4Life.com that's RetirementIncome the number4Life.com or call 301-242-3950 to schedule your complimentary consultation today because your future deserves
[00:58:54] Speaker A: a plan you can trust Greater Washington Retirement Income Solutions may conduct life insurance and retirement planning services in Maryland and maybe be licensed in other states. Financial professionals cannot conduct life insurance or securities business in states in which they are not licensed. This content should not be construed as an offer for the sale of insurance or securities products in unauthorized states or countries. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary or investment advice. Neither Greater Washington Retirement Income Solutions nor its representatives provide tax or legal advice. For answer to specific questions and before making any decisions, please consult a qualified attorney or tax advisor. Investing involves risk, which includes potential loss of principal. Guarantees are subject to the claims paying ability of the issuing insurance company not affiliated with or endorsed by the Social Security Administration, the Centers for Medicare and Medicaid Services, or any other government agency.
