In this episode of the Secure Your Retirement Podcast, Radon and Murs discuss the power of annuities as part of a holistic retirement income planning strategy. Joined by their guest, Sam Wimpy, an insurance and annuity specialist, they break down the evolving world of fixed indexed annuities and how these vehicles can provide principal protection, guaranteed lifetime income, and a meaningful role in risk management. This conversation challenges traditional ideas about annuities in retirement and highlights how they can act as a bond alternative while helping retirees plan for retirement and retire comfortably.

Listen in to learn about the practical and emotional aspects of building a solid financial foundation. The hosts and Sam dive into how annuities have evolved beyond the stereotypes of decades past and now serve as reliable, tax-deferred annuity options that align with today’s retirement planning strategies. From creating predictable income streams to securing a financial legacy, this episode provides insights for anyone seeking to secure your retirement with confidence and clarity.

In this episode, find out:

·     What makes a fixed indexed annuity different from traditional annuities and pensions.

·     How annuities serve as a bond alternative to help manage market volatility.

·     The role of income riders and guaranteed lifetime income in creating predictable cash flow.

·     How to use the Three Bucket Strategy for balanced retirement planning and risk management.

·     Why annuities in retirement can help you enjoy stability, flexibility, and peace of mind.

Tweetable Quotes:

“When you understand how an annuity fits into your overall plan, it stops being confusing—and starts being a tool for confidence and security.” — Radon Stancil

“When we view annuities as a pension alternative or a bond alternative, we open the door to better retirement planning strategies that focus on safety, growth, and flexibility.” — Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Welcome, everyone, to our podcast, Secure Your Retirement. We obviously tried it from

time to time have on a guest. And today we’ve got on a good friend and a good

guest with us as a specialist in helping us help us kind of go through the

landscape of all the annuity world Sam Wimpy all the way from Topeka Kansas so

thank you very much Sam for coming on our show today that’s right guys thanks

thanks for having me it’s always a pleasure so Murs and I you know in working

with our clients or those that are you know maybe becoming clients one of the

things we talk about is really what we try tried to think about is risk management

a lot of the times and we’ve talked a lot about our three bucket strategies,

I mean you should have money in cash money in a something that’s going to be safe

and not correlated to the stock market and then yeah, we want to have some money in

the stock market and be in growth buckets today though we really want to focus on

that middle bucket and it’s really and the reason why I’m excited to have you

on us because we’re going to talk about and maybe a little bit more detail on some

of the nitty -gritty things. And in that income bucket, a lot of times at income

safety buckets, we are utilizing what we call a portfolio of fixed indexed annuities.

And so, I just thought, since you’re our partner that we go to help us do this

out, can you kind of help for those maybe that are listening and have not been a

part of that world? Could you kind of tell us like, what’s a difference between a

fixed index annuity and then maybe an annuity that somebody knew about 30 years ago,

or maybe even a pension that they’ve got at their company. Yeah, definitely

some similarities there, but a lot of differences. And the annuity landscape has

changed pretty drastically over the last 10 to 15 years, in my opinion. One of

those changes being the introduction of the fixed indexed annuity. So, let’s start

briefly with like what an annuity is in simple form. And it’s simply you as a

client giving money to an insurance carrier, and in return, they’re going to give

you a promise of typically safety, tax deferral, or guaranteed income,

right? That’s kind of the simple definition of what an annuity is. So, then you tack

on this kind of fixed index. What’s that mean? Well, the fixed specifically refers

to kind of the insurance side of it, right? It means it’s going to provide

protection, like a fixed annuity. We kind of know how fixed annuities work. The

index portion is actually how they’re going to provide a rate of return to you that

potentially could be greater than a fixed annuity. So, it’s tied to an index.

We’re not actually investing in the index, but it’s tied to an index to give you

some type of a conservative to moderate rate of return. Yeah, I think the – so the

term FIA becomes something that we throw around a lot, but a lot of times people

forget that it is a fixed index annuity. And when I draw it on the board and I’m

explaining it to someone, I make it super simple. And I think most people get it.

The fixed piece, right, I’ll write principal protection right under the F. And then

I say, it’s indexed. All you need to think about is this is how you’re

going to earn your interest. I. And then A, and I kind of jokingly say this

because annuity in a lot of different ways has a different meaning to people. So, I

just say, think account. It’s an account that happens to be held at an insurance

company. That’s when an annuity is, right?

And so that, I think that resonates pretty well with people of understanding the

concept. So, let’s kind of you hit a couple of things of annuities can do a lot

of different things, right? And let’s just go with just the two, because there’s

other nuances out there, but of how can it provide safe growth,

and then, or how could it provide guaranteed income? Yeah, good question. So those

are kind of the top two categories that we see advisors like you utilize these

products, right? So are we going to utilize it for safety or income or both,

right? They all provide safety, but let’s take into consideration just So this is

what we’re going to call kind of like maybe your bond alternative, your safe

portfolio alternative, maybe even a moderate portfolio alternative. But at the end of

the day, what we’re looking for on these types of products is like that kind of

three to seven, three to eight percent rate of return, don’t lose my money. We hear

that a lot, right? So typically, you’re going to look at a product that has some

type of a time commitment, seven to ten years that’s tied to an indecis, maybe one

of the most popular ones used S &P 500, so it’s going to be tied to an S &P 500

and provide some rate of return over that time period. Again, we’re kind of looking

for that 3 to 8 % rate of return. Things go bad. Something happens with the market.

These are the things that you guys talk about a lot with your clients in planning.

Things go bad. Guess what? We don’t go backwards. we just get zero. So, from the

safe side, if we’re going to simplify it, it’s really the part of your plan or

your portfolio that we’re just trying to generate a conservative to moderate rate of

return. You guys can kind of decide what that is for your clients, but also provide

that downside risk. On the other side of the spectrum, which we’re going to call it

income, for guaranteed income products, there’s typically a feature within the product

that will provide guaranteed income that basically just says, hey, I’m this age and

I want to start taking income, maybe a little bit like a pension. I want to start

taking income, and we’re just going to guarantee you this rate, this income stream

for either your life or you and your spouse’s life. And what’s great about it,

Murs, you kind of hit on this is it’s pretty simple. It’s, hey, here’s how much

income you’re going to get. It’s going to pay out for your entire life or you and

your spouse’s life. That provides a lot of flexibility on the other side, right? If

we can get that guaranteed income stream, and I know I’ve got all this income to

cover expenses or cover vacations or whatever you want to do in retirement, that’s

pretty cool, right? Because we don’t have to worry about anything, and then we’ll

let, you know, the experts like you guys figure out the rest of the plan. Yeah,

so, let’s kind of talk about some, I guess, use cases, and I know you work with

not only just us, but a lot of advisors throughout the country. So, you know,

we talk a lot about trying to manage risk. And a lot of times in the past,

really the main option people lived with was to say, oh, so the way I do that is

I put a certain amount of money in stocks, and I put a certain amount of money in

bonds. The very one is 60 -40, especially for folks that we work with that are 55

years of age and older, because they’re trying to have a little bit more

conservative portfolio. And then the problem has happened over the last decade where

bonds have really not done well. In fact, in 2022, bonds did really bad and lost

about as much as the stock market lost. And so, a lot of people who were in those

portfolios go, man, I was trying to get safety. And I was doing that with something

I thought was a safer investment like a bond, but I’ve not really made much.

use cases that you’ve seen. Yeah, I think one of the first things that we talk

about when we’re looking at like, say, bonds versus annuities is we kind of hear

this like bond alternative. Well, like one of the things I like to say is like

they’re actually different, right? So, a bond is a security. An annuity is an

insurance product. We can go chat GPT or Google that and you can find out real

quickly the difference. One of them actually provides some safety and some guarantees.

the other does not, right? So again, if our end goal, when you guys sit down with

a client to build a plan for them is to generate a conservative rate of return,

and we don’t really want that to change, or we don’t want to see a lot of, you

know, I don’t want to say issues, but we don’t want to see any risk involved with

that. Like, I might not want to take on a bond, right? Because you’re right. As

the interest rate environment changes, I mean, part of the reasons that security is

there’s risk involved right there’s interest rate risk there’s credit risk all of the

above and so when I really want to go to that safe portion of my portfolio back

to hey these things have evolved we had more tools here’s a new tool that I can

use in my planning process to not lose money but still provide kind of that rate

of return can’t do that with bonds in every situation I think they both of you

guys would agree that like hey it’s not that we don’t use bonds or we don’t like

bonds, but

Yeah. I mean, I think a simple way that I’ve explained it to clients is basically,

hey, we’re trying to, at the end of the day, get a bond -like return. That’s why

we call it a bond alternative, without the risk of the bond market itself. 2022 is

a great case for the bond world where, you know, that 60 -40 portfolio crumbled.

The equity markets were down, and the bond markets were down because we were going

through this interest rate changing environment that no one I mean no one could

predict because we’re coming out of COVID and then the rate’s had rates were jacked

up very quickly cash and all this stuff was funded into the world and it just

changed the landscape for bonds and so it’s a simple way of just saying bond like

return without the risk of the bond market now I think there’s always things you

got to understand about any investment you know we do stocks We do bonds. We

utilize annuities. We use alternatives and private investments. There is no perfect

investment. You can have a really, really good put -together plan, though, that kind

of mitigates a lot of the risk of any individual investment. But you did say

something that I think is worth talking a little bit about, which is interest rates,

right? And I think everyone listening today knows that rates are still high. Rates

are starting to come down a little bit. The Fed just cut rates, and they’re going

to continue to cut.

I think a couple of things here, right, when we look at like the benefit of

annuities and we’ll hit on the interest rates in a second is like, yeah, we can go

get a CD or a money market, but do they provide tax deferral, right? So, there’s

some differences with the product, again, finding the right tool for your clients and

your planning processes, which is what you guys are really, really good at, is

important. But also, the fact that everything is a little more competitive, but the

reason is that that interest rates are high and the way insurance companies work is

they take your money, and they invest it into short -term treasuries, long -term

treasuries, long -term corporates. Obviously, I’m kind of dumbing this down a little

bit. There’re some additional things in there, but when interest rates are high, we’re

finding better short -term treasuries, long -term and corporate spreads and all that.

So, because of that, the products are more competitive now than they’ve ever been. So

we are seeing products offering, you know, higher returns, higher guaranteed income

because of where the interest rate environment’s at right now. So just so people

kind of maybe have a little bit of understanding of the of the annuity landscape.

So sometimes people will say, well, which insurance company do you work with? And

they’ll ask that to me. And I say, look, we don’t have a relationship with just

one insurance company. We are working across the board. How do you keep up with all

that? And we say, well, we actually have a back-office team that we get to reach

out to that’s going to help us. And I said, it really comes down to us kind of

going out. And the way I say it is, we’re going to go shopping. And we’re going

to go shop and say, where’s the best rates at? What’s the best place for the, and

again, based on the goal, is it income or is it accumulation? So could you talk a

little bit about like what that really looks like?

pack a little bit, but I think maybe the first thing is that we work with over 15

or 16 different insurance companies, right? We also have a product development

company, so we’ve developed some products within the industry as well. Because of

that, we’ve got a vast knowledge of all the different carriers.

So, we’re evaluating, you know, who’s the best in safety and growth and income at

all times, which does allow you guys to not have to focus on every single insurance

company, because as you know, the insurance companies are calling you guys saying,

hey, we’ve got the best product. So, we work with a ton. We’ve got a case design

team. We’ve got product specialists. Everybody’s identifying where’s the best fit. But

I think what’s most important about all that is that you guys are working with

those guys day in and day out to understand what’s the best fit for the client,

right? So, we understand the products. You guys understand the client needs and then

we collaborate to figure out what’s the best fit. But I think another way to think

about this or look at it, y ‘all are in North Carolina, right? Big golf state.

There’s a lot of great golf. Pinehurst is just down the street. There’s a bunch of

different golf ball manufacturers out there. I know you both love to play golf, but

you probably hit a different ball than he hits a different ball. And that’s because

you guys have different swings, different needs. I want a ball to go further. I

want it to spend more. If you went and talked to the Titleist rep, what ball do

you think he’s going to tell you to play? Yeah, Titleist. If you went and talk to

the Callaway rep, what’s he going to play? Right? So, you guys are independent

advisors, just like, you know, the pros out there have independent consultants to

tell them what ball fits their game best. That’s what you guys are doing. So

there’s a ton of insurance products out there. There’s a ton of annuities. Candidly,

they’re all pretty good. It’s just what’s the best fit for your plan? That’s why

people need to come and sit down with you guys. It’s because you’re going to find

out what their needs and wants are and then work with our team who are experts in

golf balls, aka annuities, and figure out which one’s the best for your plan. So, a

ton of options out there. We do a lot of research to figure out who’s really good

at what and help you pair that down, ultimately you guys are the experts that find

out what’s the best fit for their plan. Yeah, I’m still looking for a ball, by the

way, that doesn’t go in the trees and doesn’t go down in the water. I do. I like

that analogy a lot. I mean, what we have said so many times is take that analogy

one step further, and you say, let me go talk to Ken Fisher, right,

who’s a very heavily marketing organization and they have wording and verbiage out

there that says never buy an annuity well what’s his whole business structure

it’s the stock market why would he want to move any money out of the stock market

go talk to someone that only does insurance right and what do they want you

to go get they want you to go get an insurance product because they don’t know the

stock market or they’re not  licensed for it and so to us, you know, as an

independent, we’re able to say, well, we’ve got a bunch of tools in the tool belt,

whether it’s a stock market, whether it’s an annuity, whether it’s, you know, even

money markets or alternatives or long -term care products, right? We’ve got a bunch

of tools in the tool belt, and so let’s just go solve for what you need, right?

And so, for some clients, they don’t have an annuity. For others, they have a lot

because they hate the stock market. It makes us be in this place where we can be

very flexible. But at the end of the day, that’s why we started this podcast, is

you got to lead with education, and you can’t just force something on someone. You

have to show them and demonstrate how it’s actually going to accomplish their goal.

So, I just wanted to add that little piece in. You got anything else, Radin? No,

I’m just going to say, you know, we always say this. If you’re listening to this

and you go, man, I got some questions, how does this work? We always encourage

people to reach out. You can go to our website, which is POMwealth.net, go to

the Contact Us page, and just let us know, hey, I got

questions. I didn’t know this about this, or I need to understand it a little bit

better. Feel free to reach out to us, but I do want to say, thank you very much, Sam, for coming on and chatting with us.