Annuities 101

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Welcome to finishing well brought to you by Cardinal guy� Certified financial planner belonged to Schild, best-selling author and financial planner helping families finish well over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well.

I am very excited about finishing well every talking about is your money serving you or are you serving your money. That's always you know, sort of.

The question that obviously Jesus was explaining Matthew 25 when he talked about the parable of the talents and you might recall that there are three characters there that each had a chance to invest some money and one guy only got one talent and one guy got to another guy got 10. You might recall that the one guy got one was apparently serving his money because he was so scared he went buried in the ground and as a result, you know, to paraphrase Jesus the guy went out and he was called a wicked and lazy servant.

Essentially because he did not face and he didn't allow you know is what you think you put it in the ground. Expectations you fear, lack of faith. Those are those are things that we are all facing our way with our money.

I was telling you earlier would've been nice if the servant would've gone to maybe one of the senior servants and hang around the master a while and just expect are you doing online.

If there is Internet Inc. on yammer. That wasn't the case but expectations you know that's one of the beautiful things were talked about investments today on finishing well and you know one of those seven worries were hoping won't be a worry and and that's essentially your investments right yeah I mean everybody that has some savings, some money some amount of money.

Perhaps in retirement savings and their facing retirement.

The kind of folks that I'm sitting with every day. You've got expectations for that money.

Whether you know it or not and you're going to find out your expectations as soon as you sit down with somebody like me and I'm asking you so what are we going to do here and you're asking me the same thing when we get to do what you can do that has a lot to do with what's the purpose of the money and and that's one of the questions that really we got ask yourself trying out well and I'm is a tale of the purpose of the money is to serve you.

Unfortunately for many people they serve. The money through their worry and so you have a story that you have had a client that yeah unfortunately you know and I can understand as I recall her husband passed away. She was left. This money and how it fits a hard place to be. It's a really hard place in my heart goes out to her. These are people that plant a church in Canada after he retired retired early and then they moved up to a place in the church and in the she has some retirement money in Canada and then she has some retirement money in the United States is a small amount and then not sure if it was life insurance for the sale of their home but she's got quite a bit of nonretirement money for quite a bit to her until she's got between 200 and $250,000 of money that is really just sitting at a very low interest rate almost nothing in a fight buried in the backyard.

Very, very, very close to that and she was troubled by that, but she was just wrapped up in fear and she noted trust, and she'd been dealing with some people at the bank that she didn't feel real good about the � just happen to be listening to our show and she might not appreciate me talking better on the radio but I I mean this all in good service.

She's a wonderful lady and not identified.

And I won't.

When she came into Austin. We've done several things for her, but he really got me and I gave her some feedback during the meeting that I die.

I just felt that she's wrapped up in worry and and that she's got a develop some skills around trust with her money because she's she needs to get a return on this money which does that she's going to have to commit to something in somebody right and one of the beauties of know what you teach here every week on the show is that there are all sorts of different asset allocations and they all come with a different level of risk based on your purposes, or yeah I mean if you have a bucket of money world amount of money or you have an account we have a few accounts and you get your retirement in front of you. I got news for you. Is this what you been saving for so now this money is there to serve you. So we gotta find out first of all what you want to do with this morning.

There's lots of different things we don't meet people and just make assumptions that they all want the same thing so we really before we begin this process of helping you invest your money or guiding you to invest your money. We gotta sit down with you and walk you through a series of questions to find out how you want your money to search is that pay you an income in retirement is that to create an income and later retirement and I found out from her when we talk to hers that she was very worried as well about long-term care. She wanted become dependent on her kids. She also just bought a nice new condo with some of this money back a few years ago. Her small house cottage and she wanted if she does need launches long-term care to stay in her house as long as she can. So now hot now. Now we've got something to save for so we don't need to plan for high return investment return on that part of the money we need to plan that this thing is going to have long-term care benefits there that we can turn on very quickly.

She needs so this is this is again these charts that really talk about here in a minute. You can find them@cardinalguy.com one of the seven were studying download the whole PDF fund investments were on page 71 of the workbook which is of the same charts in both the workbook and the original book. I think it's on page 53 Annette on the mentor but so to move onto that. You know, again working at were not allocate assets based on this chart right yeah I mean is that this chart list I made this chart myself taking some more complicated charts and just trying to simplify my make it something that the average reader can look at somewhat using. If you go down the side.

Here we got nine different things you can put your money and he pretty much covers the whole universe stocks, bonds, fixed indexed annuities, fixed rate annuities.

You can put in the bank and a CD. At least you can get some return that would've been nice for the town sky handed out. I want to laugh a lot is not a master wants her back and I'm estimating that's how long cash in money market mean and this is where she had her money you can buy real estate.

Golden commodities in alternative investments and then options or derivatives or whatever you want to call mom and there's nine things in pretty much as the universe of what you could put your money.

So when it comes to expectations.

At one end of the spectrum. Somebody that you know I could imagine the guy with the talents that mean he's operating out of fear but then the other guy you know he would've been coming to you with a different set of expectations based on, you gotta get me this an end and that to Canada making you serve your money as well. Other right people that are operating out of fear. Come to me and they tell me what they don't want from their money and people that are operating from a good place from a place of faith. They tell me what they do one on money and by the way their expectations are usually too high for person retirement. If I got somebody was 30 years old and they tell me they want to earn 10% on their money mean there's some ways to do things and really take some risk. You also could lose substantial amount of money but we could go for when you get somebody, 60, 65, 70 years old or older. You got no business shooting for a high expectation based on hundred percent stocks were not going to recommend that you put all your money and one thing any at the very least, people are usually into things that are in stocks and bonds and that's kind of the traditional allocation. 7030 6040 every people that have brokerage statements and they bring them into us.

Most of their monies either in stocks or bonds some combination some breakdown, but I would propose that there's several other alternatives and you need to spread your money around.

Based upon your expectations. What would you know what you're expecting from them before we get into recommending a stock raft spent some time on your expectations is that's part of my job is to help you get your real expectations realistic. Make sure I can perform to those expectations and also to find out really which don't. Which is for most people is to lose any of their money.now I mean what's the purpose here and where we gone again your listing to finishing well, a certified financial planner Hans Schild is brought to you by Cardinal guide.com and forget the guide after the Cardinal where you'll find his complete book right to complete Cardinal guide for planning for living in retirement, which you know they can just write you an email and have the whole book. First of all, both books are on Amazon. There you can get to Amazon and the books from our website. Cardinal guide.com you can download like today's show, the investment or retirement income chapter of both books for free PDF right there on the investment or retirement income page of the seven Moorish tab or you can just go on the messenger thing on there and just send me an email. Send me a message with your address that you like the book. I'll be glad to send it right so there you go there, isn't there some answer for helping you get to the point right because faith in outcome from some understanding and some minute ago you said will, there's 1/2 well when you begin to understand some of the things you can have some hot and with that comes faith and in your money begins to serve you and what a wonderful thing to sit back and go okay and I'm not gonna run out of money. I know where I'm headed that mean what's ideally what what would you look at your own client base word with where's the guy that's where reality I said some of his money annuities is that in my answer the question writer minis got generally some folks that don't want to lose anything in there really wrapped up in the fear of that and they really need this money for later retirement there to be a lot and annuities actually enforce a regular break that when we come back and I act on mind sharing a conversation I had with my wife on the subject of annuities because clearly you know, here I am 64 inches, not merely my neither of us have a clue about them two years ago but now are like no man businesses some sense for what are we come back to Sharon Moore on finishing well. Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security and care and long-term care. Just go to Cardinal guide.com and contact Tom to schedule a live recording of finishing well your church Christian or civic group contact Tomczyk Cardinal guide.com that's Cardinal guide.com welcome back to finishing well, a certified financial planner Hans Schild today show simply is your money serving you or are you serving your money when we left our hero Ashley that the lady we've been discussing right.

She had come from this place of actually just leaving the money, hidden mascaras and up, she had had $250,000 somewhere between 200 250 in cash, but now she had some faith and she essentially had some faith in somebody that can help you at and and you began to allocate her assets in a different way. Based on this chart we enter IRAs small and talking about $30-$40,000 there in stocks gain she get minimum distributions in we started showing her talking about the risk that she's taken and then we realized if you look on page 71 of my book in the workbook. I mean, she had she had about $70,000 on top of this invested in the market.

That's plenty for a 76, 77, nearly 62� she was on the right track. By having this money in cash. You just overdone it and she was sitting on it too long and every month she was sweating about the interest that she didn't get to. She knew she could put in something and get maybe 3% or something which would've been a whole lot better 3% for a whole year on $250,000 and 7500 bucks right okay so what we did for her. As we we we did all the wrist stuff and we found out what she was really concerned about our money could serve her and we found out that she is worried about later retirement so that she might live a long time and she might go through some of her money and then she's worried about being broke. When she's 85 or 90 or having to become dependent upon her kids and that's a reasonable concern and it's a reasonable worry but not when you have $250,000 and you live is close, she does so. We found out she was also very worried about long-term care she she's very aware of that she knows she's in this alone and if she would have a stroke or develop dementia or something she was going need care and she would probably want to go to a facility but maybe start out at home, so she needed something for that. She also had a desire to leave something to her daughter. And so we do all the math on this that called for taken half of the hundred and 50,000 we are going to invest in putting it into one of those hybrid long-term care policies so you know pays $110,000 at her desk to her children or it pays up to hundred and $10,000 of monthly payments for long-term care for a couple years so in other words it's it's it's valuable in life. If you needed for long-term care.

It's valuable and gas to the estate. It's a pretty nice thing okay so we had 75,000.

We allocated to that and the other 75,000. We put in a fixed indexed annuity and with the intent of just leaving it there until she's up in her 80s early 80s mid 80s. She's nearly knocking to touch that 75,000 until she has to. And that's can be when she's expended all the IRA money she's got distribute that subordinate distribute that and when that runs out and about emotions and fortunately fortunately you you throw that word out annuity like people know what it means in and I sure in the world and know what it meant a year and half ago I had a discussion with my wife for the day like you know honey we mean a lactulose life insurance money when if I go in a lot, you need to talk to Hans about an annuity what's in annuity. What is that mean annuity means that a series of payments over a period of time. Just if you look it up in Webster's units is that the definition is a series of payments over a period of time and what I'm speaking about the period of time is your lifetime and that's uncertain for most of us we don't know when were going to die. So that's risk is borne by the insurance company so an annuity at its core is there to make a payment to you every month like Social Security. As long as your lot right which you one of her purposes that she wanted to make sure that she didn't go broke when she was in her 80s and 90s sushi at Social Security and with this annuity. Now it's baking right mid sitting there. Well it is speaking but a lot of people don't use annuities the way they were intended, or really are a set of a lot of people just using the savings account so they put the 75 grand in their it grows and accumulates and then maybe to three years from now they want some money out of it. They just withdraw that which you can use it like a savings account. That's really not the intent of the things the intent of the saying is solidity.

As you said, and I've submit to let it bake so it sits there and it grows some guarantees on the growth there some guarantees you'll never lose anything in this particular one that was sold or she's going to earn a return based on the performance of the stock markets of the stock market performs well she's going to get a much better return than if the stock market perform poorly she's never going to incur any losses okay that's whiskey and she's never going around among she's never going to run out of money and so what your intent is, is to turn on the payments but the longer she waits, the more they are so would you shorter if you turn this on and six years.

You can start getting this amount. When you get that amount you'll get that for the rest your life if you wait eight or nine years you get an even bigger amount for the rest your life, which is just like so security right if I wait till I'm 70 to take myself very same thing. It's just as long to bake in a grow you don't pay taxes on the growth because his tax-deferred. Ultimately, when you start pulling it out even pay taxes on what you have tax deferral as a benefit and then some people die before they turn these things on the and then it just pays out its value to your beneficiary so get over detailed too much talking and selling annuities so much on the show. I just want to bring them in as an alternative to really do bonds okay and that's what were doing a lot. His bond yields are the interest rate that you get on bonds and CDs is just the lowest that I can remember in my lifetime bonds are to 3%. Some of less than two and in the bank CDs are less than one or maybe just over one and you know you're able to put some money in annuities enters substantially more than that. So that, and you can have the guarantees of lifetime income. Some tax advantages of were doing more annuities and selling more annuities than we ever and a lot of times these annuities is an option get dissed by a lot of people in the media. They just don't really understand. They treat them like their savings account and they look at the fees and certainly there's times when people like me sell annuities to the wrong people at the wrong time in the wrong amounts in the wrong product mean, there's certainly some abuses in that area be adjusted, cast the whole bad light on annuities is just wrong. So I looked on this chart right there only for these things that essentially I core categories of investments that are guaranteed in my forum I can't lose. I can't lose on equity indexed annuities or fixed-rate annuities. I can't lose on a bank CD consents in the back. It's like I can't lose on a money market, but any of the rest of these stock bonds, real estate gold annuity. I mean gold commodities in options what's options. There's another one in Scott Buffalo. There were an option is a hallmark in an action options.

Once you guys in Chicago. The board of trade that are.

I've been up there and watch this thing in their their trading options and if I was going to write an option sell you a piece of paper that says you can buy this stock at this price.

On October 15 and on January 15 so you know if General Motors is trading for hundred dollars and I might have an option that allows you to buy 404 on October 15 and then have the same option that would allow you to advise surgeons betting on the future price change and then that option is an experience expire worthless if General Motors is trading for less than $104. People use these for the wrong reasons to their their hedging strategies we sell. No options are practice the things I learned by but the idea is asset allocation based on a strategy that is is based on faith on somebody so that you can take the burden of these riches so to speak yeah and and and and offset that with faith and where I've got it that's going to be a long-term solution like as is. I talked my wife. You know she I was like I got this life insurance a few five pathway. I would really like. I really, really, it helps me to that have faith to think that my wife can become due in a week with $300,000 with life insurance and I would want her because she's going get my bigger social security check based on what you taught me is there and then you know if she had an annuity, you know that I know she's never going around the money. I mentioned it just like that that window you know I don't want to want to think of her running out of money when she's 92 are somewhat when I can put all were to put some and you know what I want people to know this whole thing is is that your money there in your retirement money is there to serve you said the other way around. In the you you come to us. You work with us on the phone that work working it really be looking for and praying about what you want your money to do for you what you need your money to do for you and then were going to recommend some investment options that are tied to that that are appropriate for that and were always can have an eye for making sure you don't lose your money.

I hate were out of time again, but cannot just throw up word out there that I think this is really something we should pray about me that literally ask God to let me take you in on the adventure.where do we want what is the purpose for our money. Where should we be going with this in an and in what what are some of the strategies and what strategies may be defined somebody that really is capable of helping you and I hope you hear through this of their somebody like that available and if you go to Cardinal guide.com you know that that's one of the places that I know for my prayers that that I can be able to do something other than buried in the ground and work out of fear so Cardinal guide.com again. All this information is easily available to you. Listen to podcast rate the podcast now if you enjoy this podcast we would really appreciate you telling us what you like what you don't like.

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