Why a Fixed Indexed Annuity Could be the Solution to Your Retirement

March 12, 2022 00:47:43
Why a Fixed Indexed Annuity Could be the Solution to Your Retirement
Retirement Results
Why a Fixed Indexed Annuity Could be the Solution to Your Retirement

Mar 12 2022 | 00:47:43

/

Show Notes

On this episode of the Active Wealth Show, Ford explains how annuities work and why a Fixed Indexed Annuity may be right for you.
Call Ford now at 770-685-1777 or book your free consultation at ActiveWealth.com. We will give you a free portfolio analysis and a free financial plan to your 95th birthday. We’ll see you next week on the Active Wealth Show!

Schedule a conversation with Ford now: ActiveWealth.com
Watch more episodes: www.ActiveWealthShow.com/podcast
Request your free copy of Annuity 360: www.Annuity360.net

AWR 031121.mp3: Audio automatically transcribed by Sonix

AWR 031121.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer Sam Davis:
Registered investment advisors and investment adviser representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosure of any conflicts of interest, if any exist. Please refer to our firm brochure. The ADV to a Page four for additional information.

Producer:
Welcome to the Active Wealth show with your host! Ford Stokes Ford is a fiduciary and licensed financial advisor who places your needs first. He’ll help you protect and grow your wealth. The Active Wealth Show has grown because activators like you want to activate their retirement planning with sound tax, efficient investing and now your host Ford Stokes

Ford Stokes:
And welcome activators. The Active Wealth Show I’m Ford Stokes your chief financial advisor. I’m joined by Sam Davis, our executive producer. Sam, give him the greeting.

Producer Sam Davis:
Welcome to the weekend activators. So glad that you’re here with us today. We’ve got some important news, some important information to share with you because we know that you’re all here to live a happier, healthier retirement today.

Ford Stokes:
Obviously, we’re not going to do the traditional market update. We are aware that gas keeps rising and going to the pump, but we just read an article on FOXBusiness.com. We’re really a lot of experts are saying that the economy won’t slow down. It won’t impact the economy until gas prices at the pump for eighty seven, gas for just regular unleaded hits about five dollars and then you could see significant impact of the economy. Also, we still have all of our gas reserves that oil reserves that President Trump put in there, that they haven’t tapped into. But I would say that many of those people in the ruling party right now, the Democratic Party, I think they’re happy with high prices. They want all of us to buy electric cars and save the environment, which I understand that it’s nice to say the environment and try to get down your carbon footprint. I understand that, but also not at the sacrifice for our entire economy and the livelihood for our people that are raising families right now, but also for our pre-retirees and retirees. We’ve got some opportunities. But now that, you know, to kind of right the ship on gas prices, one would be to open up the gas or the oil reserves that we topped off in the last administration when President Donald Trump was in office.

Ford Stokes:
But also, there’s other mechanisms that can pull, like opening up the pipelines and trying to get things going. But right now, oil is definitely expensive and it is. It could impact us as it continues to rise if it rises past five dollars for eighty seven gas. So just want to make sure everyone was aware of that. And then also we were going to play a chapter from Annuity 360 from my book Annuity 360 because there is some good news out there. You can put your money into a safer product like a fixed indexed annuity you can and also wanted to at least explain how and why annuity companies are competing for your retirement dollars. It was very hard for you to earn that money, but it was even harder for you to save it and you need to protect and grow your wealth also. We played last week the rule of 100, which basically states, you know, if you’re you take one hundred, subtract your age from it. The remainder is the amount left over is how much you should the percentage of your portfolio that should be invested in the market. And it’s a great way to kind of set your risk tolerance.

Ford Stokes:
Many folks, let’s say you’re 60 years old, you take one hundred subtract 60 from it, you have 40 left over. That means that only 40 percent of your assets should be in risk in the market. Obviously, we think that is. Is a sound strategy, but many of you are in 80 plus percent equities within your portfolio and you’ve benefited from that last few years, for sure. Also, as we’ve seen bonds continue to rise and the cost of bonds continue to rise. That means the bonds that you currently held or that you held previously are worth less because if somebody is paying a higher interest rate for a new bond, any bond that I would own would be worth less in the marketplace. And so I would encourage everybody to consider doing some sort of bond replacement. Consider investing in fixed indexed annuities. But also, let’s understand the fact that the current fixed indexed annuity environment is not the same environment your grandfather invested in annuities with. This is not your grandfather’s fixed indexed annuity anymore or fixed annuity. And also, we want to make sure we’re we’re not investing in variable annuities. We’re talking about investing in a fixed indexed annuity. So, Sam, go ahead and play Chapter two from my book Annuity 360

Ford Stokes:
Chapter two Why Annuity and Life Insurance Companies Are Competing for Baby Boomer dollars Big idea annuities counter one of a retirees biggest fears outliving their wealth. Annuities create lifetime income streams. There are seventy three point four million baby boomers in the United States that are close to or are already in their retirement years. Baby Boomers put between nine and 10 percent of their pay towards their retirement. Only fifty five percent of boomers have any money save for their retirement. More than four in 10 boomers inaccurately believe that Medicare will cover long term health care costs. Baby Boomers hold $2.6 trillion in buying power. They’ve had more time to build their wealth in comparison to other generations because some might still be in the workforce and making more money. Baby Boomers control 50 percent of the nation’s wealth, outspend younger generations and are more likely to spend their retirement savings on themselves rather than passing them down. Total U.S. retirement assets are about 28 trillion dollars. More than half of those assets were either defined contribution plans or individual retirement accounts. Some other facts about baby boomers and their spending habits. Sixty nine percent of baby boomers either expect to or are already working past age sixty five or don’t plan to retire. Only twenty six percent of baby boomers have a backup plan for retirement if they are forced into retirement sooner than expected. Baby Boomers make up forty six point eight percent of pet spending. Baby Boomers are expected to spend three point four percent more on health related purchases than their parents did.

Ford Stokes:
Why are annuity companies targeting baby boomers? Boomers face many issues when planning for retirement. The three primary reasons are number one, growing the money they have already saved. Number two, dealing with and preparing for unforeseen expenses. The largest of which are tied to health care and long term care. Number three, optimizing their financial plans when their exact lifespan is unknown. Annuities exist to help boomers with the last issue with an annuity. A retiree gives an insurance company a lump sum of money in exchange for an annual income that will last throughout their lifespan. Annuities have the potential to become useful tools in Baby Boomers portfolios when planning their retirement. Reasons Baby Boomers should be interested in annuities. They are falling short of their retirement goals. Roughly 10000 baby boomers retire every day, but a very small percentage of them believe they can retire and live comfortably throughout their golden years. Only twenty five percent of Baby Boomers think they have enough money to retire comfortably. Many couples may be on the right track, but unforeseen circumstances such as health problems or staffing cuts might force them into retirement earlier than planned, leaving a much larger income gap. Baby Boomers are looking for a reliable source of retirement income, and annuity companies are beginning to tap into this market because they recognize the need. Not all annuities are created equal. There are two main types of annuities immediate and deferred.

Ford Stokes:
The right kind of annuity depends on your financial goals, your situations and your needs. One thing that makes annuities so attractive is that there are so many options available. While it may seem overwhelming. A financial advisor can help you sort through all of your available options and make a smart choice for your money. Security for their income annuities can help build a secure retirement through different income strategies, while also alleviating any stress or fear they may have left over from the financial crisis of 2008 and the bear market. Annuities can play an important role in a plan along with your Social Security, health care and other factors. Annuities can address issues such as maximizing your Social Security benefits, which help create an income that you can never outlive. How annuity and life insurance companies have responded to baby boomer needs interest in hybrid products. Baby Boomers don’t want to pay a fortune for something that offers them only a part of what they need, with less income to be counted in their retirement years. Already paying for individual products to meet each of their needs can be too expensive. Life insurance companies heard these concerns and responded with new hybrid products. Many life insurance companies now offer some kind of long term care rider on their whole life or universal life products. Generally speaking, these riders provide coverage for long term care should you need it or you receive a death benefit if you don’t.

Ford Stokes:
These combination products have grown from six million in 2008 to two point six billion with a B in 2013, and they are still growing need for guaranteed income. Baby Boomers are also concerned with outliving their money. They want to enjoy their retirement, but they also don’t want to run out of funds. The industry responded to these fears by offering a variety of products with guaranteed lifetime income. These products include variable and indexed annuities, with guaranteed living benefit writers and immediate or deferred annuities. The annuity industry has been transformed by these new products, according to PricewaterhouseCoopers Employee Financial Wellness Survey, since the economic downturn of 2008. Seventy six percent of retirees say that creating a guaranteed income is their top retirement planning priority. Annuity companies rose to the occasion to create products to meet the needs of baby boomers and provide them with a sense of security. The need for advisers, annuity companies have created many products to meet the needs of their consumers. This is a good thing, but it can make for a tough decision on the part of the investor. With so many options to sort through, some pre-retirees and retirees can’t sort through all the information. Many are afraid to make the wrong decision, which leads them to make no decision at all. A large part of the planning process involves an advisor educating their clients on all of their options so they can make the right decision.

Ford Stokes:
When we come back with a break, we’re going to play Chapter one for my new book Annuity 360, and why you should consider investing some of your hard earned wealth into a fixed indexed annuity that is chapter one from my book Annuity 360, and you can get that at Annuity360.Net or if you want to send you a hard copy, you can simply send me an email at Forwarded Active Wealth and just send us your name and address and email. Obviously your email and your phone number, and we will. We will send out a free copy of my book Annuity 360 just for you. And when we come back from the break, we’re going to play. Why? Chapter one, which is why you should consider investing some of your hard earned wealth into a fixed indexed annuity.

Producer Sam Davis:
Late December,

Back in 63.

Producer Sam Davis:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges, as described in the annuity contract guarantees are backed by the financial strength and claims paying ability of the issuer.

Ford Stokes:
And welcome back activators, I’m Ford Stokes, your chief financial adviser, I’m joined by Sam Davis, our executive producer. And we’re about to play Chapter one for my book Annuity 360. You can get that book at Annuity 360.Net, but the Chapter one states the the title of the chapter is why you should consider investing some of your hard earned wealth into a fixed indexed annuity. And Sam, go ahead and play Chapter one from Annuity 360.

Ford Stokes:
Chapter one Why you should consider investing some of your hard earned wealth into a fixed indexed annuity. Big idea! Protect your hard earned wealth with annual point to point protection periods that lock in your gains each year. A fixed indexed annuity can help you do the following with your wealth. Number one, protect your money from market loss. Fixed indexed annuities offered by highly rated annuity carriers did not lose a dime in account value in 2008 or 2009 during the worldwide recession caused by the mortgage loan crisis that resulted in the S&P five hundred losing fifty point one percent of its value from March one, 2008, to March 31st, 2009. Number to grow your money with market like gains typical annual growth of five to seven percent. Number three, generate a lifetime income. Your retirement will likely last 30 plus years. It might be a good idea to play some of your assets into a fixed indexed annuity to set a safety net around a portion of the retirement income that you wish to generate. Number four Eliminate market risk associated with bonds by replacing the fixed income bonds in your portfolio with a fixed indexed annuity. Number five Eliminate the advisory fees you’re currently paying to generate fixed income with bonds in your portfolio by replacing them with fixed index annuities. The annuity companies pay the advisor you don’t. This is called a bond replacement. If the above fixed indexed annuity benefits sound appealing to you, then I invite you to listen to the rest of this book and ultimately invest a portion of your hard earned wealth into a fixed indexed annuity to build a successful retirement.

Ford Stokes:
For more important information on annuities beyond this book, I also invite you to visit our website Annuity 360.Net. Let’s consider a one hundred thousand dollar investment in the S&P five hundred versus a one hundred thousand dollar investment in a fixed index annuity with a 50 percent participation rate in the S&P five hundred from 2000 to 2013. Here’s a hint, folks. The annuity wins from Jan. one, 2000 to December 31st, 2012. The S&P 500 experienced negative two point nine forty three percent growth over those 13 total years. People who retired prior to 2000 experienced zero growth over forty three percent of their estimated 30 year retirement. Question Do you want to live your life during retirement without any growth over forty three percent of your retirement years? I didn’t think so. Conversely, if you had invested into a fixed indexed annuity with a 50 percent participation rate in the S&P five hundred in January 2000, you would have seen a growth of sixty five point five three percent. That’s a significant total account growth difference of sixty eight point forty seven three percent. Do I have your attention now? The account value growth chart below shows the $100000 invested into an S&P five hundred Spyder in January of 2000 versus one hundred thousand invested into a fixed index annuity with a 50 percent participation rate in the S&P 500. Also in January of 2000, the fixed indexed annuity achieved a total growth of ninety point zero three eight percent versus just twenty five point seventy eight six percent growth in the S&P Spyder by December 31st, 2013.

Ford Stokes:
This chart shows the power of one year protection periods called annual point to point features. The gains from each year were locked in on each anniversary of the annuity policy effective date when the S&P had negative years. The S&P Spider five hundred SPI experienced losses in those same years. The fixed index annuity experienced zero losses. This proves that you don’t need double or triple digit gains if you don’t experience losses in this author’s opinion. Every sound portfolio with a smart financial plan includes fixed indexed annuity investments with tactically managed portfolios in hopes to minimize market risk, reduce advisory fees and deliver a reasonable rate of return. The annuity can also deliver consistent income with or without the added feature of an income rider that also charges fees within the policy. I recommend avoiding income riders. I strongly recommend investing a portion of your hard earned wealth into a fee efficient accumulation based fixed indexed annuity with no more than five percent annual penalty free withdrawals to allow your money to grow and to generate important income during retirement. Your human capital versus your wealth capital Human capital is an intangible asset or quality not listed on a company’s balance sheet. You can think of this as an economic value of your work. Your human capital will decrease over the course of your career.

Ford Stokes:
Your peak amount of human capital is at the start of your earning years. Whether that be right out of college at twenty two years old or at age 30 after completing your advanced degrees, this is the time where your productivity levels are high and you are contributing to your company’s wealth. You have all of your earning years ahead of you. During this time, you have to protect your hard earned wealth capital. This is not something you can recoup. You can’t go back and relive your prime earning years or the years where your human capital was the highest. There are many barriers to going back to work at retirement age. Unfortunately, age bias is a real issue, especially in certain industries, those who might have been an engineer during their younger years might be forced to take a retail job to make some extra cash because companies in their field won’t invest in older employees. Many employers focus on what you can’t do when you’re older. Instead of thinking about the experience and the expertize you could bring to a project, you will most likely have to rely on your wealth capital during retirement. The idea of losing capital as you go farther in your career sounds a little scary, but you can rest easy knowing that this new form of capital will kick in as your human capital dwindles. As you earn and invest throughout your career, your wealth capital will grow exponentially. You’ll need this wealth capital for your retirement, so it is important to choose investments that will protect and grow your wealth.

Ford Stokes:
Annuities, specifically fixed indexed annuities, can offer you market like gains without the market risk. Your money never goes below zero. By investing in a fixed indexed annuity, you’re taking money out of the Wall Street casino, and we think that’s a good thing. Annuity guarantees like guaranteed lifetime income and the guaranteed growth of your principal are based on the claims paying ability of the issuing annuity company. It’s a good idea to buy annuities from highly rated annuity carriers that are rated by Standard and Poor’s and am best. We consider a highly rated annuity carrier to be rated at least a Triple B rating by S&P or with a B Plus rating by a.m. Best. The impact of loss in your portfolio specifically, it can be devastating to your retirement. When we look at market volatility risks, the risk of loss and the potential impact on your retirement income is an important thing to understand. This chart shows the impact of losses on your retirement accounts. If we take a look at an example, let’s say you have an account that is at risk. If you start with one hundred thousand and lose 20 percent, you lose twenty thousand. And you were left with $80000 if you gained back the same 20 percent. Are you back to even as you can see in the graphic below? The answer is no. In order to get back to your original one hundred thousand dollar investment, you would have to gain back twenty five percent if we add an additional five percent for RMDs.

Ford Stokes:
We would now have to gain back thirty three point three percent to get back to even understanding. This concept is one of the keys to a successful retirement income distribution plan because you no longer have time on your side. The last thing we want to do is run out of money when we are 90 or 100 years old. How much do you have to gain to make up for a market loss? See Chart one point two. After reviewing the above chart, I’m reminded of Warren Buffett’s two rules of investing. Number one, never lose money. Number two, never forget rule number one. We invest in a fixed index annuity with a highly rated annuity carrier that has a high financial solvency ratio. Then it is likely that you will be able to follow Warren Buffett’s two rules of investing. Exactly. You’ll likely not lose any money with the amount you invest in a fixed index annuity offered by a highly rated annuity carrier with a high solvency ratio. A good financial solvency ratio is any solvency ratio over one hundred and four percent. The solvency ratio expresses financial soundness and a company’s ability to meet policy obligations as they come due. Assets divided by each one hundred dollars in liabilities results in a financial solvency ratio expressed in a dollar figure. Assets are bonds, stocks, cash and short term investments. Liabilities exclude separate accounts. The higher the amount, the stronger the company’s position to cover unforeseen emergency cash requirements.

Ford Stokes:
When we’re playing some educational chapters from my book Annuity 360 so you can understand how a fixed indexed annuity could help you. We even work with a fixed indexed annuity that’s illustrating at nine point sixty one percent right now. We’ve got some products that are also only have a five year surrender period if you want to have a shorter surrender period. We also deal with multiyear guaranteed annuities called Migas that are one two and really two three and five year products. And we want to make sure that you know that there is a safe place to put your money. If you’re tired of dealing with the news and tired of dealing with all the scary stuff out there and the volatility in the market. If you wanted to take 20, 30, 40 percent of your assets and try to replace the bonds within your portfolio and generate a retirement income that you could never outlive. Also get you market like gains without market risk. A fixed indexed annuity is a great financial product to consider, and when we come back from the break, we’re going to play a really fun chapter, which is Chapter three from Annuity 360. My book Annuity 360 Famous People Who Invested. A significant amount of their hard earned wealth in annuities. I think you’re going to enjoy this chapter. It’s kind of fun to hear other people that have made that financial decision to take risk off the table and and invest in fixed indexed annuities, specifically take market risk off the table and invest in fixed indexed annuities. So we’ll play that chapter. The famous people who invested a significant amount of their hard earned wealth in annuities, right? We come back from the break in segment three.

Producer Sam Davis:
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 project the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

I’m picking up. And she’s giving me excitations, I’m back and I’m good grade, she’s got mine.

Ford Stokes:
And welcome back activators to the Active Wealth Show and Ford Stokes, your chief financial adviser. And I’m joined by Sam Davis, who is doing a great job at playing all the chapters from my book and doing. 360 wanted to let you know. Listen, annuities been around a long time. The actual the first annuity on record in history were actually annuities called a newer during the Roman Empire, and they used to set that up so that people could travel on the roads and not get robbed, and they would have income so they would give up a lump sum to be able to get a percentage of income. Later, they called it annua. And so they’ve been around a lot longer than people think. And this next chapter is a fun chapter, and it talks about different people throughout history who have utilized annuities to fund their lifestyle. Really sincerely. Appreciate you listening, Active Wealth Show, and I hope you enjoy this fun chapter on the famous people who invested in fixed indexed annuities.

Ford Stokes:
Chapter three famous people who invested a significant amount of their hard earned wealth in annuities big idea annuities are for everyone. Even if you’re not worried about outliving your wealth, annuities are safer for your money than investing in stocks or bonds, or simply not investing at all. Babe Ruth, known as the sultan of SWAT, Babe Ruth, came into his glory days during the roaring 20s and his manager was worried that he was blowing through all of his money without putting any of it away. He introduced Babe to an insurance agent from the equitable insurance company, now AXA Equitable from nineteen twenty three to nineteen twenty nine. The slugger contributed more than half of his salary annually, purchasing between thirty five thousand and fifty thousand dollars worth of annuities each year. The Great Depression hit the country hard in October of 1929. Babe Ruth was forced to retire from baseball in nineteen thirty five due to health reasons. He was unemployed during the worst time in history, but Babe Ruth had his income annuity. It’s been reported that he received an income of seventeen thousand five hundred dollars a year, which would translate into an annual salary of more than two hundred and ninety thousand in today’s dollars. His famous quote still resonates today. He said I may take risks in life, but I will never risk my money. I use annuities and I never have to worry about my money. Steve Young Steve Young was signed out of Brigham Young University into a $40 million contract with the USFL. That was the headline, at least in reality.

Ford Stokes:
Young was given an annuity that would pay out something like $40 million over the 50 years that followed. Given the fact that some players were not paid for playing in the final season or other seasons of the USFL, accepting the annuity appears to have been a genius move on the part of either young or his agent. The annuity payments have lasted longer than the league, and it’s safe to say that he’s made more money than probably anyone else involved with the league. To be fair, it couldn’t have happened to a nicer guy. Even with the large signing bonus and salary, he continued to wear old jeans and drive a 19 year old Oldsmobile dynamic. In addition to outlasting the league, that annuity even outlasted the Oldsmobile car company with a staggering number of pro athletes going broke after they retire. It’s refreshing to read stories about players who made smart financial choices. Shaquille O’Neal, one player who’s used annuities to his advantage, is retired star Shaquille O’Neal as his 19 year career. He generated two hundred and ninety two million dollars in total compensation. In retirement, he is projected to make as much as a billion dollars from endorsements even after his career is long over, thanks to a wise agent who made him put $1 million annually into annuities from his rookie year onward. Shaq lives off the income the annuity generates with his endorsement legacy for his children. Shaq scenario demonstrates how pro athletes and other prodigious earners can protect themselves against their own personal spending errors. Allen Iverson NBA player Allen Iverson earned $200 million during his career.

Ford Stokes:
One hundred and fifty five million in salary and 40 to $50 million in endorsement deals. Iverson ended up going bankrupt because of his overly lavish lifestyle. In a December 2012 court filing, Iverson told the court that his monthly income was sixty two thousand five hundred dollars, but his expenses were three hundred and sixty thousand. Luckily for Iverson, Reebok saved him from becoming destitute by paying him an annuity worth two point three million dollars in two thousand one. Iverson made a very smart decision that would ultimately save him. He signed a unique endorsement deal with Reebok. Not only will Reebok pay Iverson eight hundred thousand a year for life, they set aside a $32 million trust fund that he can begin accessing when he turns fifty five years old in 2030. Since he divorced his wife in 2013, he will receive half of the trust. Another way that Iverson will be able to protect himself against future bankruptcy is his access to the NBA pension. He is eligible for another eight thousand a month. The lump sum of this pension is between one point five and one point eight million dollars. Most pensions are set up with single premium immediate annuities. Benjamin Franklin When Benjamin Franklin died, he requested that the two thousand sterling he earned as the governor of Pennsylvania from seventeen eighty five to seventeen eighty eight be divided equally between Boston and Pennsylvania. He wanted the money to be disbursed as a legacy. Two hundred years later, in the spring of 1990, the balance in the Philadelphia account was valued at approximately $2 million, and the balance in the Boston Trust was about four point five million dollars.

Ford Stokes:
This was sometimes called Franklin’s IRA. The money in the Boston Trust was invested using a new. Take on an old idea, the annuity using a tax deferred index variety, the money was able to benefit from exposure to stock market growth without stock market loss. This allowed the trustees of the Franklin Institute in Boston to turn an estimated four thousand four hundred dollars into four point five million, even while it was paying out an income for two hundred years. Beethoven, the social luminaries of Vienna, wanted to keep Ludwig van Beethoven from leaving their country, and so in eighteen, oh, nine two princes and an archduke guarantee the musician a generous annuity. All he had to do was stay in Vienna and compose and perform his music. His benefactors have supposedly been quoted as saying something along the lines of only a man free of worries can create with such genius. Interestingly enough, Vienna also saw its time of economic downturn, and one of the annuities guarantors tried to stop paying Beethoven, claiming financial hardship. Beethoven sued one and continued to receive his annuity payments. Perhaps this is what inspired the literary genius of Jane Austen, whose character Fanny observes in sense and sensibility. People always live forever. When there is an annuity to be paid. An annuity is serious business. It comes over and over every year, and there is no getting rid of it.

Ford Stokes:
The thing to take away from that is obviously annuities are a great way to protect and grow your wealth, especially when you’re just trying to protect for income and also have some principle leftover to pass on to your heirs. But tough times don’t last. The tough people do. And in that chapter, you learn, I mean, you know, Babe Ruth went through tough times with the Great Depression. Steve Young dealt with the closing of the USFL and the bankruptcy and end of his employer team. You, you saw Allen Iverson, Sam, you and I were talking off off-line, you know? I mean, the guy went through one hundred and sixty three million dollars of uniform player contract money, and he didn’t really save for a rainy day. But thank goodness Reebok saved for him.

Producer Sam Davis:
There’s uncertainty out there, so whether it’s something that terrible that could happen in the markets like the Great Depression or the closing of an entire league? That being Steve Young’s employer, or just some bad habits that Allen Iverson had early in his career. Thankfully, someone had the foresight in all of those situations to set them up for success later.

Ford Stokes:
You also add that, you know, Benjamin Franklin went through the American Revolution and Beethoven went through significant financial hardships and downtime during his era. And so if they can do it, I would. I would ask the question Why can’t you? Why can’t you consider taking 10, 20, 30 up to even 40 percent of your assets and invest in fixed index annuities? We’ve got one that’s offering nine point sixty one percent. As we said, we’ve got another product that’s only a five year product if you want with only a five year surrender period. We’ve even got shorter types of annuities like Migas that are two, three or five year annuities, and we can help you. All you’ve got to do is call us at (770) 685-1777 again (770) 685-1777. Feel free to reach out to us. We’re happy to help you. Also, just visit Active Wealth.com click that set an appointment button in the upper right corner and you get booked directly in my calendar. If you have bank CDs or a variable annuity or you’ve got a portion of your assets that are in bonds that aren’t doing well, then I’d encourage you to consider investing into a fixed indexed annuity with us and we’ll give you a complete annuity x ray.

Ford Stokes:
Absolutely no cost to you. Feel free to reach out to us. No problem at Active Wealth.com and the final segment, we’re going to talk about the difference in financial reserve requirements between the FDIC with bank CDs and the financial reserve requirements from each state insurance commission of annuity and insurance companies. I think you’re going to be incredibly surprised at which one is higher, which one has a higher financial reserve and which one we consider. It gives us better peace of mind to invest in over the long term. And we come back from the break. We’re going to play that chapter about the difference between the financial reserve requirement on bank CDs with the FDIC and financial reserve requirements for annuities and insurance products from the state and federal insurance commissions. It was the Active Wealth Show right here on AM nine one. The answer? We’ll be right back.

Producer:
Listen to the number one show on the weekends on AM nine 20, the answer to protect and grow your hard earned money. The Active Wealth Show with Ford Stokes, your chief financial adviser, Saturdays at 12 noon and Sundays at 11 a.m.. Jeff, the two of us, we can make it if we try

To do the.

Producer:
Just the two of us.

Ford Stokes:
And welcome back activators, the Active Wealth Show and Ford Stokes, your chief financial adviser Sam Davis, with me as our executive producer. And we’re going to play Chapter four, which is for my new book, Annuity 360, which is financial reserve requirements and annuity, has a financial reserve of one hundred percent requirement that is greater than the FDIC insured Bank Reserve requirement of three to 10 percent in this world in the United States. Banks that have over $100 million of deposits must reserve up to 10 percent in cash reserves of their deposits. But the state insurance commissions requires an annuity company or a life insurance company to reserve one hundred percent of the money you give them. And what they do is they invest in 10 year Treasury bonds safely, and then they take at the end of year one. They take the interest off of that that is generated and they invest that into options. Whether it’s the S&P 500, the Nasdaq 100, the crest was momentum. The JPMorgan cycle index. There’s all kinds of different indices. Credit Suisse Raven PAC is another example. There’s a lot of different indices that are used to link to an index for a fixed indexed annuity product to generate market like gains without market risk for clients. And what’s nice is your money that gets invested into a fixed indexed annuity is never invested into the market. It’s never invested into a risky product. It must be reserved into a 10 year U.S. Treasury bond or a safe financial vehicle. And then only the interest generated is invested in two options to get you a higher rate of return.

Ford Stokes:
Chapter four. Financial reserve requirements annuity has a 100 percent reserve requirement and is greater than the FDIC insured bank reserve requirement of three to 10 percent. Annuities are required to reserve one hundred percent of your investment. Banks are only required to reserve three to 10 percent. Having a one hundred percent reserve on your money will help you sleep more soundly at night knowing that your money is protected. Did you know that the Federal and State Financial Reserve requirement for annuity products is one hundred percent? Did you also know that the FDIC banking regulation requirements are just three to 10 percent of deposits? I prefer investing in financial products that have one hundred percent financial reserve myself. Quite literally, the requirement for annuity companies to reserve money on the policy premiums paid or at least 10 x the banking deposit reserve required by the FDIC. In the six years after the stock market crash in 1929, 60 percent of all U.S. banks close their doors, and only 40 percent of those banks ever reopened. One hundred percent of reserve life insurance and annuity companies didn’t fail or close. That is a remarkable historical fact. That’s a while. Also, in every U.S. state, there is some form of annuity guarantee association where the licensed annuity companies operating within the state will cover the payout of annuity policies as a collective for any failed annuity company within the state, state annuity guarantee associations prohibit advertising them.

Ford Stokes:
Here’s how annuity guarantee associations work. Guarantee associations are funded by assessments levied against member insurance companies that help pay claims when a member company fails. The funds are combined with the failed company’s assets to pay claims up to statutory limits. However, the coverage may not be necessary because often when an insurance company becomes insolvent, the company’s contracts are purchased by other insurance companies. So customers still have the same insurance and annuity contracts worth the same amount of money only from different companies. To ensure you receive all of your annuity benefits, it’s a good idea to investigate the ratings of the issuing insurance company before making an annuity purchase. If you plan on purchasing annuities worth more than your state guarantee association limits, you may want to purchase multiple annuities from different companies without exceeding the guaranteed limits on a single annuity. Most annuity state guarantee association limits per annuity policy are equal to the two hundred and fifty thousand dollars per bank account or bank CD or money market account that the FDIC insurance coverage delivers to the account holder. I see the annuity guarantee associations as a great extra stopgap insurance for my clients annuity policies, and I hope you enjoyed that chapter. I hope it opened your eyes. So anybody that’s listening to the sound

Ford Stokes:
Of my voice, whether it’s on AM, not sure of the answer here this weekend, or if you’re listening to me on the Active Wealth Show or on Stitcher, Spotify, Google Play, iTunes or I. Radio and others, I would encourage you to consider or at least reconsider where you’re investing that bank seed money or where you’re investing that bond money, where are you investing the money you’ve got set aside for income and consider getting market like gains without market risk? Also, when you invest in a fixed index annuity. Not all of them are built the same. Actually, in fact, all of them are different, and I would encourage you to seriously consider investing in accumulation focused annuities or at least annuities that have an income focus but have but offer a free income rider because if you can eliminate the fees that are associated with income rider fees, you’re going to win. Also, I want to make sure you understand one thing when you invest in a fixed indexed annuity. There’s no advisory fees or portfolio fees associated with a fixed indexed annuity. So that’s great news because that means your money can be more fee efficient. It also eliminates or deletes that percentage of your portfolio. So let’s say you’ve got a 60 40 portfolio, 60 percent stocks, and you want to do 40 percent in fixed indexed annuities instead of bonds. Well, you’ve just eliminated. 40 percent of your advisory fees that you pay your advisor on a monthly basis just by doing that.

Ford Stokes:
And so we’re happy to help you do that with an annuity x ray. We can review your portfolio and here’s what you can expect when you come in. If you bring your statements in what we’ll do or we can, you can upload them to ActiveWealth.com/workbook. And that’s a secure site. It’s 256 bit encrypted and we’re happy to help you. We’ll do the portfolio analysis. We’ll let you understand the risk you’re paying, the fees, you’re the fees, you’re paying, the risks you’re taking, the correlation, your assets, et cetera. And then we’ll also give you a free financial plan your ninety fifth birthday with your current plan in one with our recommended portfolios and portfolio structure. And then we’ll also give you one with our portfolios and portfolio structure with. A Roth Ladder Conversion plan. We’ll do all that at no cost to you because we want to help you make an informed financial decision with your hard earned and hard saved assets. We’re just huge fans of. What you guys and gals have done to save for retirement because there’s only like twenty four percent of Americans are properly prepared for retirement and we want to help you. We want to help you protect and grow your wealth. And now, Sam, let’s go ahead and play our final countdown. It’s the.

Producer:
So let’s recap what you may have missed. It’s the final countdown.

Ford Stokes:
So on today’s show, we played four chapters from my book Annuity 360, we wanted to do it and make sure you

Ford Stokes:
Understood a few things. One is how annuity companies and insurance companies are competing for pre retiree and retiree dollars. They’re competing for those baby boomer dollars. Number one is why you should consider. We played in segment two, which is chapter one actually was why you should consider investing into a fixed indexed annuity. It’s a great bond replacement vehicle. It’s also a great way to generate a high rate of income. It’s a great way to generate market like gains without market risk. And we we’ve done a really good job at helping people in the past understand their options with annuities and also to try to help eliminate fees. We also do some great ten thirty five exchanges where if you’ve got an old annuity that’s been sitting around not doing anything and hasn’t been earning what you wanted it to bring it in, we’ll do a review for you and we’ll give you some options to help you get a higher rate of return, or at least in hopes of getting a higher rate of return and still get you the same principle protection that you seek. We’re happy to help you there as well. We also gave you a fun chapter with some of the famous people that invested into annuities, and that was kind of a fun chapter to hear. And the last chapter we played was we talked about the difference between bank CDs and fixed the next annuities based on the financial reserve requirement of the FDIC versus the financial reserve requirement from the state insurance commissions. And so we’re. Pretty excited about that, those differences in being able to provide a product that that I personally have a greater sense of peace of mind.

Ford Stokes:
Investing into a 100 percent financial reserve product that we think can be really special for you. So I hope you enjoy today’s show. We we really wanted to kind of custom wrap this show for you and remember, listen. Current equities, the stocks right now are trading at twenty two or twenty three times earnings. There’s a lot of volatility out there. The Russians are invading Ukraine. There’s all kinds of we’re still getting through this COVID 19 pandemic thing. There’s a lot of things out there that we’re dealing with. But also, bonds are only are trading at a go forward price to earnings ratio of one hundred and thirty five. Plus we’ve got to do a better job. At protecting the safe leg of your portfolio, and all of us need to do a better job at protecting the safe leg of our portfolios, and we’re here to do that for you at Active Wealth management, I would encourage you to pick the phone up and give us a call at (770) 685-1777 or visit Active Wealth.com and click that set an appointment button and I look forward to talking to you. I look forward to helping you protect and grow your wealth. Hope every has a great week. We’ll talk more about how to build a smart financial plan with smart, safe smart risk and smart tax investing. Leslie Active Wealth Show right here on AM not to answer. Have a great week, everybody.

Producer:
Thanks for listening to the Active Wealth Show. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free consultation, call your Chief Financial Advisor Ford Stokes at (770) 685-1777 or visit Active Wealth. Investment Advisory Services offered through Brookstone Capital Management LLC on a registered investment advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you’d love including collaboration tools, automated transcription, secure transcription and file storage, advanced search, and easily transcribe your Zoom meetings. Try Sonix for free today.

Other Episodes

Episode

June 28, 2024 00:48:00
Episode Cover

Creating a Retirement Plan with Pension-like Income

Ford Stokes and Sam Davis discuss how you can include pension-like income in your retirement plan and beat the current bank CD rates with...

Listen

Episode 185

November 03, 2023 00:48:00
Episode Cover

Build a More Efficient Retirement by Replacing Your Bonds and Target Date Funds

On this week’s Active Wealth Show, Ford and Sam discuss why they have been educating pre-retirees and retirees since 2019 – to help you...

Listen

Episode 169

May 26, 2023 00:48:00
Episode Cover

Social Security Forecast for 2024 and Beyond

On this week’s show, Ford and Sam share two quotes of the week before providing a travel update for Memorial Day Weekend. Plus, we...

Listen