Which Annuities to Avoid and Which Ones to Buy

Erick explains the different types of annuities and highlights some particular ones to avoid. If you have an annuity that isn’t meeting your expectations, or if you would like Erick to help build you a retirement plan, visit www.TakePointOnRetirement.com today! 

Book a free consultation with Erick at www.TakePointWealth.com or by calling (352) 616-0511.

You can catch The Take Point on Retirement Show every Saturday on WXJB 99.9FM at 7:30 AM and on AM860 and FM93.7 The Answer at 10:00 AM and 1:00 PM. 

Which Annuities to Avoid and Which Ones to Buy Transcript 4-16-22: Audio automatically transcribed by Sonix

Which Annuities to Avoid and Which Ones to Buy Transcript 4-15-22: 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 Advisor 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 take point on retirement with your host Eric Arnett. Eric is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Tape Point Wealth Management takes pride in knowing they’ve helped so many pursue the financial future of their dreams. And they can help you, too. And now let’s start the show. Here’s Eric Arnett.

Producer Sam Davis:
And welcome to Take Point on retirement. I’m Sam Davis, joined by the founder and CEO of Take Point Wealth Management, Eric Arnett. Eric, how are you doing today?

Erick Ernett:
Good morning, Sam. Good to be here.

Producer Sam Davis:
You know, as always, we’re looking at what’s happened in the news and people are reacting. You know, one thing that that is important is inflation. You know, even if you’re cutting lots of expenses, gas prices, food prices, the inflation continues, continues to increase. So, you know, that is that is certainly a concern. And we’re going to get into that on the show today. But, you know, I want to start off the show today by having you kind of just address different topics that are going on in the news. You know, how people are are making reactionary decisions more based on emotion than strategic decisions based on proven strategy.

Erick Ernett:
It’s really difficult for our listeners, whether they’re pre retirees or actually retired and you know, they’re constantly bombarded on a daily basis with the mainstream media, financial news and and, you know, the media, the radio, the Internet, Google searches, like all these things, like people are just constantly being bombarded with negativity. And, you know, the media just continues to stoke fear because fear gets viewers and readers, right? So and so if you sit there and you listen long enough or you read all this negative financial news and there’s a greater chance that you’ll end up making an ill advised, poorly timed decision about your investment. So instead, let the curiosity that the media sparks lead you to search out some personalized advice. And, you know, we’ve talked about this before on other shows. Because of, I would say, some of the changes and geopolitical turmoil and the rising inflationary concerns. You know, now is the time more than ever. If you’re listening in your lifetime to really sit down with a professional adviser to number one, either take a look at your current plan and what it’s currently doing and is is it working for you? And have you tested that plan? So we have way we have a way in which we test your current retirement plan. And so in it’s real simple process, it’s pretty laid back. We just gather some data and some information and then we’ll go to work for you and we’ll really, truly look at what you’re doing and what your plan is, and we’ll test it and see how is this going to hold up under all of the current changes.

Erick Ernett:
So our retirees are facing. Challenges that they’ve never faced before and in other retirees haven’t faced. And that’s rising costs. Number one, concern, rising costs. The tax laws are potentially changing. Our country has a huge deficit. So there’s some very, very aggressive rhetoric up in Washington about some very aggressive tax changes that will impact and affect our retirees in a great way. And so there’s so many things and rising interest rates. And how is that affecting my portfolio currently? What does that mean for my portfolio in the future? And so it’s really important just to kind of sit back, don’t make any big knee jerk reactions here, but let’s truly sit down and test what you’re doing. And and you may be out there listening right now and think to yourself, you know, I’m not really sure if I even have a plan. And that’s okay, too. So let’s get a plan. And so we put a ton of work into these plans for our listeners. All you have to do is call in and set up an appointment with us or just a quick 15 to 20 minute chat over the phone and we’ll get started for you.

Erick Ernett:
And we’ll either build out a complete retirement plan for you. Absolutely free, no cost to you as a listener to this radio show. It’s just a free gift. And if you already have a plan or a portfolio that you’re not quite sure is working or will work for you in the future, if you have any questions about it, then why not take advantage of that offer as well? And let us really test it out for you and build some. And wouldn’t it be nice to be able to build some confidence, some clarity and feeling a little bit better about no matter what’s coming your way, that you can deal with it throughout retirement, two and three retirement. So, you know, this week in the market, we saw wholesale prices. Another component of the inflationary data numbers. Wholesale prices surged 11.2% in the month of March, which is the highest level we’ve ever had on record. So and there’s all the data and information that we look at out there in the economy. There’s it’s a mixed bag right now. There’s really there’s really some good stuff out there, too. But unfortunately, the media is not going to talk about the good stuff. Right. They’re always talking about they’ll find that one little negative piece and they’ll pull that out and this really beat it to death to where people think.

Erick Ernett:
And if that’s all they hear about that, that’s the only thing that’s influencing their retirement plans. So, yes, the bad news is, is that prices have surged. The good news is, is that a lot of experts and there’s a lot of market news and stories out there and research that we’ve done. They’re saying that the worst is behind us. You know, that they don’t see it getting any worse from here, in fact, seeing some improvement into the second half of the year. So, you know, the markets and interest rates, all the components that drive the market forces, you know, they they’ve already priced all this information and the markets are looking ahead a year and ahead, six months out. So all this negativity has already been baked into the markets where we’re at here. So, you know, so if if inflation is a concern of yours and rising costs and now is the time more than ever to sit down and reevaluate your plan, you know, what are your income sources going to be in retirement? Are they guaranteed income sources? What is your budget and what? Components or how do you have to have your buckets of money working in order to meet your goals? And so there’s a lot of different pieces that we really need to sit down and look at.

Erick Ernett:
You know, stock market’s going to be volatile this year. We’ve talked about it and there’s a lot of volatility, but earnings are starting to come out. The first first quarter earnings and it’s not that bad of a picture. It’s it’s there’s definitely a slowdown. Absolutely a slowdown. But it’s not a fall off the cliff type slowdown at this point. So job reports and job the job market is extremely strong. Wages are rising. So there’s a lot of folks out there, including our Fed chairman, Mr. Powell, came out and said they’re not concerned about inflation long term because the fact that the job market is so strong and wages have improved and and so that will help a great deal. So gas prices that just came out this morning on on our market news, you know, gas prices are going down. They think that oil has probably peaked here. So, you know, there’s are some positive things in the market. We’ll look ahead and recover and start looking forward. But there’s so many different things hitting our retirees. I’m at one time here that it could leave you a little bit concerned and a little bit lost. And so that’s why getting together with Take Point wealth management makes so much sense right now to really build that plan and test it out.

Producer Sam Davis:
Yeah. And what I love about what you guys do over there, take point wealth management and you can visit them online, TakePointWealth.com again, that’s take point wealth. And Eric and his team of specialists are happy to help you. What I love is that it’s not a one size fits all plan that you guys implement. You talk about determining what a client’s financial speed is and working with their specific goals and their specific needs, you know, are you single? Are you married? Do you have children? Do you want to fund a wedding or two weddings coming up in the near future? Do you want to send a grandkid to college or three grandkids to college? So, you know, talk about that process. Eric, what’s it like when you meet with a client and you’re kind of determining their financial speed is what you call it?

Erick Ernett:
Yeah. So it’s it’s just that like everybody out there, every family, every individual, they have what we call a different financial speed. They their the investment plan that they need in order to reach their goals might be totally different than their neighbors. And and it really boils down to really taking a look at. And creating and almost treating, almost treating. I tell people, you know, you need to treat your household and your retirement planning like a business. And so really what we do in the very beginning is we sit down and we build out just like every corporation does every quarter. They look at their cash flow statement, which is income in and expenses out, and then they also look at their their balance sheet assets versus liabilities. And so it’s really important that we don’t shun away from that and we pay close attention to it and we revisit it often because so much can change. So as an example, you know, your cash flow statement this year probably looks a lot different than it did last year or two or three years ago. And it’s going to look a lot different in your retirement. And you’ve got to factor in the fact that inflation and costs have gone up dramatically. And, you know, so there’s a lot of things that we can do to reposition the portfolio in order to compensate for that. But it has to be looked at and actively manage, you know, just kind of setting it and forgetting it really probably isn’t going to work. But I think the most important thing, Sam, that we probably don’t talk about enough is is income. You know, what type of income do we need to generate? And I’m talking about five, ten, 15, 20, 30 years.

Erick Ernett:
We do planning going out 30 years for our clients. What is that going to look like 30 years from now? And people may think, wow, I’m never going to live that long. Well, guess what? People are living into their nineties and and even if you live into your eighties, you know, it’s a long time from now. You’re talking if you’re out there listening, you’re 5060s or even early seventies. We’re talking about a 20 to 25 year plan. Got to look at this like a long range planning opportunity. So much has changed in the world. So much has changed in the markets. And so now more than ever, it really makes sense to sit down and do that. And regardless of what type of account you may have use for for your savings and how the account is invested is what’s most important. So so for starters, just simply separating the money into two time frames could really help craft a smarter investment plan and income distribution strategy. So you’ve really got to separate your money in those separate buckets and we can help you do that. And this is going to really help you shore up your income streams, how those income streams are going to be taxed and, you know, and how it’s going to how you can combat inflation. And and there may be some changes that you have to make. You might have to work a little longer. You might have to spend a little less you know, you may have to invest a little bit differently in order to reach these goals now. So all these goals have to be reevaluated. And now never there’s never been a better time to do it.

Producer Sam Davis:
Yeah. And another essential part of the plans that you put together for clients is tax planning. And I know you’ve got Randy and tax specialists on your team that can help people do just that. Because you’re right, retirement is really more about income than that one big pile of money or that one big nest egg. Some people call it, you know, you need to know which buckets are tax deferred and which buckets have already had taxes paid. So when it comes to tax planning, what are some of the things that you guys consider for people?

Erick Ernett:
Yeah, and it really it really kind of boils down to what we’re talking about is really separating the monies that you have in a different buckets. And and so not only do you have your short term money bucket and your long term money bucket, but you have you have your tax deferred bucket, your tax free bucket, and you have your taxable bucket. So different investments, different money are taxed different ways. And that’s really important to understand and get a handle on. And how is that going to affect your Social Security? Are you a single person collecting Social Security still kind of working or are you married and was one of your spouses still working? You know, there’s there’s multiple ways that families or spouses can go about even starting Social Security. So and how is your income and whatever income streams you have going to affect that Social Security? It could increase your Medicare costs and Medicare premiums. And so there are tax efficient strategies that we can put together for you in order to maximize and optimize that strategy going forward throughout retirement, to really make your retirement plan and portfolio tax efficient. So you have to focus on tax efficiency. And that’s one of the great things that take point. Wealth managers. We have a great partnership with Suncoast CPA Group, those accountants and CPAs on their team in 25, 30 years. And we integrate that into our planning with our clients to make sure that we’re looking at everything. Because taxes, we’ve talked about this a million times. You know, taxes, fees, risk having too risky of a portfolio. These are the silent killers. Volatility is a silent killer. So it’s worth it to review your investments at our regular intervals to make sure you are taking advantage of the income, investing in tax opportunities that might be available to you.

Producer Sam Davis:
We’re speaking with Eric Arnett of Take Point Wealth Management, and you can find him and his team online at TakePointWealth.com. You know, Eric, there’s a lot of people out there listening that have done a great job saving. But for a lot of people, what they’ve done is they’ve just been collecting this money in their IRA or their 401. K. So people are wondering, they’re asking, you know, what are the options for my money? That’s in my 401. K or my pension plan. You know, it’s just sitting in there. It’s been growing for years. You know, we’ve talked in the past. You know, they tell us, you know, go to school, get a good job, start saving, and then it just starts building up and up and up. So what are the options for the money for the listeners out there that’s just sitting in their IRAs or for one case?

Erick Ernett:
Yeah, so a great question. And and that’s just it inside of 41k, your options are very limited. You know, I look at these on a daily basis. In fact, I’m. Manage 41k accounts for corporations. And the the basket of investments that people have to choose from are very limited. So the fantastic thing about not just leaving your 41k at the at the corporate plan, you know, we call them Orphan four one KS or, you know, depending on where you’re at in and what age you’re at, you can roll that money tax free out of your 41k into your own individual IRA. And once you have it in your own individual IRA. You can do just about anything. So the world opens up to you and all the options that are available at that point open up to you in order to truly tailor something that is going to work for you and your long term goals and needs. Because unfortunately, it’s so sad. I see this on a daily basis because unfortunately, and it’s not our listeners fault, they just haven’t been educated. And now if you’re sitting there listening to the show and you’re even in your forties, fifties, now’s the time to really get educated and understand the stuff. It’s not too late, but there’s so much to learn and really so little time really to get things on the right track. But the big benefit there, Sam, is the fact is that, you know, when you roll out of that 41k into your IRA, the world opens up to you.

Erick Ernett:
And we can really then tailor a specific plan and find your your financial speed and bring in a multiple array of strategies and solutions in order to really make it a sound plan for you that you control. Now, I mean, you don’t have any control over your 41k, you know, so and then it opens you up to options for more tax efficient planning long range into your retirement by utilizing the Roth and the Roth conversion. So if you’re out there listening and you hear the word Roth and you’re not quite sure what it is or you’re not quite sure what the difference between a Roth conversion and a Roth contribution. Then just give us a call and we’re happy to walk you through and explain it to you. And, you know, this is really important because now once your money is out of the 41k in your IRA, now you can convert to a Roth if you want to on an annual basis or all at one time. And we’ll explain to you the rules there. And wouldn’t it be nice by the time you reach 65, 70 years old, to have all your money in a tax free bucket where you can draw that money throughout your lifetime in retirement, completely tax free. You can transition that money to your beneficiaries in your heirs completely tax free. And so taxes are currently on sale. And I’ve said this before and I’ll say it again.

Erick Ernett:
Taxes are on sale. Just Google the capital gains tax rate, potential changes that are coming down the pipe and some of these bills that are being offered up on Capitol Hill. It’s pretty, pretty serious stuff for our retirees. So a lot of laws and rules are changing. Yesterday, the House just passed a bill. And so now, of course, it’s got to go up to the Senate and be voted on and everything. But these are aggressive bills that are changing retirement rules quite a bit. You’ve got to sit down with a professional that does this on a daily basis that’s truly going to apply those those values and those strategies to your retirement plan. I just want to reiterate, Sam, if people hopefully people are listening out there, our retirement plan is not sticking all your money with an adviser in some bucket and hoping for the best and just, you know, hey, what was my return this year? People are so focused on what was my return this year? What was it last year? What is it doing this month? So short term, stop focusing on returns and focus on a long term strategy that’s going to meet your needs and provide you the income that you need long term guaranteed for life. And then a very well diversified, smart plan portfolio that’s also going to weather all storms. So all these things have to be working harmoniously and that’s what we do. At Take Point Wealth Management.

Producer Sam Davis:
You can call Eric and his team at (352) 616-0511. Again, that’s (352) 616-0511. Or you can find more information, including that phone number at Tech Point Wealth. We’ve got just a couple of minutes left in this segment, Eric, but I want to get one more question answered for the folks listening out there. You know, we talked a little bit about the importance of an income plan today, and we’ve also talked a little bit about inflation and how that’s an important consideration. We know that people’s Social Security benefits will adjust with every annual cost of living adjustment each year. But people are wondering how much will my income need to increase to keep up with inflation? So what’s the answer for the folks out there? And also, what kind of planning do you guys do to make sure that people are protected from inflation?

Erick Ernett:
Yeah, great question. So, you know, obviously, we’ve been talking about an inflationary numbers this year have been pretty drastic increases. So, you know, things that we’ve been warning our retirees about for a long time is the cost of living is going to go up throughout your retirement. And so it’s typically inflation, which is measured by the Consumer Price Index CPI. It’s been between four and 5% a year over the last 20 years. So it’s been kind of just kind of steady, you know. But currently this year, we’ve had as high as 8% inflation, 11% inflation. I would argue we’ve had as high as 15 and 20% inflation inside that are buried inside the numbers. So so you have to compensate for inflation with when you’re preparing for retirement income projections by doing just that, sitting down and creating these projections, testing them and seeing how they’re going to hold up. And we have strategies and tools that will increase your income. That based on what the inflationary numbers are so we can tie strategies to inflation. So it’s this runaway inflation that we’ve had recently has made this so much more important to truly take a look at what we can do to combat that. So there’s multiple ways you can invest in order to compound or to defend against those inflation numbers. And we’ve talked about them, you know, utilizing annuities in order to create a guaranteed income.

Erick Ernett:
And a lot of those annuities out there, once they lock in that guaranteed income, they’ll increase it for you based on inflation and and market increases. So there are a lot of options out there to help provide for that. But that’s why it’s so important with these crazy inflation numbers that we’re getting and the rising costs. That’s why it’s more important than ever that you have to reevaluate things and make sure you’re keeping up with that, because there’s a lot of people sitting out there that just have a bucket of money for one K or an IRA or whatever, and it’s just sitting in some mutual funds and they have no idea how it’s really set up or allocated. And they may have the traditional type portfolio where their advisors put them into bonds or mutual funds that hold bonds that are in hoping that those are going to create income. Well, you know, or looking at a total return perspective, but total return perspective just aren’t going to work over the next 5 to 10 years. Because if you have 50% of your portfolio sitting in bonds right now, you’ve already lost 12% year over year. You’ve already lost 6% this year of your principal. So in bonds will continue to lose money going forward because rates are going to continue to go up and that’s an inverse relationship.

Erick Ernett:
So as rates increase, bond values go down. So you have this big, big drag on your portfolio right now and you’re paying fees on it and you’re losing money. So it’s just slowly melting away in hopes that it’s going to come back is just not good enough. So let’s take a look at what’s in your mutual fund. So you have an awesome tool. Sit there and extract all the data so you can actually see what’s in your mutual funds. How many bonds do you have in your mutual funds? What are the fees that you’re paying? What are the average returns? And are those returns going to keep up with what you need in your retirement long term? So a lot of things to look at there and that’s why we do this plan and we build it out. It’s not real complicated and we look at four or five pages. It’s pretty pictures of numbers and it’s easy to understand for our clients and our prospects out there. And and it really will shed some light and create some confidence and clarity. So I urge people urge people just to take advantage of the free offer and get that done. So you can just see kind of how things are looking for you. So but real important to look at replacing those bonds right now that aren’t going to provide you the income that you need with indexed annuities.

Erick Ernett:
And we can talk about index annuities and get get in those into into great detail. But the bottom line is an index annuity is a great alternative right now to to to bonds because, you know, number one, your principal is 100% protected inside a bond. Your money is not protected, and you can get market like gains without the market risk. So alleviating the risk that the bonds carry. And then so you’re protecting your hard earned assets and not just they’re not just slowly getting eaten away. And these indexed annuities can generate a consistent income, too. And through retirement. Right. And your money actually grows tax deferred while it’s in there. And you can even eliminate advisory fees that you’re currently paying on your bond income. So if you have a bond portfolio and it’s paying you four or 5% and then you pay a fee of half a percent, now three and one half percent, then you get to pay taxes on it. You know, you’re losing money. So if you’ve got money sitting in the bank in CDs, it’s just sitting there getting eaten alive. And so more than ever, it’s so important to get together with us so we can do that smart, safe retirement plan for you.

Producer Sam Davis:
We’re going to step aside for a moment, take point on retirement. We’ll be right back. While you wait, go ahead and visit Eric and his team at Take Point Wealth. When we come back, we’re going to get into a bit more about annuities and bond replacement, take point on retirement. We’ll be right back.

Producer:
You’re listening to Take Point on retirement. To schedule your free no obligation consultation visit take point on retirement.

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.

Producer:
At take point. Wealth Management. We know you’ve worked hard to earn your money and you’ve worked even harder to save it. When it comes to wealth management and planning for retirement trust, Eric Arnett and his team of experts who have been helping individuals, families and business owners find financial freedom for more than 20 years. Let us help you protect and grow what you’ve worked so hard for. Schedule your free no obligation consultation now at TakePointWealth.com. Welcome back to take point on retirement schedule your free financial consultation now at take point on retirement.

Producer Sam Davis:
Welcome back to Take Point on retirement Sam Davis joined by Eric Arnett. You can visit Eric and his team online at take point wealth again TakePointWealth.com. You can find the phone number on that website, but we’ll give it to you right now. (352) 616-0511. One more time. (352) 616-0511. Give take point wealth management a call. They offer a free consultation. And another thing that you all offer, Eric, is, is an annuity x ray. You know, a lot of people out there may currently hold an annuity or multiple annuities, maybe not doing the best for them right now. There’s lots of different types of annuities out there. So what do you guys do with an annuity x ray and how can you help the folks out there that maybe have an annuity that’s not performing the way it should?

Erick Ernett:
Yeah. So one of the one of the drawbacks to annuities, and there’s so many of them out there, there’s so many different annuities. So that’s the first thing we do is you may have an annuity and you’re not quite so sure about or you may be interested in annuities. Either way, we’ll do what we call an annuity stress test for you, an annuity x ray, and we’ll extract all the data information and we’ll walk you through it and show you the true mechanics behind it and what’s going on. You know, some of the drawbacks to annuities is, number one, that can be very complicated in nature. Right. But the greatest drawback associated with annuities that we see are the fees that come with them. So we see sometimes annuities with as high as 5 to 7% cost inside of them that people had no idea they were paying. So how are you going to grow your money over time? You know, if you’re paying almost 5% in expenses. So there’s annuities out there that are that are often sold by brokers and therefore, they often come with commission fees that can be as high as 10%. So some annuities also come with hefty annual fees. So you have to so furthermore, you have to attempt to take your money out of your annuity too soon. You could be hit with a surrender charge. So there’s all kinds of they’re very complicated, but they don’t have to be if you truly understand them, which one’s best for you.

Erick Ernett:
And so we see a lot of variable annuities out there. So if you think you have a variable annuity, you’re not quite sure about it and how it works and when you can take money and when you can’t. And what are the expenses associated with it? We’ll extract all that data out for you and do that what we call annuity x ray and truly explain it to you so you understand there’s so many types of annuities out there. That you’ve got to just be really careful. And there’s basically basically kind of two types of them. There’s a deferred and then an immediate. And so with a deferred annuity, you don’t get payouts right away. Rather, your annuity has an accumulation period during which the premiums are paid into the contract before payouts are dispersed, and it will just accumulate depending on what you have that tied to. So as far as an index or interest rates or what so and then an immediate annuity, you could start receiving payments immediately. Shortly after you sign up for it. So there’s a lot of different annuities out there. So it’s super, super important to educate yourself and make sure you have the right one or you’re even looking at the right one. I think they can be extremely helpful and extremely impactful and be a great tool as a part of folks retirement planning.

Erick Ernett:
But they just got to be very, very careful at which ones they proceed with. And so get second and third opinions on them. And and then first and foremost, just give us a call because our team’s happy to to take that burden off your shoulders, and we’ll do that review for you. And so you truly understand what it is that you have there, because I find so many people come to me and say, Hey, could you do this annuity x ray for me? And they have no idea what they’re in or how it works. And it just shocks me because, you know, obviously it wasn’t explained to them first and foremost that at at take point wealth management, we’re not going to do anything with anybody’s money until they 100% understand it and have confidence in it. So people got to remember, this is your money. You know, you’ve got to take charge of it. You’ve got to be responsible for it. You just can’t trust any broker or any advisor to just wildly invest your money and you don’t understand what it’s in. You’ve got to understand what it’s in and take that responsibility. It’s your money. And so annuities. Yes. Can be very, very complicated. But that’s why we take great pride here at educating first and foremost, so people can understand and build a confidence and a clarity about. I can tell you, ten, 15 years ago, I, I didn’t even know I didn’t know how these things worked.

Erick Ernett:
And I didn’t like them because I didn’t know how they worked. And and I had a fear of them. But now I have annuities in my own personal retirement plan in portfolio, and I’m very comfortable with them, probably more comfortable than I am with most everything else. So they offer a lot of great benefits, but just got to take your time with them. And I think you have some nice clips from our Annuity 360 book that we can play for folks. And please just reach out and ask us for the book and we’ll give you the book for free. We’ll just mail right out to you. So whether you call us at (352) 616-0511, or you go to our website, take point on retirement, and just click up on that upper right hand corner to set up a little chat session with us. And we’ll get the book out to you and you take it on your own time to really study it, highlight it, go through it, and then get back to us and we’ll chat about it and see if it makes sense for you. So so that’s, you know, that’s just it’s unfortunately, it’s very confusing. And that’s why I think it makes sense to have a great advisory team by your side that can help you explain it to you.

Producer Sam Davis:
And as fiduciaries, you and your team have a responsibility to do what’s best for your clients when it comes to managing their assets. But I like that you also take such a big responsibility to educate your clients, make sure they understand what it is that they’re investing in. Because at the end of the day, like you say, you know, the client is most responsible for their money. You know, it’s their money. They are in charge of of deciding what’s best for them. And that’s why you guys offer annuity 360 and that book. And we’re going to go ahead and play one of the audio book chapters from Annuity 360 on the types of annuities. So with this chapter, hopefully you come to understand a little bit more about the different types of annuities, the good ones, the bad ones, and the one that might be right for you. And again, reach out to Eric and his team at Take Point. Welcome. And they can give you a copy of that book Annuity 360. So you can go ahead and read it for yourself. And before we play the chapter, Eric, I know you have one client that you sent that book out to and they actually read through that book a few, a few times, maybe even multiple times.

Erick Ernett:
Yeah, I think he said he read it six times and, and it was great because the whole process and the, the development of this was fantastic. And, you know, he first came to us as a listener on the show and really didn’t understand annuities and had a fear of them. And, you know, so we walked them through it. And then and he still was having a hard time kind of grasping it and building that confidence that he needed to build in the. In the process. And so we we got the book to him and he read the book and he read the book six times and studied it and pulled it apart. And and then he came back to us and said, you know, I don’t understand why people don’t put all their money in this. I was like, well, okay, you know, back off here a little bit. It’s, you know, you don’t want to put all your eggs in one basket. That’s not what we do. However, you know, the moral to the story is that after he read the book, he went from being completely fearful to, you know, ready to invest and felt really comfortable with it and decided that that was the best thing for him and his long range retirement plan. And, you know, amounts and percentages of what you put in them versus other people, it’s it’s different for everybody.

Erick Ernett:
That’s why. You know, I had a caller call in off the show a week or so ago, and and she had an index annuity that she wanted me to take a look at. She didn’t understand it because I guess she kind of had a falling out with her advisor. And after talking to her, her advisor put just about all of her money in this one annuity. And so that you’re putting all your eggs in one basket and restricting it. And it’s, you know, that’s important not to do as well. So you’ve got to be very careful with even what percentages that you allocate to these. But everything working together in our smart plan, where we have a risk adjusted, fee efficient, tax efficient, diversified, risk adjusted portfolio working in conjunction with your index annuity, providing guaranteed income or even safe accumulation, acting as a bond alternative. This is what we call our smart plan and this is what we’re putting forward and really helping folks understand because. It’s it’s so challenging right now to build a retirement plan and to build confidence in one. So you’ve got to have multiple components and you have to have it being actively managed. But at the same time, if you don’t have that understanding and you’re just sitting at home and you’re fearful all the time, then that’s the time to call and make changes.

Erick Ernett:
You want your head to hit the pillow at night feeling confident that, Hey, I’m in the right place, I’m doing the right things, and I feel pretty confident that my goals are going to be met long term in retirement. So so now more than ever, it’s it’s time to really sit down and discuss everything that we’ve been talking about on the show. So many things. And you can see why if somebody actually sat and listen to this whole show, they would sit and say, well, gosh, man, retirement planning and retirement insurance. It really is complicated and it really is a daunting task. And and it really is scary. Well, it doesn’t need to be that way, but it’s a process. And that’s and that’s one thing that we first and foremost pride ourselves with is education, education, education. So no one’s going to hold a gun to your head and say, hey, you know, here’s the this is the we got this product, here’s the next greatest and grace. Here you go. You just put all your money in this and we’re good to go. We’re we’re going to dove into every little detail and aspect and build out a solid, comprehensive, smart plan for you. Absolutely free. No charge at all. So if you’re listening, please take advantage of that. I think it’s just a tremendous opportunity to.

Producer Sam Davis:
Reach out to Eric and his team, get a copy of Annuity 360. You can visit them online at Take Point. Welcome once again. Take point. Welcome. And with that, we’re going to play the audio book chapter from Annuity 360 on the types of annuities.

Annuity 360:
Chapter five Types of annuities. Big idea. There are several options for you to consider when choosing an annuity. Be confident in knowing that there is an annuity out there that can meet all of your needs. Fixed annuity. A fixed annuity offers a specific guaranteed interest rate on their contributions to the account. Fixed annuities are often used in retirement planning. Fixed indexed annuity fire. A fixed indexed annuity is an accumulation based product offered by an insurance company. A fixed indexed annuity has features of both a fixed annuity and a variable annuity. The growth of your fixed indexed annuity is dependent on the performance of a chosen stock market index, but your money is not actually invested in this index. This offers you great growth, potential and exceptional protection for your investment. We will talk in depth about fixed index annuities in a separate chapter. Immediate annuity. This is sometimes called a single premium immediate annuity or a SPEA spea. An immediate annuity is able to pay the policy owner a guaranteed income starting almost right away. Some speirs allow you to defer payments for up to one year. You can purchase an immediate annuity with a lump sum and you are assured a consistent annual payment of an agreed upon amount. Variable annuity. Here’s the definition, but please don’t invest in a variable annuity. Disclaimer I strongly recommend that you do not invest in a variable annuity.

Annuity 360:
I feel compelled to describe what a variable annuity is for you as the reader of this book. This type of annuity includes an investment feature managed by mutual fund managers because the funds are exposed to the stock market. They are exposed to higher risk, which means they carry the potential for substantial losses. How does it work? A variable annuity is a mutual fund wrapped inside an annuity product. There are two elements that contribute to the value of a variable annuity the principle, which is the amount of money you put into your annuity and the returns that your annuities underlying investments deliver over time. You can get variable annuities in two forms deferred or immediate. Deferred variable annuities are the most popular type of variable annuities and are most often used for retirement planning purposes because they are designed to start paying out an income at some point in the future. Immediate variable annuities begin paying you right away. Other things to know. Some advisers would say variable annuities are great products for young high income earners. These types of investors have a much longer time horizon when it comes to recovering losses from stock market volatility. Variable annuities are tied to specific investments, which is a double edged sword for most investors. There is the possibility of impressive growth, also a very real danger of major losses, including your principal.

Annuity 360:
The bottom line here is if you are currently investing in a variable annuity, your funds could be in serious trouble if the market experienced any downturns. Two basic configurations. Immediate versus deferred. The option you select will depend on your financial goals. If you want to begin receiving annuity payments right away, you will choose an immediate annuity. Alternately, if you would like to set your payments to begin at some point in the future, you will purchase a deferred annuity and specify the start date in your contract. Income now immediate annuity features number one, funded with a single lump sum payment. Number two, guaranteed monthly payouts. Number three, supplement your retirement savings income. Later, deferred annuity features. Number one, tax deferred premium growth. Number two, guaranteed lifetime income that begins on the date. You specify number three more income later because your money accumulates longer. Phases of your annuity accumulation phase, the deferred growth phase, you defer withdrawals and the principal invested grows without asset subtraction. This refers to the period when an individual is working, planning and building up the value of their annuity through savings. It is a specific period when the annuity investor is in the early stages of building up the cash value of their annuity. The accumulation phase begins when a person starts saving money for their retirement and ends when they begin taking distributions.

Annuity 360:
For many people, this period begins when they start working and it ends with their retirement. The sooner you can begin your accumulation phase, the better. The long term financial difference between starting to save in your twenties versus starting to save in your thirties is substantial. Not only will you have more of a financial cushion in your retirement, but you will also have access to advantages such as compounding interest and protection from business cycles. Remember, the more you invest during the accumulation phase, the more you’ll receive in the distribution phase. Annuity creation phase. The payout. This happens when you turn on income with your annuity and begin monthly income payouts or penalty free withdrawals. This refers to the period when the annuitants starts to receive payments from their annuity after annuities move into the annuity creation phase. They will provide periodic payments to the annuitants. The more money you invested in your annuity during the accumulation phase, the more that is available to you in the annuity creation phase. There are four options when it comes to receiving your payouts during the annuities nation life option period, certain systematic withdrawal or lump sum payment life option. This option typically provides the highest payout because the monthly payment is calculated based on the life of the annuity. This option will provide an income stream for life, which helps retirees with their fear of outliving their wealth.

Annuity 360:
There’s also a joint life payment option that lets you continue the payments to your spouse upon your death. This means that your monthly payment will be lower because it is based on the life expectancy of both spouses. Period. Certain this option means that the value of your annuity is paid out over a time period that you choose, such as ten, 15, or 20 years. If you choose a 15 year payout period but pass away within the first ten years, your contract is guaranteed to pay your beneficiary for the remaining years. Systematic Withdrawal. This method involves withdrawing funds from an annuity account in specified amounts for a specified payment frequency. The annuity is not guaranteed lifelong payments with option. Instead, the annuity chooses to withdraw funds from the account until it is empty. The risk here is that funds could become depleted before the annuity passes away. Lump sum. This option is a one time payment for the value of the asset. The value of your lump sum payment would most likely be less than the sum of payments you would receive if you choose another payout option. This is because the party in charge of the payout is being asked to provide more funds upfront than they would have otherwise been responsible for.

Producer Sam Davis:
And so that was Chapter five from Annuity 360 on the types of annuities. And again, you can request your free copy of the book Annuity 360 so you can read it for yourself and, and educate yourself on the, on everything you need to know about annuities, which ones to avoid and which ones to buy for a successful retirement. So Eric, which specific types of annuities have you seen having the most success in your clients portfolios?

Erick Ernett:
Yeah, so we what we really do is it’s cool because being independent, you know, take point wealth management, we’re completely independent of any large company or product. So we sit back and we have the ability to scour the entire investment universe to find the very best annuity for you. And so we have no personal relationships with any companies, and so we’re not going to push a specific product and we’re not going to just push the one that pays the highest commissions, you know, so there’s there’s so many of them out there. But the great thing about it is, first and foremost is an annuity is a contract. It’s a binding contract between you and an insurance company. And it requires that insurance company to make payments to you either right away or in the future. And so once you fund your annuity, you can just withdraw your money at any time without consequences. However, I mean, you can’t just draw your money without any consequence. However, that money gets to grow on a tax deferred basis. So if your money is just sitting in a regular savings account or a brokerage account, you’re paying taxes on that as it grows. And so we really like to look at companies that are offering the best rates. And so a lot of different ways to dissect rates.

Erick Ernett:
So first and foremost, we’re looking for the companies that have good rates, have solid ratings as far as strength of company. So A-plus rated companies paying the highest rates and we and we try to find those that have no fees at all. And so there’s some great strategies out there now that even might offer a bonus on your money, have no fees and even have some free benefits to them. And so and they’re highly rated. So that’s what we do is we help screen for the very best product out there at that given time that’s going to meet that client’s overall needs. And that’s what a fiduciary should do and always should do. So make sure you ask that question. If you’re sitting down and talking to somebody, are you a licensed fiduciary? Because as a licensed fiduciary, we have to put the. Clients best interests. First and foremost, we can’t put ourselves and our interests before theirs and as fiduciaries. We’ve signed a code of ethics and we truly live by that here at Tape Point Wealth Management. And so super, super important to make sure you’re talking to the right folks and I think those licensed fiduciary are are important to seek out.

Producer Sam Davis:
Yeah. You can reach out to Eric and his team at Take Point Wealth. You can book a free consultation, a free 15 minute chat and and get started on the process of of building a financial plan or if you have a plan in place already and if your advisor hasn’t contacted you lately, how can you be sure that you have the right plan in place? And Eric, I know that it is it’s uncomfortable for a lot of people to to broach this subject and start planning for retirement. But, you know, I heard once that uncomfortable action leads to comfortable results, whether it’s learning a language or working out and trying to lose weight or building a business or establishing a new relationship, you know, sometimes it does take uncomfortable action and to reach that comfortable result in the end. So what’s it like to work with you guys, starting with that initial chat?

Erick Ernett:
Yeah, it’s just, you know, like we’ve we’ve been doing this a long time, pushing 24 years and, you know, we know what we’re doing. We’ve known a long time and we take great pride in and love to help people. And that’s where our passion is first and foremost. I mean, heck, I have probably hundreds of conversations throughout the year and they’re just very laid back and open conversations and you may never work with us, and that’s okay. I just want to make sure your questions are answered. And and at the end of the day, we feel really good about that. And so working with us, I think, is, is just really laid back. I mean, we’re just in the beginning, we’re just going to have a conversation, you know, 15 to 20 minute chat. And if it goes further from there, we’re just going to collect some data, some information, and we’re going to go to work and build you what we think is the most optimized, smart plan for you, tailored for you going forward to get you to and through retirement. And we’re going to do it completely free. It’s a $5,500 value. So so call other financial planners out there and they’re going to charge you a fee to do that. We’re going to do it completely free because we can we have the team and the tools to do it, number one, and we can do it efficiently and quickly. But number two, we just want people to have that education in hand and get their questions, answers and build some confidence and clarity. And at that point, you know, if what we’re if we put in front of a strategy that makes sense to you and you and you think it makes sense to you, make some changes, then we’ll help you make those changes.

Erick Ernett:
And it may be very small, small, subtle changes. It may be a big change. And heck, if you call me and you still go back to your other advisor and ask the same question, that’s okay too, because that’s at least sparking some type of conversation and some type of change or motivation to try to optimize things and change things because you just can’t leave things as they are. They can’t be static, they can’t be passive. You know what you were doing five years ago probably isn’t going to work over the next 5 to 10 years. It’s a constantly changing, ever dynamic marketplace. And so this is going to constantly create new challenges and changes for our retirees. So you’ve got to have a team that’s going to be active and stay on top of that and review that with you on a quarterly basis, on a semiannual basis, at a minimum, an annual basis, readjusting your plan. And so we’re goals based planners. We’re not product pushers. We put the goals in place first and paint that picture, build that plan. What’s retirement look like to you? And then we apply the tools that are going to get you there. It’s not about pushing product and putting all your money in one bucket and oh yeah, hey, what’s going to get me the highest return or what did this thing do ten years ago? You know, that’s not important. Chasing returns is the biggest mistake people can make. That’s not important. What’s important is getting a goals based plan first and then applying the tools that are going to make that goal work.

Producer Sam Davis:
So whether you’re listening on the radio and the Sunshine State this weekend or if you’re listening to take point on retirement, wherever you listen to podcasts, it’s available on Apple, Spotify, Google, everywhere you can listen to podcasts. So if you miss part of the show, you can go online, download whichever episode you want and learn a little bit more. Take the first step towards financial freedom today, or if you have a plan in place, call Eric and his team visit. Take point wealth and make sure that still is the right plan for you. Eric, thanks for joining us and thanks for being there for all the listeners again this weekend and help. Now all your clients and helping educate more people.

Erick Ernett:
Yeah. Happy Easter to everyone and I hope you have an awesome, beautiful long weekend with your family and truly just take a deep breath and the good weather is here and relax and enjoy and but then when when Monday or Tuesday rolls around, give me a call and start thinking about your retirement plan.

Producer Sam Davis:
That sounds good. Once again, this is Ben. Take point on retirement visit Eric online at take point. Well we’ll see you next week.

Producer:
Thanks for listening to take point on retirement. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets, to schedule your free no obligation consultation visit, take point on retirement, or pick up the phone and call (352) 616-0511. That’s (352) 616-0511. Investment Advisory Services offered through Brookstone Capital Management LLC. Bcm a registered investment advisor BCM and Take Point 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.

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. 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.

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