1 00:00:40,900 --> 00:00:45,869 Suze: May 26th, 2024 Suze O here and welcome everybody to 2 00:00:45,880 --> 00:00:48,509 Suze: the Women and Money podcast as well as everybody smart 3 00:00:48,520 --> 00:00:50,229 Suze: enough to listen. 4 00:00:50,970 --> 00:00:55,610 Suze: We are as I speak, obviously prerecording this on our 5 00:00:55,619 --> 00:01:02,110 Suze: way back from South Africa and on May 30th, KT 6 00:01:02,119 --> 00:01:06,269 Suze: will just tell you briefly a little bit about our 7 00:01:06,279 --> 00:01:09,268 Suze: journeys because I know all of you want to know. 8 00:01:10,739 --> 00:01:12,160 Suze: That's number one. 9 00:01:12,860 --> 00:01:15,819 Suze: Number two. Do you all know that my birthday is 10 00:01:15,830 --> 00:01:20,279 Suze: June 5th? Do you? All right. Well, you should actually, 11 00:01:20,290 --> 00:01:22,300 Suze: I don't know why you should, but it would be 12 00:01:22,309 --> 00:01:27,720 Suze: nice if you did anyway. And on June 5th, that 13 00:01:27,730 --> 00:01:35,279 Suze: is the date when the my Alliant sweepstakes ends and 14 00:01:35,370 --> 00:01:37,949 Suze: the Alliant sweepstakes is very simple. 15 00:01:38,510 --> 00:01:47,169 Suze: If you were to go to my alliant.com Alliant.com, 16 00:01:47,940 --> 00:01:50,400 Suze: I keep spelling that just so, you know, because so 17 00:01:50,410 --> 00:01:53,360 Suze: many of you get it confused with alliance with this 18 00:01:53,370 --> 00:01:57,430 Suze: with that, you have to go to my alliant.com and 19 00:01:57,440 --> 00:02:02,360 Suze: right there, there is a little quiz five questions, just 20 00:02:02,370 --> 00:02:03,319 Suze: answer them. 21 00:02:04,269 --> 00:02:07,250 Suze: The right answers will come up and educate you if 22 00:02:07,260 --> 00:02:09,850 Suze: you happen to get it wrong. But at the end 23 00:02:09,860 --> 00:02:13,490 Suze: of the fifth question, you get to put in your email. 24 00:02:13,500 --> 00:02:16,130 Suze: Why do I say you get to put in your email? 25 00:02:16,538 --> 00:02:20,250 Suze: Because after June 5th, one of your emails will be 26 00:02:20,258 --> 00:02:25,460 Suze: selected and one of you will win $5000. I don't 27 00:02:25,470 --> 00:02:27,970 Suze: care what you do with it should at least go 28 00:02:27,979 --> 00:02:28,449 Suze: there 29 00:02:29,179 --> 00:02:31,660 Suze: and enter and see if you can win. You don't 30 00:02:31,669 --> 00:02:33,679 Suze: have to open up an account. You don't have to 31 00:02:33,690 --> 00:02:36,399 Suze: already be a client. You don't have to do anything 32 00:02:37,380 --> 00:02:40,720 Suze: for those of you who have already done it and 33 00:02:40,729 --> 00:02:43,429 Suze: you put in your email, guess what? You are all 34 00:02:43,440 --> 00:02:48,478 Suze: qualified to be entered. So that ends June 5th. Why 35 00:02:48,490 --> 00:02:52,000 Suze: not give yourself a birthday gift from me 36 00:02:52,830 --> 00:02:58,728 Suze: and enter it? Now, that's number one, number two. Many 37 00:02:58,740 --> 00:03:00,859 Suze: of you know that if you want to ask a 38 00:03:00,869 --> 00:03:05,880 Suze: question on the, Ask KT and Suze Anything podcast editions, 39 00:03:06,589 --> 00:03:09,500 Suze: you simply send in a question to ask Suze podcast 40 00:03:09,508 --> 00:03:10,970 Suze: at gmail.com 41 00:03:11,750 --> 00:03:17,190 Suze: and if KT selects it, it will be on the podcast. 42 00:03:18,139 --> 00:03:21,679 Suze: However, as thousands of you now know, 43 00:03:22,470 --> 00:03:27,669 Suze: I peruse those questions. And if I see one that 44 00:03:27,679 --> 00:03:31,649 Suze: catches my fancy, I answer you personally. 45 00:03:32,679 --> 00:03:37,479 Suze: And I have noticed a trend over the past few 46 00:03:37,490 --> 00:03:38,440 Suze: years 47 00:03:39,350 --> 00:03:43,830 Suze: besides questions about Roth retirement accounts and conversions being the 48 00:03:43,839 --> 00:03:46,000 Suze: number one question asked, 49 00:03:46,850 --> 00:03:53,360 Suze: the next question that is mostly asked is about annuities, 50 00:03:53,449 --> 00:03:56,860 Suze: specifically variable annuities. 51 00:03:57,619 --> 00:03:58,119 Suze: And 52 00:03:58,850 --> 00:04:01,899 Suze: I usually know when it's gonna be about a variable 53 00:04:01,910 --> 00:04:07,970 Suze: annuity because the subject area always says, please help. I'm 54 00:04:07,979 --> 00:04:12,710 Suze: in big financial trouble, whatever it may be, it's obvious 55 00:04:13,100 --> 00:04:18,010 Suze: that it's going to be about a variable annuity. Now, 56 00:04:18,019 --> 00:04:23,779 Suze: a while ago, I did a complete podcast on annuities. 57 00:04:23,880 --> 00:04:27,950 Suze: So if you don't know what an annuity is, 58 00:04:28,390 --> 00:04:31,428 Suze: you need to go back and listen to that because 59 00:04:31,440 --> 00:04:36,000 Suze: I don't wanna waste today's podcast on talking about what 60 00:04:36,010 --> 00:04:39,899 Suze: an annuity is because the majority of, you know, at 61 00:04:39,910 --> 00:04:43,019 Suze: this point in time. And if you don't, please go 62 00:04:43,029 --> 00:04:46,769 Suze: back and find that podcast and listen to it. 63 00:04:47,549 --> 00:04:50,329 Suze: One thing I really want to make clear with all 64 00:04:50,339 --> 00:04:53,928 Suze: of you, you all think that I hate annuities across 65 00:04:53,940 --> 00:04:55,480 Suze: the board. I do not. 66 00:04:56,720 --> 00:04:59,579 Suze: There are many annuities that I like and I think 67 00:04:59,589 --> 00:05:06,459 Suze: make total sense. I like single premium fixed annuities where 68 00:05:06,470 --> 00:05:09,618 Suze: usually you deposit one sum of money, you get a 69 00:05:09,630 --> 00:05:14,170 Suze: specific interest rate for a long period of time equal 70 00:05:14,178 --> 00:05:17,890 Suze: to whatever the surrender period is of that annuity. 71 00:05:18,799 --> 00:05:23,868 Suze: And I don't mind those indexed annuities. Hey, if you 72 00:05:23,880 --> 00:05:26,859 Suze: want to buy an index annuity, I don't have a problem. 73 00:05:26,869 --> 00:05:31,510 Suze: And simply that is where you put in money, the 74 00:05:31,519 --> 00:05:36,029 Suze: money is invested and attached to usually the Standard and 75 00:05:36,040 --> 00:05:40,130 Suze: Poor's 500 index. And if the index goes up, let's 76 00:05:40,140 --> 00:05:45,940 Suze: say 10% in that year, you only get 70% of that. 77 00:05:46,209 --> 00:05:48,058 Suze: So you would get 7%. 78 00:05:48,799 --> 00:05:51,450 Suze: But because you are taking less, 79 00:05:52,160 --> 00:05:55,359 Suze: you are guaranteed to get back at least what you 80 00:05:55,369 --> 00:05:57,849 Suze: put in or the value at the time of the 81 00:05:57,859 --> 00:05:59,220 Suze: annuitant death. 82 00:06:00,010 --> 00:06:02,750 Suze: What is an annuitant? 83 00:06:03,510 --> 00:06:05,980 Suze: The annuitant of an annuity 84 00:06:07,059 --> 00:06:14,369 Suze: is what makes annuities tax deferred. Because in an annuity policy, 85 00:06:14,380 --> 00:06:17,649 Suze: there is an owner, the person who owns the policy, 86 00:06:17,829 --> 00:06:21,730 Suze: makes all the decisions of the policy can change any 87 00:06:21,738 --> 00:06:23,720 Suze: part of that contract. 88 00:06:24,769 --> 00:06:28,850 Suze: The owner chooses the annuitant, the insured 89 00:06:29,500 --> 00:06:34,559 Suze: and all the benefits of that annuity are based on 90 00:06:34,570 --> 00:06:40,040 Suze: the life expectancy of that annuitant. And then there is 91 00:06:40,049 --> 00:06:46,320 Suze: a beneficiary because of that. When you put money in 92 00:06:46,329 --> 00:06:47,399 Suze: an annuity, 93 00:06:48,459 --> 00:06:52,940 Suze: all the growth of those earnings and interest are tax 94 00:06:52,950 --> 00:06:59,540 Suze: deferred until you take it out. Just that simple. The 95 00:06:59,549 --> 00:07:02,959 Suze: owner and the annuitant can be the same person, 96 00:07:03,829 --> 00:07:08,470 Suze: but the annuitant and the beneficiary cannot be the same 97 00:07:08,480 --> 00:07:12,980 Suze: person because the beneficiary is who gets the money when 98 00:07:12,989 --> 00:07:18,429 Suze: the annuitant dies. The owner can also be the beneficiary 99 00:07:18,440 --> 00:07:20,029 Suze: if they want. 100 00:07:20,670 --> 00:07:25,799 Suze: So with that said, there is one kind of annuity 101 00:07:26,540 --> 00:07:30,799 Suze: that I really dislike tremendously 102 00:07:31,540 --> 00:07:35,279 Suze: and that is a variable annuity. 103 00:07:36,190 --> 00:07:38,279 Suze: And a variable annuity 104 00:07:39,359 --> 00:07:43,260 Suze: simply is an annuity, a contract with an insurance company 105 00:07:43,690 --> 00:07:48,269 Suze: where they take your money that you've given them, they 106 00:07:48,279 --> 00:07:52,549 Suze: deposit it in to a sub account that's like a 107 00:07:52,559 --> 00:07:53,779 Suze: mutual fund 108 00:07:55,140 --> 00:07:59,420 Suze: and the money goes up the money goes down. There 109 00:07:59,429 --> 00:08:03,089 Suze: are fees, big time fees in a variable annuity. If 110 00:08:03,100 --> 00:08:04,049 Suze: you ask me 111 00:08:05,109 --> 00:08:08,320 Suze: and the growth of that money while it grows and 112 00:08:08,329 --> 00:08:11,730 Suze: it changes, maybe they buy something, sell something. You do 113 00:08:11,739 --> 00:08:14,779 Suze: not pay any income taxes while it's in there. But 114 00:08:14,790 --> 00:08:18,149 Suze: when you go to take it out, you pay ordinary 115 00:08:18,160 --> 00:08:22,760 Suze: income taxes on it. Or if you die, your beneficiary 116 00:08:22,769 --> 00:08:26,380 Suze: pays ordinary income taxes on it. 117 00:08:27,640 --> 00:08:31,700 Suze: Also, it is sold to you under the guise that 118 00:08:31,709 --> 00:08:34,979 Suze: you will never get less than what you originally put in. 119 00:08:35,909 --> 00:08:37,690 Suze: So if you put in 120 00:08:38,559 --> 00:08:43,760 Suze: $50,000 the markets have gone down and now it's worth 121 00:08:43,770 --> 00:08:45,329 Suze: $30,000 122 00:08:46,429 --> 00:08:51,049 Suze: and the annuitant dies. All right, you will get back 123 00:08:51,059 --> 00:08:53,489 Suze: your $50,000 124 00:08:54,159 --> 00:08:58,619 Suze: but you pay a hefty price for that. Usually 1.2 125 00:08:58,630 --> 00:09:03,500 Suze: to 1.5% of what's called a mortality charge. So you're 126 00:09:03,510 --> 00:09:05,439 Suze: paying for that, right? 127 00:09:06,080 --> 00:09:09,460 Suze: But the annuitant has to die for you to get 128 00:09:09,469 --> 00:09:12,380 Suze: back all of your money. 129 00:09:13,520 --> 00:09:17,729 Suze: However, if you put in $50,000 and it grows to 130 00:09:17,760 --> 00:09:22,479 Suze: $100,000 and the annuitant dies. All right. So you get 131 00:09:22,489 --> 00:09:24,140 Suze: the $100,000 132 00:09:24,880 --> 00:09:29,210 Suze: but you are going to pay ordinary income tax on 133 00:09:29,219 --> 00:09:35,520 Suze: the $50,000 growth of that money. Just write all of 134 00:09:35,530 --> 00:09:36,500 Suze: that down 135 00:09:37,200 --> 00:09:40,580 Suze: so that you will understand in a little bit why 136 00:09:40,590 --> 00:09:47,700 Suze: I so dislike variable annuities. Again, variable annuities are sold 137 00:09:47,710 --> 00:09:51,789 Suze: to you under the guise that you can invest in 138 00:09:51,799 --> 00:09:56,750 Suze: mutual funds and always get back at least the amount 139 00:09:56,760 --> 00:10:00,539 Suze: of money that you put in. Got that 140 00:10:01,369 --> 00:10:02,909 Suze: Put a pin in it for a second. 141 00:10:03,719 --> 00:10:08,669 Suze: The last annuity that I really like as well, especially 142 00:10:08,679 --> 00:10:11,869 Suze: when interest rates are high like they are now is 143 00:10:11,880 --> 00:10:14,390 Suze: what's called an immediate annuity. 144 00:10:15,080 --> 00:10:18,718 Suze: An immediate annuity is where you deposit a sum of 145 00:10:18,729 --> 00:10:19,299 Suze: money 146 00:10:20,059 --> 00:10:24,979 Suze: and it's immediately annuitized and you get monthly income for 147 00:10:24,989 --> 00:10:29,159 Suze: the rest of your life. Or there are different variations 148 00:10:29,169 --> 00:10:32,059 Suze: of how long you get that income if you die 149 00:10:32,070 --> 00:10:36,239 Suze: before your life expectancy and so on. I don't have 150 00:10:36,250 --> 00:10:36,799 Suze: a problem with 151 00:10:36,885 --> 00:10:41,655 Suze: those if you need income and you are retired and 152 00:10:41,664 --> 00:10:45,465 Suze: I talk about that in the ultimate retirement guide, which 153 00:10:45,474 --> 00:10:49,664 Suze: by the way is being updated as we speak. So 154 00:10:49,674 --> 00:10:52,655 Suze: wait till the update comes out if you are going 155 00:10:52,664 --> 00:10:55,025 Suze: to buy it. All right, 156 00:10:55,950 --> 00:10:58,929 Suze: when annuities first came out, 157 00:10:59,710 --> 00:11:06,069 Suze: they were there as an alternative to your tax deferred 158 00:11:06,080 --> 00:11:13,679 Suze: retirement accounts. Remember originally you were able to fund a 159 00:11:13,710 --> 00:11:18,369 Suze: 401k or an IRA, not with a lot of money. 160 00:11:18,380 --> 00:11:22,330 Suze: Remember IRAs used to be $2,000 a year. That was it. 161 00:11:23,200 --> 00:11:27,239 Suze: But you were able to fund retirement accounts 162 00:11:28,070 --> 00:11:31,130 Suze: with money that you had never paid taxes on 163 00:11:31,979 --> 00:11:34,718 Suze: and they would grow and grow and grow. And when 164 00:11:34,729 --> 00:11:38,479 Suze: you took the money out, you would pay ordinary income 165 00:11:38,489 --> 00:11:44,390 Suze: taxes on all of it. But all retirement accounts have 166 00:11:44,400 --> 00:11:49,159 Suze: a limit as to how much money you can put in. 167 00:11:50,669 --> 00:11:54,409 Suze: Then came the Roth retirement account where you were able 168 00:11:54,419 --> 00:11:57,530 Suze: to fund it with after tax money 169 00:11:58,929 --> 00:12:02,309 Suze: and all the money would grow tax free. And when 170 00:12:02,320 --> 00:12:05,229 Suze: you took it out, it was all tax free. But 171 00:12:05,239 --> 00:12:09,270 Suze: forget Roths for a second here because annuities really came 172 00:12:09,280 --> 00:12:14,069 Suze: along way before Roths ever were even thought about. 173 00:12:14,929 --> 00:12:15,520 Suze: Ok. 174 00:12:16,710 --> 00:12:22,969 Suze: So with an annuity, the insurance companies created an alternative 175 00:12:22,979 --> 00:12:26,250 Suze: so called retirement account for you 176 00:12:27,130 --> 00:12:32,390 Suze: where you could put in money that you had already 177 00:12:32,400 --> 00:12:36,390 Suze: paid taxes on as much as you wanted. 178 00:12:37,320 --> 00:12:42,390 Suze: You weren't limited to a few thousand dollars. You were able 179 00:12:42,400 --> 00:12:48,450 Suze: to put in $100,000 or $200,000 or $300,000 whatever amount 180 00:12:48,460 --> 00:12:52,739 Suze: you wanted with after tax money 181 00:12:54,289 --> 00:13:00,020 Suze: and therefore your money you deposited earned would stay in 182 00:13:00,030 --> 00:13:01,659 Suze: the annuity 183 00:13:02,340 --> 00:13:05,559 Suze: and it would grow tax deferred. 184 00:13:06,599 --> 00:13:09,940 Suze: And then on the death of the annuitant, 185 00:13:10,640 --> 00:13:12,539 Suze: the money would come out 186 00:13:13,419 --> 00:13:17,159 Suze: and you would simply pay taxes on the growth of 187 00:13:17,169 --> 00:13:17,960 Suze: that money. 188 00:13:19,299 --> 00:13:24,400 Suze: Now, remember I mentioned that I really liked single premium, 189 00:13:24,409 --> 00:13:28,840 Suze: fixed annuities. Again, a single premium, you make one deposit, 190 00:13:29,679 --> 00:13:33,679 Suze: usually it's a large deposit like I just mentioned. And 191 00:13:33,690 --> 00:13:37,820 Suze: with a fixed annuity, you get a fixed interest rate 192 00:13:37,830 --> 00:13:40,820 Suze: for a specific period of time. 193 00:13:41,640 --> 00:13:44,579 Suze: Again, warning if you ever do that, make sure the 194 00:13:44,590 --> 00:13:48,679 Suze: interest rate is fixed to the amount of time the 195 00:13:48,690 --> 00:13:53,260 Suze: surrender period of that annuity is in effect. 196 00:13:54,409 --> 00:13:57,770 Suze: If you don't know what the surrender period is, it 197 00:13:57,780 --> 00:13:59,169 Suze: is a charge 198 00:13:59,849 --> 00:14:03,859 Suze: that's for a specific number of years that if you 199 00:14:03,869 --> 00:14:08,130 Suze: come out of the annuity within that surrender period, you 200 00:14:08,140 --> 00:14:13,469 Suze: will pay a 7 to 10% surrender charge. Usually decreasing 1% 201 00:14:13,479 --> 00:14:18,630 Suze: a year every single year until they have recouped all 202 00:14:18,640 --> 00:14:22,190 Suze: the money they paid to the salesperson who sold it 203 00:14:22,200 --> 00:14:24,750 Suze: to you. Just that simple. 204 00:14:25,320 --> 00:14:29,809 Suze: Don't be tricked into going into an annuity that gives 205 00:14:29,820 --> 00:14:32,530 Suze: you a high interest rate and possibly a bonus to 206 00:14:32,539 --> 00:14:35,659 Suze: go in the first year. But then the next years 207 00:14:35,669 --> 00:14:38,770 Suze: they drop you all the way down. 208 00:14:39,719 --> 00:14:42,260 Suze: All right, let me go back to this for a second. Now, 209 00:14:43,210 --> 00:14:48,880 Suze: a fixed annuity can be compared to a certificate of deposit. 210 00:14:49,390 --> 00:14:54,169 Suze: And in my lifetime when I was seeing clients, I 211 00:14:54,179 --> 00:14:59,530 Suze: put so many people into what was a five year 212 00:14:59,539 --> 00:15:05,369 Suze: fixed annuity CD. That was a five year CD annuity. 213 00:15:06,200 --> 00:15:08,739 Suze: So it worked like a certificate of deposit, but it 214 00:15:08,750 --> 00:15:10,210 Suze: was in an annuity. 215 00:15:10,890 --> 00:15:13,640 Suze: And the reason that I did it was I want 216 00:15:13,650 --> 00:15:19,099 Suze: you to think about this. You put $5,000 let's say 217 00:15:19,489 --> 00:15:22,030 Suze: in a regular certificate of deposit 218 00:15:22,900 --> 00:15:26,780 Suze: and it pays out interest to you. You have to 219 00:15:26,789 --> 00:15:29,190 Suze: pay taxes on that interest 220 00:15:29,919 --> 00:15:33,169 Suze: and that money is no longer in the certificate of 221 00:15:33,179 --> 00:15:36,940 Suze: deposit to compound for you at that interest rate 222 00:15:37,900 --> 00:15:42,450 Suze: in a CD annuity or fixed annuity that guarantees you 223 00:15:42,460 --> 00:15:46,690 Suze: the interest rate for the entire time in the surrender period, 224 00:15:48,309 --> 00:15:52,619 Suze: the interest that you earn stays in the account. So 225 00:15:52,630 --> 00:15:56,530 Suze: now the interest is also making interest. So it is 226 00:15:56,539 --> 00:16:03,450 Suze: compounding that way. All right, that's number one, number two, 227 00:16:03,460 --> 00:16:06,770 Suze: because it's in the account, you don't have to pay 228 00:16:06,780 --> 00:16:08,210 Suze: taxes on it 229 00:16:09,010 --> 00:16:14,030 Suze: while it's in there. And therefore your tax money gets 230 00:16:14,039 --> 00:16:16,700 Suze: to grow for you wherever you have it held. 231 00:16:17,640 --> 00:16:20,239 Suze: Obviously, at the end of the period, 232 00:16:21,059 --> 00:16:24,260 Suze: now your money comes out and you will pay ordinary 233 00:16:24,270 --> 00:16:26,440 Suze: income tax on the growth of it. 234 00:16:27,130 --> 00:16:30,090 Suze: But given the fact that the interest in the annuity 235 00:16:30,099 --> 00:16:34,169 Suze: has been compounding, it really turns out to be a 236 00:16:34,179 --> 00:16:35,510 Suze: good thing. 237 00:16:36,219 --> 00:16:40,039 Suze: What all of you need to know anytime you buy 238 00:16:40,049 --> 00:16:44,450 Suze: an annuity. Really, if you withdraw money before you are 239 00:16:44,460 --> 00:16:49,219 Suze: 59 and a half years of age, there is a federal 10% penalty, 240 00:16:49,229 --> 00:16:54,440 Suze: a state penalty just like a retirement account. This is 241 00:16:54,450 --> 00:16:59,119 Suze: what I want you to understand annuities were meant to 242 00:16:59,130 --> 00:17:06,079 Suze: be an alternative retirement account for when you got older, 243 00:17:07,380 --> 00:17:12,290 Suze: not for younger people to put money in, but for 244 00:17:12,300 --> 00:17:17,130 Suze: really people in their late fifties and so forth, who 245 00:17:17,140 --> 00:17:21,729 Suze: knew they needed another kind of retirement account. 246 00:17:22,810 --> 00:17:25,069 Suze: And truthfully that was great. 247 00:17:25,729 --> 00:17:29,390 Suze: They were also meant to be for people who wanted 248 00:17:29,400 --> 00:17:32,310 Suze: monthly income for the rest of their lives. 249 00:17:33,089 --> 00:17:36,069 Suze: And that also can be great. 250 00:17:37,089 --> 00:17:41,109 Suze: So with that understanding 251 00:17:41,910 --> 00:17:45,569 Suze: of why annuities were originally created. 252 00:17:46,920 --> 00:17:53,530 Suze: What ended up happening is that many financial advisors ran 253 00:17:53,880 --> 00:17:57,780 Suze: with the idea of selling annuities to all of you 254 00:17:58,349 --> 00:18:01,489 Suze: within retirement accounts 255 00:18:02,180 --> 00:18:05,770 Suze: under the guise of you will always get back at 256 00:18:05,780 --> 00:18:07,839 Suze: least what you put in. 257 00:18:10,310 --> 00:18:13,849 Suze: All right, everybody can, you just put a pin in 258 00:18:13,859 --> 00:18:15,770 Suze: that for a second. 259 00:18:16,719 --> 00:18:20,250 Suze: Nothing drives me crazier. 260 00:18:20,959 --> 00:18:24,979 Suze: Then when you write me and you tell me that 261 00:18:24,989 --> 00:18:31,659 Suze: you or your parents put $300,000 of your retirement account 262 00:18:31,770 --> 00:18:34,699 Suze: into a variable annuity. 263 00:18:36,199 --> 00:18:40,280 Suze: I have said over and over again to all of 264 00:18:40,290 --> 00:18:40,619 Suze: you 265 00:18:42,219 --> 00:18:45,869 Suze: that it makes no sense for you to put a 266 00:18:45,880 --> 00:18:53,410 Suze: tax deferred investment such as an annuity within a tax 267 00:18:53,420 --> 00:18:58,640 Suze: deferred or tax free. If it's Roth retirement account, it 268 00:18:58,650 --> 00:19:02,479 Suze: makes absolutely no sense whatsoever. 269 00:19:03,150 --> 00:19:07,329 Suze: But this isn't just my opinion. This is the professional 270 00:19:07,339 --> 00:19:14,530 Suze: opinion by most annuity companies as well as you may know, 271 00:19:14,540 --> 00:19:21,329 Suze: since 1986 I have been a certified financial planner among 272 00:19:21,339 --> 00:19:28,170 Suze: with many other different licenses. And a certified financial planner 273 00:19:28,719 --> 00:19:33,910 Suze: is a person who takes courses in so many different 274 00:19:33,920 --> 00:19:40,188 Suze: areas of finance. It's not funny, estate planning taxes, insurance, 275 00:19:40,459 --> 00:19:45,020 Suze: everything that you could think of. They have to pass 276 00:19:45,030 --> 00:19:50,280 Suze: a serious exam. The CFP standards are so high, I 277 00:19:50,290 --> 00:19:53,180 Suze: cannot even tell you and I am sure that you 278 00:19:53,189 --> 00:19:55,469 Suze: are seeing commercials everywhere 279 00:19:56,369 --> 00:19:59,900 Suze: about being a CFP. 280 00:20:00,760 --> 00:20:06,060 Suze: Now, even though I don't see clients anymore, I hold 281 00:20:06,069 --> 00:20:10,500 Suze: my certified financial planners license in such high regard 282 00:20:11,310 --> 00:20:15,969 Suze: that every two years, I have to take 30 hours 283 00:20:15,979 --> 00:20:23,010 Suze: of continuing education credit to maintain my CFP standing. 284 00:20:23,640 --> 00:20:28,089 Suze: Why am I telling you this? Because recently 285 00:20:28,849 --> 00:20:33,069 Suze: I've taken the courses that I needed to take to 286 00:20:33,079 --> 00:20:38,150 Suze: maintain my CFP. And one of the courses I decided 287 00:20:38,160 --> 00:20:41,489 Suze: to take is called Annuities Today. 288 00:20:43,569 --> 00:20:47,270 Suze: It is 160 pages of information 289 00:20:48,040 --> 00:20:54,550 Suze: and an exam that you have to pass as I 290 00:20:54,560 --> 00:20:58,819 Suze: am reading and studying all 160 pages. 291 00:20:59,579 --> 00:21:02,510 Suze: I want to read to you what is on page 292 00:21:02,520 --> 00:21:10,718 Suze: seven from this course exam that every single CFP needs 293 00:21:10,729 --> 00:21:11,680 Suze: to know 294 00:21:13,199 --> 00:21:18,530 Suze: in order to be a CFP, which is not something 295 00:21:18,540 --> 00:21:21,359 Suze: that is easy to be and something that you might 296 00:21:21,369 --> 00:21:24,130 Suze: look for in your financial advisor. 297 00:21:25,660 --> 00:21:28,699 Suze: I am now quoting and I want you to listen 298 00:21:28,709 --> 00:21:35,760 Suze: to me while annuities are excellent accumulation vehicles for most people. 299 00:21:36,500 --> 00:21:42,640 Suze: The ideal annuity buyer is a person who has already 300 00:21:42,650 --> 00:21:49,859 Suze: contributed the maximum amount to their existing tax deferred retirement 301 00:21:49,869 --> 00:21:56,919 Suze: plan such as a 401k, a 403b or an IRA. 302 00:21:56,949 --> 00:21:58,438 Suze: Are you listening to me? 303 00:21:59,260 --> 00:22:03,520 Suze: This is due to the fact that they are already 304 00:22:03,530 --> 00:22:09,760 Suze: building up tax deferred money in those plans and the 305 00:22:09,770 --> 00:22:16,199 Suze: fees associated with those savings vehicles usually are much lower 306 00:22:16,699 --> 00:22:21,659 Suze: than those of non-qualified annuities. 307 00:22:22,630 --> 00:22:25,270 Suze: What is a non-qualified annuity, 308 00:22:26,199 --> 00:22:31,500 Suze: A non-qualified annuity is an annuity that you fund 309 00:22:32,180 --> 00:22:36,569 Suze: with money that you have already paid taxes on a 310 00:22:37,310 --> 00:22:39,239 Suze: qualified annuity 311 00:22:40,319 --> 00:22:44,659 Suze: is an annuity that you have never paid taxes on 312 00:22:46,050 --> 00:22:50,180 Suze: tax sheltered annuities and things like that. TSAs, that's sually 313 00:22:50,189 --> 00:22:54,629 Suze: what teachers do to fund their retirement accounts. 314 00:22:55,569 --> 00:22:57,550 Suze: Now, I want you to think about this 315 00:22:58,819 --> 00:23:03,930 Suze: If one of the exams for continuing education credit and 316 00:23:03,939 --> 00:23:06,520 Suze: I'm sure to even become a CFP, 317 00:23:07,430 --> 00:23:10,390 Suze: they say in the course literature 318 00:23:11,790 --> 00:23:16,899 Suze: that an annuity within a retirement account is not what 319 00:23:16,910 --> 00:23:21,770 Suze: it is intended to be. It is not ideal that 320 00:23:21,780 --> 00:23:25,520 Suze: you should be funding your retirement accounts first. 321 00:23:26,489 --> 00:23:30,229 Suze: So, all right, let's just say you have funded your 322 00:23:30,239 --> 00:23:36,000 Suze: retirement accounts and now you have money in a 401k. 323 00:23:36,010 --> 00:23:39,910 Suze: Maybe you have $30,000 in there or maybe you have 324 00:23:39,920 --> 00:23:44,619 Suze: done an IRA rollover with money that was in a 325 00:23:44,630 --> 00:23:50,329 Suze: retirement account at work and now you have 300,000, 500,000 326 00:23:50,339 --> 00:23:54,040 Suze: in an IRA rollover. And now you go to see 327 00:23:54,050 --> 00:23:55,540 Suze: a financial advisor 328 00:23:56,280 --> 00:24:01,900 Suze: and the financial advisor has you within your IRA rollover? 329 00:24:02,310 --> 00:24:05,739 Suze: Put your money in an annuity. 330 00:24:06,930 --> 00:24:12,869 Suze: Are you kidding me? That financial advisor in many ways 331 00:24:13,500 --> 00:24:18,119 Suze: is doing something that they should not be doing. 332 00:24:19,050 --> 00:24:23,469 Suze: Now, why am I making such a point about this? 333 00:24:24,010 --> 00:24:29,729 Suze: Because recently I got an email from a daughter who 334 00:24:29,739 --> 00:24:34,189 Suze: is now taking over and looking everything that her parents 335 00:24:34,430 --> 00:24:35,910 Suze: are invested in 336 00:24:37,589 --> 00:24:40,479 Suze: her mother or maybe it was her father. And now 337 00:24:40,489 --> 00:24:45,010 Suze: I don't remember, put in $295,000 338 00:24:46,089 --> 00:24:48,349 Suze: 11 years ago. 339 00:24:49,260 --> 00:24:51,670 Suze: In a variable annuity, 340 00:24:52,569 --> 00:24:59,319 Suze: the fees are over $4,000 a year on this variable 341 00:24:59,329 --> 00:25:00,030 Suze: annuity 342 00:25:00,729 --> 00:25:05,430 Suze: because there's all kinds of riders that the insurance agent 343 00:25:05,439 --> 00:25:09,420 Suze: may try to sell you. And you usually will say, ok, 344 00:25:10,420 --> 00:25:16,239 Suze: the daughter then was looking at what was the true 345 00:25:16,250 --> 00:25:20,899 Suze: value of this annuity calls the insurance agent 346 00:25:22,140 --> 00:25:25,670 Suze: and the insurance agent says to her, 347 00:25:26,530 --> 00:25:30,429 Suze: well, if your parent takes the money out right now, 348 00:25:31,390 --> 00:25:38,609 Suze: there still is a 10% surrender charge after 11 years 349 00:25:38,619 --> 00:25:43,250 Suze: of being in this variable annuity and all they would 350 00:25:43,260 --> 00:25:51,149 Suze: get back is $50,000 above their original deposit. 351 00:25:53,910 --> 00:25:57,010 Suze: $295,000 original deposit, 352 00:25:58,089 --> 00:26:01,689 Suze: $50,000 of growth if they surrender it, 353 00:26:02,349 --> 00:26:07,829 Suze: if they don't surrender it, the $4,000 charge a year 354 00:26:07,839 --> 00:26:11,329 Suze: continues and on and on. 355 00:26:12,349 --> 00:26:18,409 Suze: I worked with this woman considerably. Maybe we had 5,7,8 356 00:26:18,599 --> 00:26:21,410 Suze: correspondences between each other 357 00:26:22,199 --> 00:26:26,829 Suze: and finally the numbers show she should absolutely surrender the 358 00:26:26,839 --> 00:26:27,729 Suze: policy 359 00:26:28,400 --> 00:26:32,708 Suze: and within her parents' retirement account because they're now close 360 00:26:32,719 --> 00:26:34,060 Suze: to R MD age. 361 00:26:35,089 --> 00:26:38,550 Suze: Other things will be invested in properly. 362 00:26:40,780 --> 00:26:47,959 Suze: Number one rule under no circumstances, in my opinion, under none. 363 00:26:48,859 --> 00:26:53,180 Suze: Should you be buying a variable annuity or really any 364 00:26:53,189 --> 00:26:54,400 Suze: kind of annuity 365 00:26:55,229 --> 00:26:58,089 Suze: within a retirement account? 366 00:26:58,839 --> 00:27:05,219 Suze: It makes absolutely no sense whatsoever and notice the CFP 367 00:27:05,229 --> 00:27:08,770 Suze: regulations that are in this course, 368 00:27:09,540 --> 00:27:15,239 Suze: absolutely say annuities, they don't say anything about a variable 369 00:27:15,250 --> 00:27:21,770 Suze: annuity or a fixed annuity or whatever they say annuities. So, 370 00:27:21,810 --> 00:27:25,680 Suze: almost in 99% of the cases, 371 00:27:26,390 --> 00:27:32,179 Suze: it makes no sense to put an annuity within a 372 00:27:32,189 --> 00:27:34,209 Suze: retirement account. 373 00:27:35,030 --> 00:27:35,819 Suze: However, 374 00:27:36,910 --> 00:27:44,430 Suze: annuities were originally created for money that was non-qualified money, 375 00:27:44,599 --> 00:27:49,589 Suze: money outside of retirement accounts that you have already paid 376 00:27:49,599 --> 00:27:54,869 Suze: taxes on that you want to grow tax deferred. All right, 377 00:27:54,880 --> 00:27:57,089 Suze: like I said, I don't have a problem if it's 378 00:27:57,099 --> 00:28:03,670 Suze: an indexed annuity, a fixed annuity or an immediate annuity 379 00:28:03,680 --> 00:28:05,349 Suze: because you're looking for income. 380 00:28:06,530 --> 00:28:10,310 Suze: But again, it makes absolutely no sense to do a 381 00:28:10,319 --> 00:28:15,489 Suze: variable annuity outside of a retirement account. Why? 382 00:28:16,660 --> 00:28:17,829 Suze: Because 383 00:28:19,000 --> 00:28:22,949 Suze: you are far better off if you are going to 384 00:28:22,959 --> 00:28:27,170 Suze: be investing your money in mutual funds or exchange traded 385 00:28:27,180 --> 00:28:29,920 Suze: funds to do it directly 386 00:28:30,599 --> 00:28:34,900 Suze: through a no load mutual fund or variety of no 387 00:28:34,910 --> 00:28:39,540 Suze: load mutual funds which have no commission on them whatsoever 388 00:28:39,550 --> 00:28:44,119 Suze: to buy or sell or exchange traded funds, that act 389 00:28:44,130 --> 00:28:48,579 Suze: like a mutual fund, so to speak, that follow an index, 390 00:28:49,170 --> 00:28:51,520 Suze: no commission to buy or sell. 391 00:28:51,939 --> 00:28:56,040 Suze: So now you've invested in mutual funds or exchange traded 392 00:28:56,050 --> 00:29:01,750 Suze: funds for $50,000 and that $50,000 now has grown to 393 00:29:01,780 --> 00:29:06,689 Suze: $100,000 and you die, it goes to your beneficiaries, they 394 00:29:06,699 --> 00:29:12,199 Suze: get a step up in cost spaces to $100,000 so 395 00:29:12,209 --> 00:29:14,369 Suze: they can turn around and sell it right there and 396 00:29:14,380 --> 00:29:18,150 Suze: not have to pay any capital gains whatsoever if it 397 00:29:18,160 --> 00:29:20,510 Suze: is in a variable annuity. 398 00:29:21,189 --> 00:29:25,540 Suze: I'm going to repeat, they get the $100,000 but they 399 00:29:25,550 --> 00:29:32,270 Suze: are going to pay ordinary income tax on that $50,000. 400 00:29:32,689 --> 00:29:36,250 Suze: They don't have a choice in the mutual fund or 401 00:29:36,260 --> 00:29:37,890 Suze: the exchange traded fund. 402 00:29:38,650 --> 00:29:41,400 Suze: It goes to your beneficiaries and they wanna keep it 403 00:29:41,410 --> 00:29:42,640 Suze: just like it is. 404 00:29:43,290 --> 00:29:48,589 Suze: All right, their new cost basis is $100,000. So now 405 00:29:48,819 --> 00:29:51,959 Suze: if they keep it for, let's say, another few years 406 00:29:51,969 --> 00:29:55,630 Suze: and now it's worth $150,000 and they go to take 407 00:29:55,640 --> 00:30:01,520 Suze: it out, they're only gonna pay capital gains tax on $50,000. 408 00:30:01,869 --> 00:30:02,430 Suze: That's it. 409 00:30:03,119 --> 00:30:08,699 Suze: However, let's just say you go into an exchange traded 410 00:30:08,709 --> 00:30:11,579 Suze: fund or a mutual fund and now it goes down. 411 00:30:12,390 --> 00:30:16,010 Suze: If you sell it, you get to take that loss 412 00:30:16,020 --> 00:30:20,209 Suze: off of your taxes or maybe use it to offset 413 00:30:20,219 --> 00:30:21,119 Suze: gains 414 00:30:22,010 --> 00:30:26,729 Suze: in a variable annuity if it goes down. 415 00:30:28,119 --> 00:30:33,819 Suze: All right, the annuitant has to die before you get 416 00:30:33,829 --> 00:30:38,180 Suze: your original deposit back. That's number one, you have to 417 00:30:38,189 --> 00:30:42,979 Suze: stay in there until the annuitant dies to get your 418 00:30:42,989 --> 00:30:45,300 Suze: original deposit back. 419 00:30:46,449 --> 00:30:50,359 Suze: If you are the owner and the annuitant, you do 420 00:30:50,369 --> 00:30:55,469 Suze: not get your original money back until you die. 421 00:30:56,280 --> 00:30:59,339 Suze: In fact, it's not you getting it back. It is 422 00:30:59,349 --> 00:31:01,479 Suze: your Bena Fisheries. 423 00:31:02,609 --> 00:31:05,270 Suze: So, can you just tell me the advantage of that 424 00:31:05,810 --> 00:31:10,699 Suze: if you decide to come out before the annuitant has died? 425 00:31:10,709 --> 00:31:13,979 Suze: Now you're only going to get back the $30,000 and 426 00:31:13,989 --> 00:31:16,989 Suze: guess what? You don't get to take it off your taxes. 427 00:31:18,069 --> 00:31:20,050 Suze: What are you thinking? 428 00:31:21,390 --> 00:31:24,160 Suze: The commission on a variable annuity 429 00:31:24,800 --> 00:31:29,380 Suze: or most annuities are usually anywhere from four or 5% 430 00:31:29,390 --> 00:31:34,380 Suze: in most companies. Not all up to even higher, 7%. 431 00:31:35,109 --> 00:31:39,010 Suze: Have you asked the person selling you the variable annuity? 432 00:31:39,020 --> 00:31:41,560 Suze: How much commission they are going to make if you 433 00:31:41,569 --> 00:31:45,560 Suze: buy it? You probably haven't. Have you asked them what 434 00:31:45,569 --> 00:31:50,930 Suze: happens if the insurance company goes down? Is your money insured? 435 00:31:50,939 --> 00:31:55,089 Suze: Have you asked them how that would work? Have you 436 00:31:55,099 --> 00:31:59,890 Suze: asked them everything that you need to know? But even 437 00:31:59,900 --> 00:32:03,500 Suze: more important and I'm gonna go longer on this podcast 438 00:32:03,510 --> 00:32:04,810 Suze: and probably normal. 439 00:32:05,349 --> 00:32:09,619 Suze: Have they asked you everything they need to know about you? 440 00:32:09,630 --> 00:32:15,260 Suze: Do you know that the National Association of Insurance Commissioners 441 00:32:15,760 --> 00:32:22,239 Suze: has a regulation that is the NIC Senior Protection in Annuity, 442 00:32:22,250 --> 00:32:25,369 Suze: Transaction Model Act and regulation. 443 00:32:26,199 --> 00:32:31,819 Suze: They put this in effect in 2003 making it so 444 00:32:31,829 --> 00:32:37,089 Suze: that seniors were not taken advantage of by having their 445 00:32:37,099 --> 00:32:41,459 Suze: money put into annuities if it wasn't appropriate for them. 446 00:32:42,300 --> 00:32:47,599 Suze: So it requires that an insurance agent, a financial advisor, 447 00:32:48,699 --> 00:32:54,540 Suze: they make this reasonable effort to obtain information concerning a 448 00:32:54,550 --> 00:33:00,010 Suze: senior's circumstance. Where do I learn about this again? In 449 00:33:00,020 --> 00:33:04,719 Suze: the course, they make a huge point of this. They 450 00:33:04,729 --> 00:33:05,630 Suze: bold it 451 00:33:06,630 --> 00:33:11,849 Suze: that the agent needs to know the financial status, the income, 452 00:33:11,859 --> 00:33:16,180 Suze: the tax status, the liquid assets you have the investment objectives, 453 00:33:16,189 --> 00:33:21,489 Suze: other information considered reasonable in making the recommendation. And do 454 00:33:21,500 --> 00:33:25,750 Suze: you have comprehensive long term care insurance in place? This 455 00:33:25,760 --> 00:33:28,530 Suze: is bolded. I am reading to you right now from 456 00:33:28,540 --> 00:33:29,280 Suze: the book, 457 00:33:30,410 --> 00:33:33,890 Suze: they need to make an effort to know all of 458 00:33:33,900 --> 00:33:35,180 Suze: that about you 459 00:33:36,160 --> 00:33:40,930 Suze: or does your financial advisor that's seen you just simply 460 00:33:40,939 --> 00:33:43,800 Suze: do what they meet with you. They see that you 461 00:33:43,810 --> 00:33:46,640 Suze: have this money and then they give you what a 462 00:33:46,650 --> 00:33:51,609 Suze: sales pitch as to why you should be doing an annuity. 463 00:33:52,020 --> 00:33:56,420 Suze: Most people that write me, tell me that they met 464 00:33:56,430 --> 00:34:00,959 Suze: the person that put them in the annuity at a 465 00:34:00,989 --> 00:34:04,290 Suze: luncheon or a dinner that they were invited to 466 00:34:05,140 --> 00:34:08,199 Suze: and have I not said to you, you should never 467 00:34:08,209 --> 00:34:10,719 Suze: go to those and if you do, you should never 468 00:34:10,729 --> 00:34:14,919 Suze: do business with anybody that's putting on such a presentation. 469 00:34:16,000 --> 00:34:21,139 Suze: Now, I can go on and on about everything that 470 00:34:21,149 --> 00:34:24,610 Suze: is in the course that I've just taken about what 471 00:34:24,620 --> 00:34:27,459 Suze: seniors have to sign and be presented with. If they're 472 00:34:27,469 --> 00:34:29,179 Suze: going to buy an annuity, 473 00:34:30,000 --> 00:34:33,719 Suze: all these things that are in big bold, all these 474 00:34:33,729 --> 00:34:36,669 Suze: things that none of you when I email you or 475 00:34:36,679 --> 00:34:38,239 Suze: I talk with you in person 476 00:34:38,918 --> 00:34:41,938 Suze: have been presented with or even told about, 477 00:34:43,199 --> 00:34:47,500 Suze: listen, I have nothing to gain. I'm not selling you anything. 478 00:34:47,510 --> 00:34:52,340 Suze: I'm not providing you information for a cost. I am 479 00:34:52,350 --> 00:34:55,850 Suze: simply providing you with the education that you need in 480 00:34:55,860 --> 00:35:00,179 Suze: my opinion to keep you safe and sound. 481 00:35:00,850 --> 00:35:06,590 Suze: So I advise that you really, really think twice before 482 00:35:06,600 --> 00:35:08,790 Suze: you buy a variable annuity, 483 00:35:10,000 --> 00:35:15,320 Suze: especially if it is in a retirement account. 484 00:35:16,330 --> 00:35:18,899 Suze: All right. I hope this has helped you. 485 00:35:19,729 --> 00:35:22,830 Suze: I hope I didn't go on too long, but there's 486 00:35:22,840 --> 00:35:25,629 Suze: really only one thing that I want you to remember 487 00:35:25,639 --> 00:35:27,770 Suze: when it comes to your money 488 00:35:28,629 --> 00:35:30,179 Suze: people first. 489 00:35:31,600 --> 00:35:33,379 Suze: That means you have to be educated, 490 00:35:34,020 --> 00:35:36,209 Suze: that means you have to be dealing with a financial 491 00:35:36,219 --> 00:35:40,339 Suze: advisor and not a financial salesperson. You need to know 492 00:35:40,350 --> 00:35:43,120 Suze: what not to do as much as you need to 493 00:35:43,129 --> 00:35:44,360 Suze: know what to do. 494 00:35:45,040 --> 00:35:50,360 Suze: So people first then money and if you are educated, 495 00:35:50,669 --> 00:35:54,360 Suze: then your money will always be protected. You will make 496 00:35:54,370 --> 00:35:57,639 Suze: the right moves and it's better to do nothing than 497 00:35:57,649 --> 00:36:00,419 Suze: to do something that you don't thoroughly understand. 498 00:36:01,379 --> 00:36:04,199 Suze: So if it's people first, then money, 499 00:36:04,969 --> 00:36:08,790 Suze: then eventually you'll have all the money in the world 500 00:36:08,949 --> 00:36:12,870 Suze: to buy the things that you need. If you do 501 00:36:12,879 --> 00:36:13,350 Suze: that 502 00:36:14,399 --> 00:36:20,270 Suze: and stay safe, you will also be unstoppable. See you soon. Bye bye.