1 00:00:00,519 --> 00:00:00,939 Music: MUSIC IN. 2 00:00:29,229 --> 00:00:35,080 Suze: April 9th, everybody, 2023. Welcome to the Women and Money 3 00:00:35,090 --> 00:00:39,479 Suze: podcast as well as everybody smart enough to listen, Suze 4 00:00:39,490 --> 00:00:45,409 Suze: O here and Happy Easter Passover and Ramadan. You know, 5 00:00:45,418 --> 00:00:48,939 Suze: I just want to say that I personally love when 6 00:00:48,950 --> 00:00:54,060 Suze: these three holidays fall at the same time of year. 7 00:00:54,509 --> 00:00:59,330 Suze: And this morning, there will be a sunrise ceremony for 8 00:00:59,340 --> 00:01:04,000 Suze: the entire island as there is every year at the 9 00:01:04,010 --> 00:01:09,680 Suze: Davis residency and 100 or 200 people will come and 10 00:01:09,690 --> 00:01:15,459 Suze: they all come together as one. And I love that, 11 00:01:15,629 --> 00:01:18,339 Suze: regardless of their faith. 12 00:01:18,870 --> 00:01:22,619 Suze: And that's something that I can only pray will be 13 00:01:22,629 --> 00:01:25,860 Suze: true for everybody in this world 14 00:01:26,489 --> 00:01:29,080 Suze: because as time goes on, 15 00:01:30,160 --> 00:01:33,680 Suze: it just seems like we're getting more and more and 16 00:01:33,690 --> 00:01:38,150 Suze: more divided and in my personal opinion, going back in 17 00:01:38,160 --> 00:01:43,569 Suze: time and I just find it all such a travesty. 18 00:01:44,379 --> 00:01:49,809 Suze: However, until then there is one thing we all need 19 00:01:49,819 --> 00:01:55,510 Suze: to do and that is to be one with our money. 20 00:01:56,000 --> 00:02:00,160 Suze: As you know, over the past 40 years, all the 21 00:02:00,169 --> 00:02:04,370 Suze: work my entire life, my work with money has been 22 00:02:04,379 --> 00:02:08,279 Suze: based on the theory that you and your money are 23 00:02:08,320 --> 00:02:08,970 Suze: one 24 00:02:09,627 --> 00:02:13,157 Suze: That your money cannot do anything without you. 25 00:02:14,080 --> 00:02:17,970 Suze: And that if you aren't in touch with who you are, 26 00:02:17,979 --> 00:02:22,239 Suze: you also aren't in touch with your money. As you 27 00:02:22,250 --> 00:02:25,410 Suze: have to know about who you are and how you 28 00:02:25,419 --> 00:02:30,410 Suze: deal with things. You also have to know certain things 29 00:02:30,419 --> 00:02:32,850 Suze: just about how money works. 30 00:02:33,369 --> 00:02:36,550 Suze: And it seems that one of the topics that you 31 00:02:36,559 --> 00:02:40,330 Suze: really wanted me to talk about as I was looking 32 00:02:40,339 --> 00:02:43,839 Suze: on the Women and Money community app, hopefully all of 33 00:02:43,850 --> 00:02:47,109 Suze: you are joining us on the Women and Money community 34 00:02:47,119 --> 00:02:53,168 Suze: app by simply downloading it at Apple apps or Google Play. 35 00:02:53,179 --> 00:02:56,570 Suze: That's where I get a lot of questions that sometimes 36 00:02:56,580 --> 00:02:59,490 Suze: I answer there more than anywhere else now. 37 00:02:59,869 --> 00:03:04,758 Suze: And it's really been an incredible forming of a community 38 00:03:04,770 --> 00:03:10,990 Suze: where all of you are helping one another. With that said, however, 39 00:03:11,110 --> 00:03:15,160 Suze: I just have to say that when somebody on the 40 00:03:15,169 --> 00:03:17,600 Suze: community answers your question, 41 00:03:18,758 --> 00:03:22,668 Suze: just make sure that their answer is correct. 42 00:03:23,369 --> 00:03:26,679 Suze: So it's nice that you help one another. But if 43 00:03:26,690 --> 00:03:30,918 Suze: you're confused or whatever it is, make sure you hear 44 00:03:30,929 --> 00:03:35,250 Suze: it from me directly. All right. So, one of the 45 00:03:35,259 --> 00:03:39,619 Suze: areas that all of you really have wanted me to tackle, 46 00:03:39,630 --> 00:03:45,000 Suze: because you are just so confused about it is on annuities. 47 00:03:45,410 --> 00:03:49,020 Suze: And so that's what the Suze School is going to 48 00:03:49,029 --> 00:03:52,580 Suze: be about today. But before I get there, 49 00:03:53,070 --> 00:03:56,679 Suze: I just have to say I am so blown away 50 00:03:57,309 --> 00:04:03,080 Suze: by the response to last week's webinar that I gave 51 00:04:03,089 --> 00:04:09,559 Suze: where over 60,000 people viewed it the entire hour 52 00:04:10,220 --> 00:04:15,789 Suze: viewed that webinar and the response we got was over 53 00:04:15,800 --> 00:04:18,790 Suze: the top. It was the best they've ever seen. It 54 00:04:18,799 --> 00:04:22,160 Suze: helped them and on and on. So normally when I 55 00:04:22,170 --> 00:04:23,909 Suze: do a live webinar, 56 00:04:24,670 --> 00:04:28,440 Suze: we rebroadcast it for those of you who couldn't be there, 57 00:04:28,450 --> 00:04:32,010 Suze: live for that weekend, like two or three days and 58 00:04:32,019 --> 00:04:33,159 Suze: then it goes away. 59 00:04:33,829 --> 00:04:38,820 Suze: We have gotten thousands and when I say thousands, I mean, 60 00:04:38,829 --> 00:04:44,920 Suze: thousands of responses saying, "please show the webinar again, please, 61 00:04:44,928 --> 00:04:47,089 Suze: my friends told me it was the best thing they 62 00:04:47,100 --> 00:04:52,700 Suze: ever saw." So sometime in April this month, we will 63 00:04:52,709 --> 00:04:55,669 Suze: show it again and I will let you know when 64 00:04:55,678 --> 00:04:58,880 Suze: that is. Also for those of you 65 00:04:59,309 --> 00:05:03,899 Suze: Who are on the waiting list for the Ultimate Retirement 66 00:05:03,910 --> 00:05:07,799 Suze: Guide for 50 plus, never dawned on me that over 67 00:05:07,809 --> 00:05:11,039 Suze: 20,000 of those would sell out right away. 68 00:05:11,660 --> 00:05:15,659 Suze: So they will be in, in the next two or 69 00:05:15,670 --> 00:05:18,839 Suze: three weeks and we will ship them out to you 70 00:05:18,850 --> 00:05:23,029 Suze: as you know, they are $10 including shipping for a 71 00:05:23,040 --> 00:05:26,920 Suze: New York Times best seller, hardback. And I think you 72 00:05:26,928 --> 00:05:31,729 Suze: will love it when you read it. All right. Let's 73 00:05:31,738 --> 00:05:38,380 Suze: get to annuities. All of you need to understand that 74 00:05:38,390 --> 00:05:41,529 Suze: I do not hate all annuities. 75 00:05:42,350 --> 00:05:45,670 Suze: Can you write that down in your little Suze Notebook, 76 00:05:45,678 --> 00:05:51,480 Suze: Suze Orman does not hate all annuities. In fact, there 77 00:05:51,488 --> 00:05:52,519 Suze: was a time 78 00:05:53,369 --> 00:05:58,100 Suze: in the United States, for years, actually that I was 79 00:05:58,109 --> 00:06:03,399 Suze: the number one advisor and salesperson, so to speak... 80 00:06:04,380 --> 00:06:11,190 Suze: In getting people to buy single premium deferred annuities. I 81 00:06:11,200 --> 00:06:14,600 Suze: was putting my clients to the tune of about $20 82 00:06:14,609 --> 00:06:17,000 Suze: million dollars a year, 83 00:06:18,070 --> 00:06:24,589 Suze: obviously with a lot of people into annuities. So there 84 00:06:24,600 --> 00:06:29,839 Suze: are some annuities at specific times in the economy that 85 00:06:29,850 --> 00:06:32,559 Suze: I absolutely love. 86 00:06:33,250 --> 00:06:38,609 Suze: And then there are some annuities that I absolutely do 87 00:06:38,619 --> 00:06:43,820 Suze: not love. So you need to get that straight. 88 00:06:44,450 --> 00:06:50,570 Suze: There are different varieties of annuities. There are single premium 89 00:06:50,579 --> 00:06:56,850 Suze: deferred annuities which I tend to absolutely love, in many circumstances. 90 00:06:57,109 --> 00:07:02,420 Suze: There are variable annuities which I tend to not love 91 00:07:02,428 --> 00:07:08,339 Suze: in most circumstances. There are indexed annuities which I can 92 00:07:08,350 --> 00:07:10,739 Suze: be hot and cold on. I think there are better 93 00:07:10,750 --> 00:07:12,320 Suze: ways to invest your money. 94 00:07:12,869 --> 00:07:18,399 Suze: There are income annuities which if you are looking for 95 00:07:18,410 --> 00:07:23,320 Suze: guaranteed income specifically while interest rates are high right now. 96 00:07:23,329 --> 00:07:27,149 Suze: And I talk about this in the ultimate retirement guide 97 00:07:27,160 --> 00:07:30,760 Suze: for 50 plus, I do not have a problem with them. 98 00:07:31,700 --> 00:07:37,510 Suze: And then there are tax sheltered annuities which are annuities 99 00:07:37,519 --> 00:07:42,809 Suze: that many people, especially teachers. That's where their retirement accounts 100 00:07:42,820 --> 00:07:46,010 Suze: tend to go. I don't really have a problem with 101 00:07:46,019 --> 00:07:47,029 Suze: those either. 102 00:07:47,850 --> 00:07:52,559 Suze: So we will be breaking down. Now, every single one 103 00:07:52,570 --> 00:07:57,119 Suze: of those annuities and how they differ and the pros 104 00:07:57,130 --> 00:07:58,940 Suze: and cons of each one 105 00:07:59,559 --> 00:08:02,420 Suze: A few minutes ago, I made the assumption that you 106 00:08:02,429 --> 00:08:06,760 Suze: already had out your little Suze Notebooks. So, if I 107 00:08:06,769 --> 00:08:11,359 Suze: was wrong with that assumption, get them out now. 108 00:08:12,260 --> 00:08:16,299 Suze: Let's first start with what is an annuity 109 00:08:17,089 --> 00:08:22,260 Suze: And an annuity is a contract with an insurance company 110 00:08:23,109 --> 00:08:29,130 Suze: where you are usually the insured known as the annuitant. 111 00:08:29,730 --> 00:08:32,799 Suze: You also usually are the owner 112 00:08:33,710 --> 00:08:38,840 Suze: and the beneficiary is whoever you want the annuity to 113 00:08:38,849 --> 00:08:41,439 Suze: go to upon your death 114 00:08:42,080 --> 00:08:47,849 Suze: Because it is a contract with an insurance company that 115 00:08:47,859 --> 00:08:51,530 Suze: has an insured, again known as an annuitant. 116 00:08:52,090 --> 00:08:56,900 Suze: the interest or the growth that your money earns is 117 00:08:56,909 --> 00:09:01,699 Suze: tax deferred, which means you do not pay taxes on 118 00:09:01,710 --> 00:09:06,109 Suze: it until you withdraw it. And when they are purchased 119 00:09:06,119 --> 00:09:14,340 Suze: outside of a retirement account, they are known as non-qualified annuities. 120 00:09:14,390 --> 00:09:15,780 Suze: Write it down 121 00:09:16,320 --> 00:09:23,479 Suze: If you purchase an annuity within a retirement account, it's 122 00:09:23,489 --> 00:09:26,729 Suze: known as a qualified annuity, 123 00:09:27,520 --> 00:09:32,390 Suze: especially if the retirement account is a traditional retirement account, 124 00:09:32,400 --> 00:09:39,010 Suze: meaning it's a non-ROTH retirement account or a pre-taxed retirement account. 125 00:09:39,570 --> 00:09:44,069 Suze: So a qualified annuity is, you have never paid taxes 126 00:09:44,080 --> 00:09:46,729 Suze: on the money that is in that annuity, 127 00:09:47,380 --> 00:09:52,950 Suze: A non-qualified annuity is an annuity that you have funded 128 00:09:52,960 --> 00:09:58,650 Suze: with money that you have already paid taxes on. Let's talk 129 00:09:58,659 --> 00:10:05,989 Suze: about non-qualified annuities that are outside of retirement accounts. 130 00:10:06,809 --> 00:10:15,030 Suze: All non-qualified annuities usually have the exact same laws governing them. 131 00:10:15,700 --> 00:10:21,190 Suze: And the laws are not only by the United States government, 132 00:10:21,299 --> 00:10:26,179 Suze: but they're also by the insurance company itself. 133 00:10:26,859 --> 00:10:31,890 Suze: Now, whether you know it or not, most annuities pay 134 00:10:31,900 --> 00:10:37,840 Suze: a very hefty commission to the financial advisor who is 135 00:10:37,849 --> 00:10:41,900 Suze: selling you that annuity. There are many annuities that are 136 00:10:41,909 --> 00:10:46,439 Suze: issued possibly by Vanguard or other companies that do not 137 00:10:46,450 --> 00:10:47,968 Suze: have commissions on it. 138 00:10:49,280 --> 00:10:53,250 Suze: But most do. How would you know 139 00:10:53,919 --> 00:10:58,530 Suze: If an annuity has a surrender charge? 140 00:10:59,390 --> 00:11:04,140 Suze: and a surrender charge means that you deposit, let's just 141 00:11:04,150 --> 00:11:07,640 Suze: say $10,000 into an annuity, 142 00:11:08,320 --> 00:11:13,289 Suze: and the annuity contract states that you have got to 143 00:11:13,299 --> 00:11:19,549 Suze: keep your money in there for at least 7-10 years. 144 00:11:20,280 --> 00:11:24,760 Suze: And if you take it out before that period of time, 145 00:11:25,219 --> 00:11:29,859 Suze: there will be what's called a surrender charge that you 146 00:11:29,869 --> 00:11:33,809 Suze: will have to pay and the surrender charge can start 147 00:11:33,820 --> 00:11:35,510 Suze: at 10% 148 00:11:36,099 --> 00:11:41,669 Suze: going all the way down to 0% over those seven 149 00:11:41,679 --> 00:11:47,339 Suze: or 10 years. Now, why is there a surrender charge? 150 00:11:47,349 --> 00:11:52,669 Suze: There is a surrender charge because that usually equates to 151 00:11:52,679 --> 00:11:55,030 Suze: the amount of commission 152 00:11:55,780 --> 00:11:59,869 Suze: that the sales person or the financial advisor was paid 153 00:11:59,880 --> 00:12:05,340 Suze: to sell you that annuity. If you come out of 154 00:12:05,349 --> 00:12:10,799 Suze: that annuity before the company that issued, the annuity can 155 00:12:10,809 --> 00:12:14,609 Suze: get back the commission they paid to the financial advisor 156 00:12:14,619 --> 00:12:17,590 Suze: by the fees that are within the annuity, 157 00:12:18,380 --> 00:12:22,369 Suze: they want to make sure that you are responsible for 158 00:12:22,380 --> 00:12:26,089 Suze: that deficit. So there are some annuities that let's say 159 00:12:26,099 --> 00:12:29,390 Suze: have a seven year surrender charge. 160 00:12:29,909 --> 00:12:34,260 Suze: And maybe if you come out before the surrender charge 161 00:12:34,270 --> 00:12:37,789 Suze: is up in those seven years, you could pay 7% 162 00:12:37,799 --> 00:12:40,239 Suze: of what you take out, the first year, the second year, 163 00:12:40,250 --> 00:12:42,909 Suze: the third year and then maybe it starts to go 164 00:12:42,919 --> 00:12:47,679 Suze: down to 5% 4% 3%. So by the time the 165 00:12:47,690 --> 00:12:52,559 Suze: insurance company has gotten back all of their fees that 166 00:12:52,570 --> 00:12:56,219 Suze: they paid out to the financial advisor who got their 167 00:12:56,229 --> 00:12:58,080 Suze: commission upfront by the way, 168 00:12:58,729 --> 00:13:04,429 Suze: that's when the surrender fees or charges go away. If 169 00:13:04,440 --> 00:13:08,520 Suze: you have an annuity that there are no surrender charges 170 00:13:08,530 --> 00:13:12,750 Suze: for you to come out of. That's usually an annuity 171 00:13:12,760 --> 00:13:17,659 Suze: that didn't pay a commission for a salesperson to sell 172 00:13:17,669 --> 00:13:23,770 Suze: it to you or a financial advisor. So, those are 173 00:13:24,380 --> 00:13:31,739 Suze: the fees from the annuity. Also, the government comes in here, 174 00:13:32,200 --> 00:13:37,710 Suze: where if you withdraw any money from your annuity 175 00:13:38,429 --> 00:13:42,719 Suze: before the age of 59 a half, 176 00:13:43,599 --> 00:13:51,059 Suze: they will charge you a 10% penalty fee. Exactly the 177 00:13:51,070 --> 00:13:54,979 Suze: way an IRA works or a retirement account. If you 178 00:13:54,989 --> 00:13:58,239 Suze: take money out of the retirement account before the age 179 00:13:58,250 --> 00:14:02,510 Suze: of 59 a half, you pay, unless it's a Roth, 180 00:14:02,549 --> 00:14:08,780 Suze: you pay a 10% tax penalty, right? The same is 181 00:14:08,789 --> 00:14:13,030 Suze: true with an annuity. Why is that true? 182 00:14:13,559 --> 00:14:18,200 Suze: It's because again, an annuity is a contract with an 183 00:14:18,210 --> 00:14:19,530 Suze: insurance company. 184 00:14:20,309 --> 00:14:24,869 Suze: And because you are the annuitant, there is an annuitant, 185 00:14:24,880 --> 00:14:29,000 Suze: which means an insured person that is how they get 186 00:14:29,010 --> 00:14:32,080 Suze: it to be tax deferred. 187 00:14:32,869 --> 00:14:37,289 Suze: You have two words that you have just learned, you've 188 00:14:37,299 --> 00:14:42,719 Suze: learned non-qualified annuity, which means you have funded it with money, 189 00:14:42,729 --> 00:14:44,799 Suze: you have already paid taxes on 190 00:14:45,859 --> 00:14:50,070 Suze: and now you have the next word which is tax 191 00:14:50,080 --> 00:14:51,070 Suze: deferred 192 00:14:51,700 --> 00:14:58,380 Suze: And annuities, all annuities are tax deferred, meaning you do 193 00:14:58,390 --> 00:15:02,690 Suze: not pay taxes on it while the money is in there. 194 00:15:03,049 --> 00:15:06,890 Suze: But when you do go to take it out, you 195 00:15:06,900 --> 00:15:11,229 Suze: will pay ordinary income tax on any amount of money 196 00:15:11,239 --> 00:15:12,590 Suze: that you take out. 197 00:15:13,099 --> 00:15:17,549 Suze: And if you are under the age of 59.5, you 198 00:15:17,559 --> 00:15:22,039 Suze: will also pay a 10% tax penalty. 199 00:15:22,780 --> 00:15:24,229 Suze: Are we clear here? 200 00:15:24,969 --> 00:15:30,760 Suze: So there are penalties and surrender fees that are imposed 201 00:15:30,770 --> 00:15:37,739 Suze: upon most annuities by the insurance company itself as well 202 00:15:37,750 --> 00:15:39,659 Suze: as the government. 203 00:15:40,640 --> 00:15:44,130 Suze: That's important for you to understand 204 00:15:45,539 --> 00:15:52,210 Suze: Next, in most annuities, you buy a tax deferred annuity 205 00:15:53,030 --> 00:15:55,780 Suze: and it goes up and up and up and up 206 00:15:55,789 --> 00:16:02,090 Suze: in value and you die and it goes to your beneficiaries, 207 00:16:02,280 --> 00:16:06,979 Suze: they will have to pay ordinary income tax on any 208 00:16:06,989 --> 00:16:07,820 Suze: money 209 00:16:08,510 --> 00:16:14,070 Suze: that they have inherited above what you originally put in. 210 00:16:14,409 --> 00:16:16,739 Suze: So right now, what I'm doing is I'm giving you 211 00:16:16,750 --> 00:16:21,200 Suze: a general overview of annuities. 212 00:16:21,950 --> 00:16:28,140 Suze: And again, this applies to all annuities except for income annuities, 213 00:16:28,159 --> 00:16:32,669 Suze: normally also known as immediate income annuities where you have 214 00:16:32,679 --> 00:16:35,659 Suze: started income right away. But I'll get to that in 215 00:16:35,669 --> 00:16:36,419 Suze: a little bit. 216 00:16:37,239 --> 00:16:41,859 Suze: So when you go to withdraw money for yourself, you 217 00:16:41,869 --> 00:16:45,900 Suze: will pay ordinary income tax on any amount of money 218 00:16:45,909 --> 00:16:47,409 Suze: that you do withdraw. 219 00:16:48,739 --> 00:16:53,419 Suze: If you die and you leave your annuity to anybody. 220 00:16:53,630 --> 00:16:57,119 Suze: When they withdraw the money, they will have to pay 221 00:16:57,190 --> 00:17:00,830 Suze: income tax, ordinary income tax on that money as well. 222 00:17:01,450 --> 00:17:06,079 Suze: So you put in $10,000 and over the years, it 223 00:17:06,089 --> 00:17:09,239 Suze: has gone up and up and up and now let's 224 00:17:09,250 --> 00:17:12,369 Suze: just say it's worth $50,000. 225 00:17:13,078 --> 00:17:16,288 Suze: And you die and you leave it to your beneficiaries, 226 00:17:16,298 --> 00:17:23,917 Suze: your beneficiaries will owe ordinary income tax on that $40,000. 227 00:17:24,509 --> 00:17:27,798 Suze: And the reason that they only owe income tax on 228 00:17:27,808 --> 00:17:33,328 Suze: that $40,000 is that, that was your earnings on the 229 00:17:33,338 --> 00:17:41,088 Suze: original $10,000 that you already pay taxes on, in this example. 230 00:17:42,310 --> 00:17:47,040 Suze: Those are things that you have to understand about annuities 231 00:17:47,050 --> 00:17:55,650 Suze: over all. Ok, let's start with a single premium deferred annuity. 232 00:17:55,660 --> 00:17:57,930 Suze: One of my favorite that I really don't have a 233 00:17:57,939 --> 00:18:02,859 Suze: problem with, especially when interest rates are higher. And a 234 00:18:02,869 --> 00:18:09,459 Suze: single premium deferred annuity is exactly as its name says 235 00:18:10,180 --> 00:18:15,609 Suze: In one single premium, one single amount of money, 236 00:18:16,319 --> 00:18:22,079 Suze: you put it in to a single premium, deferred annuity. 237 00:18:22,640 --> 00:18:26,660 Suze: And again, there's the word deferred, which means they are 238 00:18:26,670 --> 00:18:31,099 Suze: deferring the income tax that you will owe on the 239 00:18:31,109 --> 00:18:34,040 Suze: growth of that money or the interest rate that money 240 00:18:34,050 --> 00:18:37,420 Suze: will earn until you take it out, 241 00:18:38,160 --> 00:18:44,810 Suze: Especially because this is a non-qualified annuity. We're talking about again, 242 00:18:44,819 --> 00:18:48,959 Suze: you fund it with money you have already paid taxes 243 00:18:48,969 --> 00:18:51,290 Suze: on in one lump sum. 244 00:18:51,920 --> 00:18:55,959 Suze: So you would put in $10,000 at one lump sum 245 00:18:55,969 --> 00:19:00,369 Suze: or 50,000 or 100,000 or whatever amount of money that 246 00:19:00,380 --> 00:19:01,650 Suze: you want to put in. 247 00:19:02,439 --> 00:19:08,169 Suze: Now, normally when you buy a single premium deferred annuity, 248 00:19:08,819 --> 00:19:11,709 Suze: the insurance company will give you 249 00:19:12,459 --> 00:19:18,319 Suze: a specific interest rate for a specific period of time. 250 00:19:18,819 --> 00:19:23,589 Suze: It can be one year, it can be two years, 251 00:19:23,599 --> 00:19:28,109 Suze: three years, four years or five years or more. 252 00:19:28,900 --> 00:19:33,310 Suze: What you want to be careful of. You do not 253 00:19:33,319 --> 00:19:38,629 Suze: want to buy a single premium deferred annuity that gives 254 00:19:38,640 --> 00:19:43,109 Suze: you just a high interest rate for the first year 255 00:19:43,180 --> 00:19:44,910 Suze: that's guaranteed to you, 256 00:19:45,599 --> 00:19:48,410 Suze: but it has a five or a seven or a 257 00:19:48,420 --> 00:19:53,129 Suze: 10 year surrender period and you do not know what 258 00:19:53,140 --> 00:19:55,489 Suze: is the interest rate that they are going to be 259 00:19:55,500 --> 00:19:59,959 Suze: giving you for all the years after the first year 260 00:19:59,969 --> 00:20:04,719 Suze: because remember, you will have in most cases surrender charges 261 00:20:04,849 --> 00:20:09,050 Suze: for a number of years. So you will be stuck there. 262 00:20:09,709 --> 00:20:14,439 Suze: So if they happen to decide, let's entice everybody to 263 00:20:14,449 --> 00:20:19,718 Suze: put their money into this single premium deferred annuity, let's 264 00:20:19,729 --> 00:20:22,869 Suze: just say interest rate for a one year certificate of 265 00:20:22,880 --> 00:20:25,780 Suze: deposit like the kind you can get at Alliant Credit Union, 266 00:20:25,790 --> 00:20:26,900 Suze: for instance. 267 00:20:27,560 --> 00:20:31,488 Suze: Those interest rates are 5% for one year. 268 00:20:32,099 --> 00:20:33,829 Suze: Why not offer 269 00:20:34,660 --> 00:20:42,649 Suze: 5.5% or 6% for one year. Entice people to purchase 270 00:20:42,660 --> 00:20:47,810 Suze: the single premium, deferred annuity guaranteed for one year. Even 271 00:20:47,819 --> 00:20:53,369 Suze: though the surrender charges may apply for seven years, get 272 00:20:53,380 --> 00:20:55,229 Suze: them to put their money in. 273 00:20:55,640 --> 00:20:59,810 Suze: And then after the first year, we will lower their 274 00:20:59,819 --> 00:21:05,139 Suze: interest rates from years to, to whatever the surrender period is, 275 00:21:05,209 --> 00:21:08,010 Suze: to make up for the fact that we paid them 276 00:21:08,020 --> 00:21:12,979 Suze: so much more the first year than the going interest rate. 277 00:21:13,459 --> 00:21:17,050 Suze: Did you hear what I just said to you? That 278 00:21:17,060 --> 00:21:22,589 Suze: is not what you want. If you buy a single premium, 279 00:21:22,599 --> 00:21:24,209 Suze: deferred annuity, 280 00:21:24,939 --> 00:21:28,810 Suze: you want them to guarantee you the interest rate that 281 00:21:28,819 --> 00:21:32,989 Suze: you are going to be paid for the entire length 282 00:21:33,000 --> 00:21:35,250 Suze: of your surrender charge. 283 00:21:36,109 --> 00:21:41,550 Suze: So if you wanted to, you put $100,000 in to 284 00:21:41,560 --> 00:21:46,040 Suze: a single premium, deferred annuity where they are guaranteeing you, 285 00:21:46,050 --> 00:21:50,520 Suze: let's just say 5% for all five years and the 286 00:21:50,530 --> 00:21:55,270 Suze: surrender charge is up after five years. Sounds like a 287 00:21:55,280 --> 00:21:58,459 Suze: good deal. All right. And you go for it and 288 00:21:58,469 --> 00:22:01,609 Suze: after five years you decide you don't want to do 289 00:22:01,619 --> 00:22:05,718 Suze: another annuity and you take out all of your money. 290 00:22:06,010 --> 00:22:08,900 Suze: If you are under the age of 59 and a half, 291 00:22:08,910 --> 00:22:12,589 Suze: you will pay a 10% penalty on the interest that 292 00:22:12,599 --> 00:22:16,839 Suze: you've earned and you will pay ordinary income tax on 293 00:22:16,849 --> 00:22:21,880 Suze: the interest that you earned $100,000 over five years will 294 00:22:21,890 --> 00:22:26,219 Suze: make you about $28,000 in interest. 295 00:22:26,829 --> 00:22:30,439 Suze: And if you're under 59 and a half, when you withdraw, 296 00:22:30,619 --> 00:22:37,079 Suze: you will pay $2800 on a Federal level. And there 297 00:22:37,089 --> 00:22:41,020 Suze: might be state charges as well depending on the state 298 00:22:41,030 --> 00:22:43,780 Suze: that you live in. So you have to take that 299 00:22:43,790 --> 00:22:49,300 Suze: into consideration. Plus you will pay ordinary income taxes on 300 00:22:49,310 --> 00:22:53,180 Suze: the full $28,000. 301 00:22:54,189 --> 00:23:00,699 Suze: So single premium deferred annuities are usually far better for 302 00:23:00,709 --> 00:23:06,209 Suze: people who know they are going to turn 59 and a 303 00:23:06,219 --> 00:23:11,040 Suze: half or older in the year that the surrender charge 304 00:23:11,050 --> 00:23:12,000 Suze: is up 305 00:23:12,849 --> 00:23:17,829 Suze: or they're already older and they're looking at that as 306 00:23:17,839 --> 00:23:22,780 Suze: a replacement for, let's say, a certificate of deposit. So 307 00:23:22,790 --> 00:23:27,390 Suze: a single premium deferred annuity, which was my favorite to 308 00:23:27,400 --> 00:23:32,698 Suze: put people into, will work very well for people who 309 00:23:32,709 --> 00:23:33,800 Suze: are older. 310 00:23:34,500 --> 00:23:38,810 Suze: They want a guaranteed interest rate for a specific period 311 00:23:38,819 --> 00:23:39,630 Suze: of time. 312 00:23:40,469 --> 00:23:43,099 Suze: They want to not have to pay taxes on that 313 00:23:43,109 --> 00:23:48,060 Suze: money because maybe in those five years before it matures 314 00:23:48,069 --> 00:23:50,810 Suze: or whatever the surrender period is, 315 00:23:51,849 --> 00:23:55,390 Suze: they want to not pay taxes because now maybe they're 316 00:23:55,400 --> 00:23:59,510 Suze: in a currently high tax bracket and five years or 317 00:23:59,520 --> 00:24:02,569 Suze: seven or 10 years from now, they'll be in a 318 00:24:02,579 --> 00:24:06,569 Suze: lower tax bracket by a lot. So they don't care 319 00:24:06,579 --> 00:24:08,130 Suze: and that's what they want to do. 320 00:24:08,739 --> 00:24:13,989 Suze: So, single premium deferred annuities can take the place of 321 00:24:14,000 --> 00:24:18,069 Suze: a certificate of deposit or a treasury if you want 322 00:24:18,079 --> 00:24:18,670 Suze: it to. 323 00:24:19,569 --> 00:24:24,339 Suze: And that's essentially how they work. So for those of 324 00:24:24,349 --> 00:24:28,640 Suze: you who have put money into a single premium deferred annuity, 325 00:24:28,650 --> 00:24:31,500 Suze: you have locked in a good interest rate for the 326 00:24:31,510 --> 00:24:35,660 Suze: exact same amount of time as your surrender charge. You 327 00:24:35,670 --> 00:24:39,270 Suze: understand how they work in terms of the tax penalties 328 00:24:39,280 --> 00:24:43,660 Suze: from the government, the surrender charges from the insurance company. 329 00:24:44,180 --> 00:24:47,880 Suze: And by the way, normally you are allowed in many 330 00:24:47,890 --> 00:24:53,150 Suze: insurance companies to withdraw 10% a year without the surrender 331 00:24:53,160 --> 00:24:57,910 Suze: charge applying. But if you withdraw that 10% a year 332 00:24:57,920 --> 00:25:01,790 Suze: from the annuity and you are not 59 and a half 333 00:25:01,800 --> 00:25:05,829 Suze: you will still have to pay a 10% penalty on 334 00:25:05,849 --> 00:25:08,229 Suze: that money, just so you know. 335 00:25:08,930 --> 00:25:12,209 Suze: so as long as you understand that and you know, 336 00:25:12,219 --> 00:25:14,900 Suze: the ins and outs of it and you know why 337 00:25:14,910 --> 00:25:18,550 Suze: you are doing it, I don't have a problem with that. 338 00:25:18,829 --> 00:25:22,300 Suze: I just want to remind all of you. However, 339 00:25:22,890 --> 00:25:25,819 Suze: and I did this on a podcast just a few 340 00:25:25,829 --> 00:25:31,819 Suze: weeks ago, unlike a bank that is insured with FDIC 341 00:25:31,829 --> 00:25:36,199 Suze: Insurance or a credit union that is insured by N 342 00:25:36,209 --> 00:25:41,550 Suze: C U A insurance annuity companies are not insured by 343 00:25:41,560 --> 00:25:44,419 Suze: FDIC or N C U A. 344 00:25:44,849 --> 00:25:50,599 Suze: Remember each state has its own Insurance Guarantee Association that 345 00:25:50,609 --> 00:25:54,540 Suze: will provide protection for you. In the event that the 346 00:25:54,550 --> 00:25:57,560 Suze: insurance company becomes insolvent. 347 00:25:58,239 --> 00:26:01,310 Suze: So it is important that you understand that and it 348 00:26:01,319 --> 00:26:04,849 Suze: is important that you understand each state 349 00:26:05,300 --> 00:26:10,449 Suze: has its own level of insurance issued by the state 350 00:26:10,459 --> 00:26:15,709 Suze: Guaranteed Associations. So again, I did a whole thing on that, 351 00:26:15,719 --> 00:26:19,329 Suze: the rating of insurance companies in a podcast just a 352 00:26:19,339 --> 00:26:22,869 Suze: little bit ago. So you might want to check it out, 353 00:26:22,880 --> 00:26:27,109 Suze: but you are never ever to put more money in 354 00:26:27,140 --> 00:26:31,770 Suze: an insurance company contract like an annuity. 355 00:26:32,310 --> 00:26:37,810 Suze: that is more than what the State Guarantee Association will 356 00:26:37,819 --> 00:26:41,900 Suze: insure you for. All right, just make sure that you 357 00:26:41,910 --> 00:26:47,280 Suze: understand that. So that's a single premium deferred annuity. 358 00:26:47,910 --> 00:26:51,800 Suze: The next type of annuity which I do not like 359 00:26:51,810 --> 00:26:54,160 Suze: is a variable annuity 360 00:26:54,800 --> 00:27:01,510 Suze: And a variable annuity is equal to an insurance company 361 00:27:01,520 --> 00:27:07,290 Suze: issuing you a mutual fund that invests in different things. 362 00:27:07,300 --> 00:27:10,000 Suze: You usually can choose which one of those funds you 363 00:27:10,010 --> 00:27:12,170 Suze: want to have your money invested in. 364 00:27:13,239 --> 00:27:18,399 Suze: But, whatever you earn on it is tax deferred. 365 00:27:19,229 --> 00:27:24,260 Suze: And remember we're talking about non-qualified annuities right now where 366 00:27:24,270 --> 00:27:27,698 Suze: you are funding them with money that you have already 367 00:27:27,709 --> 00:27:29,599 Suze: paid income taxes on. 368 00:27:30,670 --> 00:27:34,430 Suze: So you have money that's just sitting there. It's not 369 00:27:34,439 --> 00:27:39,189 Suze: in a retirement account. And now you are thinking to yourself, 370 00:27:39,199 --> 00:27:41,670 Suze: I want to invest it. And you go to see 371 00:27:41,680 --> 00:27:45,069 Suze: a financial advisor and maybe you're thinking you want to 372 00:27:45,079 --> 00:27:49,239 Suze: put it in different mutual funds or exchange traded funds 373 00:27:49,380 --> 00:27:52,099 Suze: and your financial advisor that you're seeing 374 00:27:52,510 --> 00:27:56,910 Suze: presents an opportunity and it sounds like this: if you 375 00:27:56,920 --> 00:28:00,680 Suze: were to put your money into a variable annuity, 376 00:28:01,729 --> 00:28:05,189 Suze: because again, it's a contract with an insurance company, it's 377 00:28:05,199 --> 00:28:09,260 Suze: an annuity. You will be guaranteed that you will never 378 00:28:09,270 --> 00:28:14,130 Suze: get back less than what you originally put in, number one. 379 00:28:14,469 --> 00:28:18,719 Suze: Number two, you can change funds any time you want 380 00:28:19,050 --> 00:28:22,569 Suze: within the variable annuity and you will not have to 381 00:28:22,579 --> 00:28:24,319 Suze: pay income taxes on it. 382 00:28:25,160 --> 00:28:28,449 Suze: And that this is a way for you to invest 383 00:28:28,459 --> 00:28:33,689 Suze: in the stock market with absolutely no risk whatsoever. That 384 00:28:33,699 --> 00:28:38,770 Suze: is the sales pitch for most variable annuities. 385 00:28:39,619 --> 00:28:41,949 Suze: Are you kidding me? 386 00:28:42,650 --> 00:28:46,619 Suze: First of all, a variable annuity for them to be 387 00:28:46,630 --> 00:28:49,410 Suze: able to say you will never get back less than 388 00:28:49,420 --> 00:28:53,939 Suze: what you put in. That means that if you die, 389 00:28:53,949 --> 00:28:56,699 Suze: it's not like you can get it out at any time. 390 00:28:56,709 --> 00:28:58,619 Suze: Let's go back to our example. 391 00:28:59,170 --> 00:29:04,660 Suze: You put $100,000 in for instance, the markets have plummeted. 392 00:29:04,670 --> 00:29:10,180 Suze: Your money is only worth $70,000. It's not like you 393 00:29:10,189 --> 00:29:13,800 Suze: can say to that annuity company, I want my money 394 00:29:13,810 --> 00:29:17,900 Suze: back and they'll give you $100,000, no. 395 00:29:18,790 --> 00:29:23,550 Suze: That guarantee for you to get back the $100,000 in 396 00:29:23,560 --> 00:29:28,099 Suze: this case reads like this, you will get back on 397 00:29:28,109 --> 00:29:32,160 Suze: your death because you are the annuitant or the insured, 398 00:29:32,410 --> 00:29:37,380 Suze: you will get back the $100,000 that you put in 399 00:29:37,390 --> 00:29:38,180 Suze: or 400 00:29:38,390 --> 00:29:41,680 Suze: the value of that annuity if the annuity at that 401 00:29:41,689 --> 00:29:45,339 Suze: time is higher. So whichever one is higher, you will 402 00:29:45,349 --> 00:29:49,569 Suze: get back that amount of money, but you have to 403 00:29:49,579 --> 00:29:51,680 Suze: have died to do so. 404 00:29:51,969 --> 00:29:55,479 Suze: number one. Number two, for them to be able to 405 00:29:55,489 --> 00:30:00,800 Suze: guarantee you that they charge you a mortality charge of 406 00:30:00,810 --> 00:30:07,619 Suze: about 1.3% a year of your money. So you are 407 00:30:07,630 --> 00:30:11,479 Suze: paying for that everybody. That is not just something that 408 00:30:11,489 --> 00:30:16,459 Suze: a variable annuity gives you. But all right, let's just 409 00:30:16,469 --> 00:30:19,420 Suze: say you put in $100,000 years ago 410 00:30:19,810 --> 00:30:27,530 Suze: and now it is worth $500,000 and you die and 411 00:30:27,540 --> 00:30:32,599 Suze: your beneficiaries get that $500,000. They are going to owe 412 00:30:32,609 --> 00:30:40,439 Suze: ordinary income tax on $400,000. Why 400,000? Because you put 413 00:30:40,449 --> 00:30:43,489 Suze: in 100,000 of your own money that you already pay 414 00:30:43,500 --> 00:30:44,400 Suze: taxes on, 415 00:30:44,839 --> 00:30:49,430 Suze: they get back 500,000. So the difference between your original 416 00:30:49,439 --> 00:30:57,790 Suze: deposit and a non-qualified annuity and what they get is taxable. 417 00:30:57,819 --> 00:31:03,160 Suze: Understand that. Now, why am I stressing that? Because if 418 00:31:03,170 --> 00:31:11,400 Suze: you put $100,000 directly into an index mutual fund or 419 00:31:11,550 --> 00:31:14,510 Suze: ETF at a brokerage firm 420 00:31:14,930 --> 00:31:18,859 Suze: and you left it there for years while that money 421 00:31:18,869 --> 00:31:22,300 Suze: is growing, in most cases, you do not pay a 422 00:31:22,310 --> 00:31:25,180 Suze: penny of income tax on it anyway. 423 00:31:25,920 --> 00:31:33,510 Suze: However, upon your death, if it grew to $500,000, 424 00:31:34,449 --> 00:31:38,579 Suze: your beneficiaries wouldn't have to pay any, 425 00:31:39,300 --> 00:31:43,079 Suze: You better underline this in your notebook. They won't have 426 00:31:43,089 --> 00:31:49,109 Suze: to pay any income tax on that whatsoever. Why? 427 00:31:49,739 --> 00:31:53,239 Suze: Because when they inherit it from you, they get a 428 00:31:53,250 --> 00:31:57,670 Suze: step up in cost basis. If it goes from 100,000 429 00:31:57,680 --> 00:32:02,790 Suze: to 500,000, they inherit it. Their cost basis now is 430 00:32:02,800 --> 00:32:08,040 Suze: 500,000 if they turn around and they sell it absolutely 431 00:32:08,050 --> 00:32:11,790 Suze: no income tax at all, if they sold it for 500,000. 432 00:32:12,209 --> 00:32:15,150 Suze: If they keep it, let's just say they do. 433 00:32:15,550 --> 00:32:19,439 Suze: And now it grows to 600,000 or 700,000 and they 434 00:32:19,449 --> 00:32:23,329 Suze: decide to sell it. Hey, if they kept it for 435 00:32:23,339 --> 00:32:26,150 Suze: at least a year, they'll pay capital gains tax on 436 00:32:26,160 --> 00:32:29,839 Suze: whatever increase above the 500,000. 437 00:32:30,780 --> 00:32:34,989 Suze: But let's talk about, you forget about when you're dead. 438 00:32:35,000 --> 00:32:38,329 Suze: Let's talk about right now. You are alive and you 439 00:32:38,339 --> 00:32:40,670 Suze: want to be able to use this money while you 440 00:32:40,680 --> 00:32:45,540 Suze: are alive. So you simply take $100,000 that you've already 441 00:32:45,550 --> 00:32:48,469 Suze: paid taxes on and you put it in a brokerage 442 00:32:48,479 --> 00:32:50,150 Suze: firm where you buy 443 00:32:50,959 --> 00:32:56,430 Suze: an index fund or ETF, ok, just that simple, like 444 00:32:56,439 --> 00:32:59,420 Suze: the Vanguard Total Stock market index fund or ETF that 445 00:32:59,430 --> 00:33:02,209 Suze: I've been talking about now for all three or four 446 00:33:02,219 --> 00:33:07,729 Suze: years on this podcast and you put in $100,000 and 447 00:33:07,739 --> 00:33:11,109 Suze: now years later, it's worth 500,000. 448 00:33:12,000 --> 00:33:15,890 Suze: Any money that you take out that's been in there 449 00:33:15,900 --> 00:33:19,790 Suze: for over one year, you are only going to pay 450 00:33:20,260 --> 00:33:24,989 Suze: capital gains tax on that money. That is a big 451 00:33:25,000 --> 00:33:29,729 Suze: difference everybody than paying ordinary income tax on the money 452 00:33:29,739 --> 00:33:33,869 Suze: that you withdraw from a variable annuity. Oh, and what else? 453 00:33:34,430 --> 00:33:36,650 Suze: There is no surrender charge. 454 00:33:37,109 --> 00:33:41,380 Suze: There is no 10% Federal tax penalty, if you take 455 00:33:41,390 --> 00:33:45,479 Suze: money out before you are 59 and a half years of age. 456 00:33:46,469 --> 00:33:51,900 Suze: There is no mortality charge of 1.3% like there is 457 00:33:51,910 --> 00:33:57,420 Suze: in a variable annuity. In fact, there are many index 458 00:33:57,430 --> 00:34:02,359 Suze: funds that don't charge any fees to buy or expenses 459 00:34:02,369 --> 00:34:07,420 Suze: anything in them. What so ever so more of your 460 00:34:07,430 --> 00:34:10,199 Suze: money goes to work for you. 461 00:34:10,860 --> 00:34:15,149 Suze: So this sales pitch and I underlined sales pitch, 462 00:34:15,800 --> 00:34:20,149 Suze: of a variable annuity allowing you to invest and be 463 00:34:20,159 --> 00:34:24,109 Suze: guaranteed that you will get all of your money back. 464 00:34:24,159 --> 00:34:25,889 Suze: Number one costs you, 465 00:34:26,500 --> 00:34:29,110 Suze: if you leave your money in there for a long 466 00:34:29,120 --> 00:34:32,089 Suze: period of time, chances are your money would have come 467 00:34:32,100 --> 00:34:35,069 Suze: back anyway and had grown to be far more 468 00:34:35,928 --> 00:34:39,499 Suze: And you would just be better off buying a mutual 469 00:34:39,509 --> 00:34:43,928 Suze: fund or exchange traded fund outside of a variable annuity. 470 00:34:43,938 --> 00:34:49,979 Suze: And remember, variable annuities also come with what? Surrender charges 471 00:34:49,989 --> 00:34:54,058 Suze: in most cases. And if you take money out before 472 00:34:54,069 --> 00:34:58,578 Suze: the age of 59 a half the 10% penalty by 473 00:34:58,589 --> 00:35:04,128 Suze: the government. And in all circumstances, whatever money you take 474 00:35:04,138 --> 00:35:04,618 Suze: out 475 00:35:05,020 --> 00:35:11,509 Suze: or your beneficiaries take out will be taxed as or income. 476 00:35:12,409 --> 00:35:16,840 Suze: Indexed annuities. They are a type of annuity that is 477 00:35:16,850 --> 00:35:20,820 Suze: linked to a market index such as the Standard and 478 00:35:20,830 --> 00:35:25,739 Suze: Poor's 500 index. So they offer you the potential to 479 00:35:25,750 --> 00:35:31,209 Suze: get higher returns than fixed annuities, for instance. Providing some 480 00:35:31,219 --> 00:35:37,639 Suze: protection against market risk. Why is that? Because they usually 481 00:35:37,649 --> 00:35:40,060 Suze: will guarantee you a minimum 482 00:35:40,719 --> 00:35:44,409 Suze: return that you will get a year on your money. 483 00:35:45,030 --> 00:35:48,229 Suze: But for that minimum guaranteed return, 484 00:35:48,949 --> 00:35:52,520 Suze: if your annuity is indexed, let's say to the Standard 485 00:35:52,530 --> 00:35:56,658 Suze: and Poor's 500. If the Standard and Poor's 500 index 486 00:35:56,669 --> 00:36:02,040 Suze: skyrockets and it goes up, let's just say 10% 487 00:36:02,899 --> 00:36:07,899 Suze: The most you may make on that annuity would be maybe, 488 00:36:08,389 --> 00:36:15,629 Suze: you know, 9%. So usually they only give you 70, 80, 90% 489 00:36:15,659 --> 00:36:20,050 Suze: of what the index does. But for you giving up 490 00:36:20,060 --> 00:36:25,229 Suze: some return on the index, they usually guarantee you a 491 00:36:25,239 --> 00:36:29,350 Suze: minimum return on your money. 492 00:36:30,669 --> 00:36:34,520 Suze: Many people like indexed annuities. All right, you can do 493 00:36:34,530 --> 00:36:38,820 Suze: that if you want, they have less risk than a 494 00:36:38,830 --> 00:36:43,600 Suze: variable annuity truthfully. But what people don't like about them 495 00:36:43,610 --> 00:36:49,580 Suze: usually is they can be very complicated to understand. But hey, 496 00:36:49,590 --> 00:36:53,799 Suze: if that's something that you wanna do, you absolutely can 497 00:36:53,810 --> 00:36:59,719 Suze: do that. Next, most non-qualified annuities also can come in 498 00:36:59,729 --> 00:37:00,560 Suze: the form 499 00:37:01,020 --> 00:37:06,610 Suze: of income annuities, usually immediate income annuities where you take 500 00:37:06,620 --> 00:37:10,489 Suze: a lump sum of money, the insurance company invests it 501 00:37:10,500 --> 00:37:15,870 Suze: for you and they guarantee you a monthly income for 502 00:37:15,879 --> 00:37:19,408 Suze: either the rest of your life or a period certain, 503 00:37:19,419 --> 00:37:22,370 Suze: so they will certainly pay you for, let's just say 504 00:37:22,379 --> 00:37:23,948 Suze: 10 years. 505 00:37:24,919 --> 00:37:29,219 Suze: Which means that if you buy an immediate annuity and 506 00:37:29,229 --> 00:37:32,899 Suze: you die in the next year after you bought it, 507 00:37:33,199 --> 00:37:37,800 Suze: they will pay your beneficiaries for, let's say 10 years. 508 00:37:37,810 --> 00:37:43,629 Suze: But after that, it stops. If you live past 10 years, 509 00:37:43,639 --> 00:37:46,350 Suze: they'll continue to pay you for as long as you 510 00:37:46,360 --> 00:37:47,649 Suze: are alive. 511 00:37:47,919 --> 00:37:51,899 Suze: I talk about these in some detail in the Ultimate 512 00:37:51,909 --> 00:37:55,429 Suze: Retirement Guide for 50 Plus because for those of you 513 00:37:55,439 --> 00:38:00,500 Suze: who just simply want a guaranteed income for the rest 514 00:38:00,510 --> 00:38:03,830 Suze: of your life, because you don't have it anywhere else 515 00:38:03,840 --> 00:38:07,050 Suze: and you want to know that, I do not have 516 00:38:07,060 --> 00:38:11,759 Suze: a problem with you doing that right now. Just look 517 00:38:11,770 --> 00:38:13,850 Suze: at the ins and outs of them. 518 00:38:14,500 --> 00:38:19,770 Suze: So now let's go to qualified annuities, which means you 519 00:38:19,780 --> 00:38:24,570 Suze: are funding them within normally a retirement account with money 520 00:38:24,580 --> 00:38:26,949 Suze: that you have never paid taxes on 521 00:38:27,909 --> 00:38:34,000 Suze: A retirement account is the type of account where everything 522 00:38:34,010 --> 00:38:36,719 Suze: in there is tax deferred. 523 00:38:37,540 --> 00:38:41,330 Suze: So what sense does it make, for instance, for you 524 00:38:41,340 --> 00:38:45,389 Suze: to put money in a tax deferred account, like a 525 00:38:45,399 --> 00:38:52,350 Suze: retirement account and purchase a variable annuity, for instance, that 526 00:38:52,360 --> 00:38:54,709 Suze: is also tax deferred? 527 00:38:55,510 --> 00:38:58,639 Suze: What sense does it make for you to put a 528 00:38:58,649 --> 00:39:04,939 Suze: tax deferred investment in a tax deferred account? It makes 529 00:39:04,949 --> 00:39:09,020 Suze: absolutely no sense whatsoever. 530 00:39:09,929 --> 00:39:14,100 Suze: If you want to put a fixed annuity within a 531 00:39:14,110 --> 00:39:19,129 Suze: retirement account. Again, if it's guaranteeing you a really high 532 00:39:19,139 --> 00:39:23,040 Suze: interest rate for the exact time that it's in there and, 533 00:39:23,050 --> 00:39:25,469 Suze: you know, you're not gonna be taking money out. I 534 00:39:25,479 --> 00:39:27,159 Suze: don't have a problem with that, 535 00:39:28,060 --> 00:39:32,149 Suze: But a variable annuity where they are, in essence, again, 536 00:39:32,159 --> 00:39:35,169 Suze: putting your money into what? Mutual funds 537 00:39:35,969 --> 00:39:40,300 Suze: And you are paying mortality charges and so forth and 538 00:39:40,310 --> 00:39:45,669 Suze: possible surrender fees and things like that. That makes absolutely 539 00:39:45,679 --> 00:39:49,139 Suze: no sense. If you are in a retirement account, 540 00:39:49,439 --> 00:39:53,959 Suze: why not just buy mutual funds, exchange traded funds, not 541 00:39:53,969 --> 00:39:56,169 Suze: have any limits as to when you can take money 542 00:39:56,179 --> 00:39:59,570 Suze: out when you can't take it out. So, variable annuities 543 00:39:59,580 --> 00:40:06,429 Suze: within a retirement account is absolutely, in my opinion, just stupid, everybody, 544 00:40:06,679 --> 00:40:13,959 Suze: Tax Sheltered Annuities, TSAs, are usually qualified annuities where if 545 00:40:13,969 --> 00:40:17,810 Suze: you are a teacher or something like that where you work, 546 00:40:17,820 --> 00:40:20,250 Suze: that's where they put your money. 547 00:40:20,540 --> 00:40:24,010 Suze: If that's the only retirement choice you have, again, I 548 00:40:24,020 --> 00:40:28,179 Suze: don't have a problem with that if, however, you have 549 00:40:28,189 --> 00:40:32,500 Suze: other choices at your place where you work such as 550 00:40:32,510 --> 00:40:36,549 Suze: a ROTH retirement account or whatever. I think there might 551 00:40:36,560 --> 00:40:40,250 Suze: be better ways for you to invest your money. But 552 00:40:40,260 --> 00:40:43,459 Suze: if all you have offered to you is a Tax 553 00:40:43,469 --> 00:40:48,330 Suze: Sheltered Annuity. I don't have a problem with that. 554 00:40:49,050 --> 00:40:54,179 Suze: So that is my summation on annuities. Now, I know 555 00:40:54,189 --> 00:40:57,339 Suze: I went a little long here but I think it 556 00:40:57,350 --> 00:41:01,500 Suze: was worth it. So just in summary, truthfully, 557 00:41:02,199 --> 00:41:06,469 Suze: I don't hate all annuities. Don't think that you have 558 00:41:06,479 --> 00:41:10,459 Suze: made a mistake, especially if you're doing a single premium 559 00:41:10,469 --> 00:41:13,888 Suze: deferred annuity and you can get a really high interest 560 00:41:13,899 --> 00:41:18,290 Suze: rate now guaranteed for the entire time that your surrender 561 00:41:18,300 --> 00:41:23,899 Suze: charge is in place. Make sure you know, the insurance 562 00:41:23,909 --> 00:41:29,050 Suze: limits at your state of how much you can put in. 563 00:41:29,639 --> 00:41:31,310 Suze: Other than that, 564 00:41:31,850 --> 00:41:35,699 Suze: I think this should have given you a good education 565 00:41:36,070 --> 00:41:42,909 Suze: on how annuities work. So once again, I wish all 566 00:41:42,919 --> 00:41:47,330 Suze: of you a very happy Easter today. Passover that started 567 00:41:47,340 --> 00:41:51,020 Suze: a few nights ago, but is continuing. There's only one 568 00:41:51,030 --> 00:41:55,419 Suze: thing that I want all of you to say, especially 569 00:41:55,429 --> 00:41:56,340 Suze: today 570 00:41:57,110 --> 00:42:01,198 Suze: and I want you to do it with me: Today, 571 00:42:01,209 --> 00:42:06,800 Suze: wherever I go, I will create a more joyful, 572 00:42:07,909 --> 00:42:14,370 Suze: peaceful, loving world. All right, until Thursday, everybody when Miss 573 00:42:14,399 --> 00:42:17,860 Suze: Travis joins us again. Miss Travis, who you just love 574 00:42:17,870 --> 00:42:20,739 Suze: so much and is so much funnier than me and 575 00:42:20,750 --> 00:42:24,250 Suze: who you miss, which I happen to love. By the way, 576 00:42:24,510 --> 00:42:29,479 Suze: we will be back with Ask KT and Suze Anything. But 577 00:42:29,489 --> 00:42:36,120 Suze: until then, remember you are unstoppable. 578 00:42:42,300 --> 00:42:43,419 Music: MUSIC OUT.