Safety Comes First

For the last 32 years, I have been in the profession of asset protection through fixed index annuities. I have assisted retirees and others over 55 with strategies to make sure that the “golden years” are truly the golden years. No one has ever lost a penny, due to market downturns through my plans.

Safety has always been at the forefront.

I have set up more than $120,000,000 in different types of fixed annuities without ever charging a fee. For the uninformed, annuities are only offered through insurance companies and must have a written provision for an income stream, either immediately or deferred. (To clear up any confusion, the insurance company pays me. You do not pay me so 100% of your money goes to work for you, starting on the first day.)

In the past few weeks, many of my clients with substantial money in the market have been getting notices from their brokers, alerting them about uncertainty due to the midterm election next week. This isn’t about politics or a scare tactic. (Disclaimer: I am not licensed to advise clients to get in or out of the market. That advice should come from a properly security licensed professional.)

One notice from a brokerage firm advised the client to rollover or transfer some of their nest egg into safe investments until the current political uncertainty is somewhat settled. Any financial professional with your best interest in mind usually has a certain percentage in safety, especially for those retired or near retirement. Risk vs. Reward.

I have led more than 1,600 retirement seminars through the years. Here are some of the most asked questions:

“Don’t annuities have high fees?” There are 3 types of annuities: Fixed, Fixed Index and Variable. The only type that has fees are variable annuities which require a different license. Fixed and fixed index don’t have fees.

“I don’t want to tie up my money.” Annuities have surrender charges/early withdrawal penalties which you know about in advance. Each year, the surrender percentage goes down until it disappears. One of the most popular products today is one that has a no-cost return of premium rider. This means that at ANYTIME, you can always get back at least what you started with. This gives you peace of mind that your money is accessible.

“What if I need money out?” After one year, you can always get 10% out without a penalty. If it’s a qualified annuity (IRA) and you are over 73, you can get your required minimum distribution out without penalty. Some annuities even allow you to start getting the gain out after one month.

“I can make more money in the stock market.” That is true if you add the word “potentially.” You can also lose more money. A 10% loss requires 11.2% gain to get back even. Fixed annuities are not “get-rich” accounts. They are safe and steady. Also, many give as much as 11% first-day bonus.

“What is the percentage formula most financial professionals use related to age and risk?” For years, the common formula was to subtract your age from 100. That was the amount that needed to be at risk. At age 50, keep half in risk. At age 70, 30% in risk. Safety could be CD’s, fixed annuities, money market and savings. The concern is life expectancy and how much loss can be tolerated.

“What are the tax advantages of annuities?” By tax code, annuities aren’t taxed UNTIL you draw out the gains. YOU decide when you pay taxes. (Never pay taxes on money you aren’t using.) Qualified (pre-tax dollars) annuities have no tax advantage, only the safety and guarantees.  

“What is a 1035 exchange?” This is the process of rolling over an existing non-qualified annuity or life insurance to another annuity. This is done if the old one has a low rate of return or the client likes the features (up front bonus) on the new one. No taxes are due on a 1035 rollover or any type of annuity transfer/rollover. Get an annuity checkup.

“What is meant by a fixed index annuity?” An FIA is a fixed annuity with different options chosen annually on how you want your money to grow. A popular index is the S&P 500. Note: you are NOT in the market. Your gains are based on the indices chosen. Example: the S&P annual point to point with a cap (ceiling). Let’s say the “cap” is 7%. If the S&P goes up 10% in a year, you only get 7% (the cap). If it goes down 4% in a year, you make ZERO. Zero is the floor. Each year, your gains are added to your account.

“What happens upon death with an annuity?” At death, there are no charges and your named beneficiaries divide the account value without going through the probate process. It does NOT matter how long the annuity has been in force.

“What are the disadvantages of annuities?” Early withdrawal charges (if you choose an annuity without the return of premium rider). Lower growth than potential gains in the market. (This is where your age and risk tolerance needs to be factored.) They seem to be too complex. (They are actually easy to understand IF you take the time to be educated.)

“How do I do a rollover from my present account?” This can be done electronically after you answer suitability questions to make sure an annuity would fit in your financial retirement puzzle. They are not for everyone.

“What is meant by a 3-legged retirement income stool?” Most retirees get 1. A pension or defined benefit plan 2. Social Security 3. Guaranteed income from investments (not MAYBE paychecks.) An annuity can provide an income check you can’t outlive.

“How do I get more information?” Go to coachbradford.com or send me an email at coachbradbradford@gmail.com.

Hope is important in our daily lives. But:

“Hope is NOT a Plan.”