Retirement Tips | 2 Ways to Earn Interest and Delay Taxes
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
So, what are the 2 ways to earn
interest and delay taxes? Great question. I'm glad you're here. My
name is Stan The Annuity Man, I'm America's Annuity Agent, licensed in all
50 states. This is part of my retirement tips series on the Stan The Annuity Man
YouTube channel. Which I hope you can hit subscribe or
hit the bell. I think the bell alerts you to when these come out.
By the
way, spoiler alert: They come out every single day, Monday
through Friday. So, we're just getting started. I want to educate the public on
all things annuity. But let's talk about this. Let's get into
the details, let's do facts. Not fiction, not sales pitches. But only
after this music. So, what are the 2 ways to earn
interest and delay taxes? You know, I always say an annuity for what it will
do, not what it might do. Not the unicorns
chasing the butterflies, the hypothetical theoretical, back-tested, hopeful-agent scenario that you see and hear. And you go, "Wow,
that sounds too good to be true." It is too good to be true.
You know, annuities are contracts. You have to understand that. So, what are the
2 ways to earn interest and delay taxes in the annuity world that you need
to be aware of? I've written books on multi-year guarantee annuity and fixed
index annuity. Go to theannuityman.com. Sign up there
and I'll ship the books for free and you'll just get them in the mail.
No
obligation, no cost. So, let's talk about multi-year guarantee
annuities. Multi-year guarantee annuity is a fixed rate annuity.
It's the annuity industry version of a CD.
So, for instance you can get currently at the time of this taping, you can get a
3-year multi-year guarantee annuity. In other
words, you're locking in that interest for 3 years.
In this case, most states have an interest rate around 3%.
So, for those 3 years, you're going to get 3 percent and it's going to
compound tax-deferred. Eventually when you pull
money out of an annuity, any type of an annuity,
you're going to pay taxes at ordinary income rate levels.
And you just have to
know that. I mean anyone that says to you that they can get you an annuity
that's tax-free income that they can't. That's
the IRS doesn't allow it. But what the IRS does allow (and this is pretty cool)
is they allow you to defer taxes. And a lot of people out there are
in very, very high tax brackets. They don't want to lose a penny. But they
also want to earn interest. Multi-year guarantee annuity is a very
simplistic way, a fixed rate annuity way, you know exactly
what it's going to do, what it will do.
Not what it might do. There's no might do. There's
will do. Will do with multi-year guarantee annuity is that
interest that you're going to get paid and you can actually peel.
Most of them allow you to peel it off and and put it into a bank account if
you want to. But in this case, you're looking for a
way to delay taxes and put it off and tax defer
and get interest. Multi-year guarantee annuity is a great
way to go about it. And you can ladder them. You can buy like
a 3-year, 4-year, 5-year or 7-year. They can go as far out as 10
years or more. But in my opinion, you always try to keep the maturity
short with multi-year guarantee annuities with the hope
that interest rates go up. Okay, the other way to earn interest and delay taxes
is with an indexed annuity, fixed indexed annuity.
Back in the day,
they were called equity indexed annuities. But now they're called fixed
index annuities. They were designed in 1995 to compete
with CD returns which is exactly what they do. They are not securities. They are
life insurance products that are issued at the state
level. So, people that want to push them as
market return products, they're really not. They're cd products. Now, some years
can be a little bit better than others.
But the blended return since 1995
has been in that cd level. The good news about index annuities is
that when the interest is locked in, in other words, whatever gain on that
call option that you've done… And by the way,
I've done a series on indexed annuities you might want to check out that
explains caps and spreads and participation rates
and all that stuff that's part of the series I did on indexed annuities. So,
whatever that locks in at, I mean, it never goes below that. So, you just stair
step up hopefully that that interest locks in. And if the
markets go in the toilet, you don't lose a penny. Now, the good news
when used like multi-year guarantee annuities and indexed annuities,
when using a non-IRA account, then that growth
grows tax-deferred and compounds. Which is a good thing.
Because there's a lot of you out there that don't want any more taxes.
You're
at a high tax bracket where you just want to protect the principal
and just have interest hit and defer the taxes down the road. In other
words hockey analogy, is kick the puck down the ice a
little bit. Eventually when you pull it out, you will have to pay taxes on it but
with these 2 products –indexed annuities and multi-year
guarantee annuities. You can earn interest
and delay taxes. Alright, let's stay on the subject on indexed annuities a
little bit because in addition, if you just bought an
indexed annuity and said, "Okay, Stan. I don't need income or i don't need any
i don't need any whistles or barrels. I just want
that index call option return, whatever that is to be credited to the account. I
don't want to pay taxes on it. I want to delay it but I want that interest credit."
Fine. There's no annual fees. It's very… You know, we'll shop all carriers for the
best cap spreads, participation rates, strategies involved. We need to talk
about that go to theannuityman.com and sign up there.
Or if you
want to discuss it, you can just hit the comments down here
on my YouTube channel. I do check that and we will answer you as well.
But I wanted to talk to you about indexed annuities with
income writers. Now, I've written a book on income riders that I'll send with the
other ones. The fixed indexed annuity one and the
multi-year guarantee annuity book as well.
But at the time of application, you can attach what's called an income rider to
a fixed annuity. What an income rider is is an attached benefit that grows
separately. So, if you draw a line down the middle of a blank sheet of paper,
index option stuff here income rider calculation is here. And you can use this
side to calculate a future income payment. Now, the good news is
typically that has an interest rate attachment that it grows
by as well and it's not true interest because you
can only use this to calculate your first income payment.
So, it's kind of a phantom account monopoly money.
But it does have a growth
percentage with most of them that it grows by. But it grows tax
deferred. So, again, if you're looking for interest to
grow and to delay taxes, you can have a fixed indexed annuity
standalone without the income rider. Or you can have a fixed index annuity
with an income rider. Either way, both sides of that calculation… Remember
i did that the accumulation value and then the income rider.
Both sides of that calculation and there are separate calculations
are going to grow tax-deferred.
Which is a good thing.
So, once again, you need to talk with me and go to theannuityman.com. Set of time
and let's talk about what you're trying to achieve.
It really comes down to 2 questions you need to ask and answer. Number 1,
what do you want the money to contractually do and number 2
when do you want those contractual guarantees to start?
In this case, "Hey, Stan. I want interest. I want to delay taxes."
Then we need to go shop MYGAs, we need to go shop index annuities for the best
contractual guarantees for your specific situation.
Hey, I've done a
series of these retirement tips video. I encourage you to go check them all out.
You can go to the playlist right below me and you can see the whole series and
look at them one by one to see which one applies to
you. Remember this with multi-year guarantee annuities and fixed
indexed annuities. You can use our proprietary calculators at theannuityman.com to run the quotes yourself. We have a
live feed of the best fixed rates for your specific state. You just filter by
your state of residence and the duration that you're looking at.
24/7, 365 you can shop that at your leisure. Let me know if you're interested
we can coordinate the paperwork. And with index annuities, a little bit
more of a complex product.
But with both products, we need to talk one-on-one me
and you. You and The Annuity Man, America's Annuity Agent.
The number 1 agent in the country. I will shoot it straight if you haven't
caught that from me by now. It's going to be a
brutally factual conversation. I'm going to put your interest first
from a fiduciary standpoint. That's the way it should be with all
conversations and i will tell you if annuity does not fit.
I promise to do that. Hit the subscribe button. I'll see you
on the next Stan The Annuity Man video. you.
