How To Increase Velocity On Your Debts With Strategic Annuity Moves

For those of you that are still watching present, you're dialed in. Your next action step is doing an audit on an existing annuity, if you have one. See what opportunities you have. I would, I would argue even if rates come down come September, there's still opportunity on a table, especially if you purchased an annuity prior to Covid, when rates were at zero and even maybe like 2021, I think, is when rates started to go up after 2021, going into 20, 2022. So that's when rates were at zero and that was, you know, annuities were only paying, I think I, I haven't I seen an annuity that was only paying a 1% or, or 1.5, something like that. Yeah, distribution rate, that, that's, you know, super inefficient compared to, say, numbers today. Right, right. And that person could easily switch that over and get themselves a much higher rate. And it doesn't cost them any money out of pocket. And to your point, there may be a surrender charge to it, so you might go down in principle, but it almost doesn't matter or doesn't have an effect because of what the benefit, income benefit or roll up. As you mentioned, those, that specific language has an effect on the actual distribution of that particular money, of those of those dollars. So that's huge. I've got links below for you to.

We're really at the entry level, scratching the surface in this video. I mean, we do so much more. So when we audit an annuity, maybe we can't improve it, but nine times out of 10, we inform the client of something that they were unaware of that they needed to adjust. It may be as simple as just changing, updating a beneficiary, but it's a really good step. It's a good practice, especially if you have an agent that isn't servicing your annuity. Like, it's good to check on them once in a while. But not only do we look at how we can maximize the income to align with their goals, we're going to look at, you know, can we do a bridge strategy to pump up the income even more from that annuity by deferring it maybe another year? You know, we're going to look at the taxation and distribution of the income from that annuity and how to keep as much of that as possible. That's all just part of the process. So, you know, we take it a few other levels beyond just maximizing income. We look at several other options to see how we can really maximize every dollar from that Account.

Yeah, that just came up. I just popped up another question here. With the big beautiful bill passing recently, there's quite a few deductions that W2 earners can receive or claim would. Do you think there's a world now where you might be getting cases where, let's say someone is retired and the amount of guaranteed income they have from their Social Security, their pension and annuity is actually more than what they need and maybe the gap is actually quite large. Is there ever a world where it makes sense if they have the kind of annuity that they can turn off and let it defer in this higher rate environment that we're in, almost take less money simply because their tax bracket.

Almost like in a way they would still net the same amount of cash flow. Because now we've got a, we've got the SALT deduction that they've implemented. They've got child tax credits that have increased and if, and if wife or, or husband has a side business, the qualified business income deduction increased. So when you look at these percentages, maybe there's a world where actually taking less income, you end up with the same amount of cash flow simply because of how they're taxing you less on every dollar? Yeah, there's a world where that might be the case.

100%. Right on. So you know that one of the big deductions for my industry is they raised the standard deduction for people over the age of 65. And that. And that really had a massive impact on how their Social Security could be taxed for certain filers. If you're single, up to 75,000. If you're married, up to 150,000. And so the big beautiful bill passed on a Friday. By Monday morning, actually it was Monday afternoon, I had a video out to every single one of my clients saying we need to meet now because of the change in deduction. And remember, it's only 25 through 28. But again, it's just like you said, now they can recognize more income and keep more of that money. But instead of turning the annuity off, what I would maybe look at or my team would look at with our CPA and different people is is that an opportunity for Roth conversions? Is that an opportunity to purchase more things that produce income down the road.

For you or maybe acquire rental or something?

Absolutely, yeah. You can put it in whatever you want. One thing that I think is really cool, especially to capture the high interest rate environment, is for some people you could purchase life insurance. So let me give you an example. Of that, this is crazy. Let's say, for example, by the taxes changing, you're gonna recognize an extra 1% of your income. Okay. From that payment. It's not a big deal, right? What are you gonna do with 1%? Well, if we took that 1% and put it in life insurance and you were taking a distribution from a $250,000 taxable Iraq, you could essentially go out and buy something called a gul, guaranteed universal life. And what that's going to do is guarantee you a $250,000 tax free payment. So what have you done? You've effectively replaced your fully taxable IRA with a tax free distribution for either your spouse or your children. And some of these guls even have riders that will pay you out for long term care or chronic care. So, for example, you might actually create efficiency in distributing your own wealth back to yourself, tax free and just by using the new changes in the bill. So, I mean, the possibilities are it's, it's really an exciting time to be evaluating retirement because there's so many different moving parts that we now can take advantage of. And so if you're, if you're in it and you're sincere and you're dedicated, you know, as a professional in the retirement space, there's, you can do amazing things for clients that we haven't had.

Access to before, man, I'm pretty sure we can go all day. So again, action steps, action steps. Those of you that are watching, I will have links below in the description in the comment section. Get on Daniel's calendar. It doesn't cost to do an audit, to just bring as much information as you can to the table so that you can really maximize your time. Because we are in this window here where you do want to take advantage and not waste time. And you want to make sure, you know, with your team, you've got, like you said, you've got software that can scan so many different companies. And I equate that to someone wanting to buy a car today. Like, what if you wanted to buy a car that cost 35,000 and you go to your local dealer but you not knowing, 10 miles away they're selling that same car just in a different color for $30,000 and it's a $5,000 savings and maybe they're offering a 0.25% difference in financing rate, so now you're saving an extra thousand or more in interest for a total of say, 7,000 or more in tax savings. And that the fact that, say it's an American Made car. Now you're able to claim, I think, a deduction, if I'm not mistaken, on the interest that you pay. So we're talking little tweaks and leveraging other people's skills to get the full picture. So, please, if you're watching, you're 10 years out or less or a little bit more out from retirement, you're thinking about retirement, you're processing these things. Let's have a conversation with Daniel and his team, because there's a lot of folks I talk to that are also trying to retire early. When I talk to those people that are trying to retire early, let's just say before 59 and a half, but they're contributing to accounts that you're not going to be able to touch till after 59 and a half. So it's kind of like, hey, what are you doing with your dollar? It's not. You're not actually solving for what you really want to do. If you're trying to retire before 59 and a half, let's say by 50 or 55. Well, you need to have a conversation with Daniel, his team, to essentially solve for that, because it's a different conversation altogether. We're talking an extra 10 more years before you're able to turn on, say, Social Security and other benefits that can come along the way. With an annuity. There's no age limitation. Correct. In terms of when you can get one and when you can turn it on, there's no penalties. In terms of you have to be a certain age to claim these. The annuity payout. Correct.

Well, again, these are complex, Right. So it depends on how you take the payment. So you can annuitize prior to age 59 and a half and do what's called a 72T. And yes, you can get out of the 10% early withdrawal penalty if you're taking an income rider prior to age 59 and a half, that's where the IRS actually will impose a 10% penalty on the interest that you've earned from that annuity. And so it depends on how you structure. There are. There are plenty of scenarios where you can structure lifetime income prior to age 59 and a half. Just using.

Because I was thinking about the kid that is young that got attacked by the dog and won't be able to access it till 18. So that's where I got a little interesting.

So structured settlements, actually, they're insane. Like, you can do things with those that you can't do with, just like purchasing an annuity. So they're Very unique products. But what they do is they actually produce the income tax free. So, so it's. Yeah, it's insane. So that's how there's kind of like that, that, not that issue with the deferred interest and the, and the rule. And, and basically the reason I think for that rule is Denzel, if you think about it, it's just like an IRA or a 401k, right? If you're, if the IRS is letting you defer interest, they don't want you taking it before age 60, essentially 59 and a half. The same with an annuity. An annuity is going to defer, grow tax, deferred interest, and then you're going to pay the tax when you pull it out, just like an IRA or 401k. And so it's similar in that realm of retirement account where if you touch it pre 59 and a half, there's a 10% penalty unless you annuitize it with that special rule. But for the structured settlement case for a little girl across the street, we built hers where it grows at a fixed rate until she's 18 and then it pays out. Now they chose a 10 pay, but you could have, they could have chosen a 20 pay or even a life pay, and it comes out tax free for the rest of her life. So it's pretty cool what you can do with those. There's some, some really unique products in that market.