Welcome to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, senior He is CEO and founder of Empower Wealth and Tax. Phil, how are you today?
I am wonderful. It’s good to be with you again, Cynthia. How’s life treating you? How are the kids?
Fantastic. Thank you so much,
00:47
Papa. How’s Papa doing?
Wonderful. He’s doing wonderful as well. And how’s your beautiful bride?
Oh, she’s absolutely a ten. We’re on our honeymoon for the rest of our lives from now on. Yeah, that’s what we already decided, okay, from now on. It’s honeymoon. No more, you know, we had the empty nest going on. So, it’s just the two of us. And we have a lot of like, hobbies.
So, you, you’re a match made in heaven. So, I just love your family. And let me ask how are the children and grandchildren? Everyone doing?
Yeah, God bless them. The kids are doing fine. They’re all working around doing the right things. And the grandchildren are growing up nicely. By my children, fortunately, are turning out to be good parents. And I guess that all comes circle on around. But it’s a beautiful thing. It’s really nice to be honest with you. I’m a big fan of grandkids. Sure. It’s nice. You’ve number one, you get to see your kids. You get to see the grandkids. Give your children, their parents, the same song and dance that they used to give us except you can sit back and you can laugh at it and say Oh my, my Yeah, it’s a beautiful thing. So yeah, it’s fun. Yeah, it’s great. That’s absolutely great.
Oh, well, Phil, I love today’s topic, obviously, we’re going to talk about something that can kind of be a little bit of a, I don’t know, controversial subject, if you will, annuities, people have such passionate opinions about them. And sometimes they don’t really know why they feel the way that they do. So, I should ask you a question. What are some of the top reasons that people should consider having an annuity? And number one, why do sometimes people like back away from them? Was it tied to a commercial that was out at one time?
It’s more than just that many folks that have owned annuities. Haven’t seen many much return in them I think of lately. I believe that they look at as sometimes annuities were sold as a guaranteed return. I’ve seen it a lot because a lot of folks will come in, they’ll have an annuity they bought 10 years ago or eight years or what have you. And I’ll ask them, Why did you purchase the annuity? Why? Where does it fit in your retirement income plan? And they’ll say no, I was just guaranteed a percent a year regardless of what the market did. And when I look inside of the contract, it was very, very misleading. There was no guaranteed accumulation value of a percent. It was an income rider that was used strictly for calculating how much income you could turn on when you turned on your lifetime income in the annuity, because that’s what they do. So, it was an income value roll up. And so, I think from that might have gotten a few bad days, but to be honest with you, in order to buy an annuity and really feel comfortable, this is my professional opinion, you should buy it from a licensed fiduciary and, and from a company that is one of the leaders in selling annuities that only allows licensed fiduciaries to sell their product. Okay? Because then, you know, you’re, you’re, you’re selling them being offered them for the right reasons not to make a commission sale or something of that nature. Because, again, we have to write an entire script on why we even offer them but annuities nowadays, these newer products are really amazing. From about a handful of companies. There are about 2000 Plus products on the market, and I won’t, I won’t sell the majority of them. I mean high 95 98%. Okay, there are a few that are amazing. In fact, they’re so good. They sound too good to be true, but we use them for tax efficiency and tax planning and income planning. But getting back to your question about the 30 reasons. Many folks who do not have a guaranteed pension. We’ll put an annuity into their retirement income plan. For a number of reasons Number one, they we call it MelB marks money, they never want to run out of money. Okay, number two, the annuity should give them inflation increases each year, many of these older products were static, meaning if I started with 2000 a month, today, five years from now, I’m still receiving 2000 a month. You know, like in traditional pension, the plans nowadays give us pretty hefty increases or cola adjustments averaging anywhere between three to six 7% per year. Okay. Okay. So, I like that many folks also are concerned that potentially Social Security may go bankrupt or run out of funding or some other situation may occur. And they want to make sure they’re guaranteeing their own income, in addition to Social Security. So, there are a number of different reasons. Personally, I like guarantees. When I construct an income plan for a client. In our case, we make these income plans tax efficient, I want an annuity product, that number one only can only be sold by a registered investment advisor. And I want to make sure it really touches all the bases and acts in the client’s best interest, not the insurance companies has to be mutually beneficial. Sure. So, the first thing that we want to look at is guaranteed lifetime income for both husband and, and spouse. Okay, both, both spouses, husband, wife, wife, husband, what have you, yes, so I want to make sure that it’s guaranteed. The other thing I want to look at, and these are some of the reasons, I want to make sure I can fund it with Ira dollars. And I can convert those Ira dollars to Roth IRA dollars, over a period of, say, three years for five years. And at the end of the conversion, when the entire value of that annuity has been converted to a tax-free Roth, then I want to turn on increasing tax-free income for the client. Okay, you remember, we maximize Social Security, and then we want Roth income. So, and I need to be able to do internal Roth conversions, the larger percentage of these insurance companies will not allow it, they won’t allow Roth internal Roth conversions. Were they all make the client convert the entire mountain one year? Wow. So, they don’t do partials. So, there’s a lot of things. But the annuity plans today, the ones that we offer clients, only one of two reasons. Number one, my client wants growth without market volatility. They want growth without, without taxable income with tax deferral, or they want to turn it into they want to take a piece of their 401 K pension, move it into the annuity to get joint income for, for the two of them, and but be able to convert it to tax free first. Once you convert it to a Roth, you’re receiving tax free income for both lives if it’s set up that way. So, when you really start to look about look into the newer products, and everything that they allow us to do, they’re, they’re suitable. They’re suitable products, where years and years ago, I never really believed that.
That is interesting. I mean, when you think about it, it’s the face of everything has changed so much with retirement planning. And now annuities seem to have such a strong force in that retirement plan overall.
Yeah, it is. And you’re taking the money out of the market, but you’re still getting market like returns, and you’re insuring a piece of your retirement, in addition to Social Security. And again, I believe Social Security will be around for all of us, especially if you were born 1960 to 65 and later and older, but Social Security’s face will change for our children and certainly our grandchildren. Sure, sure.
That makes sense. Well, Phil, there’s a special offer that you plan to present to your viewers today. Let’s talk about what that is, before we take our first commercial break.
Well, first of all, folks, it’s we’re talking about annuities. If you own an annuity that you purchased recently, or even if you purchased it five years, 10 years 20 years ago, and you have no idea why you purchased it, give us a call, we’ll put, we’ll, we’ll take a look at it and do an annuity comparison for you to see if it’s even something that should be in your retirement income plan. But what I really like to do for your is, I’d like to help you structure a tax efficient retirement income plan. And I’d like to do a Morningstar report on your portfolio. Many folks are concerned that this is going to be the year sometime between 24 and 25. When we see a 22,007 2008 like correction, some folks are predicting gloom and doom now I’m an eternal optimist, but I, I believe in being prepared. So let us do that Morningstar report by a certified financial planner, an analyst. And let us take a look at any of those annuity products. First five colors. If you dial 888-818-6557, we’ll be happy to accommodate you and I look forward to visiting with you,
Phil, thank you so much to our viewers at home, that number to call is 888-818-6557. Or if you have your smartphone handy, go ahead grab it, click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and Tax landing page and you can schedule if you’re one of the first five callers that annuity X ray, if you will that Morningstar report, let him take a look at what you currently have in place. And if there’s any adjustments that need to be made, Bill will make those recommendations but first, you have to call in 888-818-6557. We’re going to take a very short commercial break; we’re talking about the top 30 reasons that people should consider an annuity. When we return, we’ll have more.
For most folks who are getting ready to retire. They’ve spent 30, 40, 50 years paying into Social Security, and they haven’t a clue on what claiming strategy best works for their plan. You should feel comfortable, you should feel safe. You should be educated by your financial advisor in all aspects law, taxes, inflation, your wealth management, including your insurance products as well, working with a financial advisor that has their own tax firm, has their own legal arm and their own wealth management and insurance firm really ties it together. What folks enjoy most of all, is working not only with a fiduciary, but they want to work with someone that does it all. They want to come in they want to do their Roth conversions. They want to do their tax returns. They want to update their wills in their trust, and they want to come to one firm that has all of that expertise inside of it. That’s Empower well.
Welcome back to retire smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, Sr. He is founder and CEO of Empower Wealth and tax and we’re talking about all the reasons why you should consider an annuity and your retirement plan. So, this is a great episode because a lot of people have mixed feelings and mixed emotions about annuities and maybe don’t understand why they feel that way.
So, I see quite frequently people say don’t buy an annuity, that’s a waste of money, don’t do that. And most of those folks really don’t know what they’re talking about. Because they don’t really do income planning. Or they’re one dimensional. They work with a big box wholesaler firm that’s not allowed to sell annuities or doesn’t offer annuities or they don’t offer a competitive product class in folks. So, what I’d like you to do is I’d like you to grab a pen or pencil and a piece of paper, and I’m going to give you all the reasons, some of okay, and maybe all of the reasons why folks own I’m going to say top quality annuities. Okay. So, the first thing is you want to make sure that you have a steady income flow. Normally when I’ll ask an individual How much are you spending in retirement Okay, house was paid off these bills, but your What are your daily bills, okay, each month, what do you spend, I call it mailbox money. So, if your Social Security is not getting the job done, maybe you filed early, okay, or maybe you didn’t pay that much, and maybe your, your Social Security is not, it doesn’t cover all of your bills, you may consider an annuity tip kind of couple or marry that, to have that guaranteed lifetime income. Second thing is you may be concerned that your spouse, when they lose that social security check, you may be concerned that that spouse, that survivor, Social Security will not be enough income. So, if your spouse isn’t really savvy when it comes to investments and things of that nature, you may want to set up an ancillary income plan to be turned on at the death of the first spouse. This is just some of the reasons, some of the reasons and some of the functions of an annuity. The third thing is protect you against market volatility. Many times, I’ll tell a client if the if the S&P drops 30% How much do you want your portfolio to lose? And most of the time, wife will say, zero, okay, husband will say nothing about 15% 20%. I’ll say well, wait a second, you have 1.5 million in that IRA. 25% means you don’t mind losing 375,000 of that 1.5 Is that acceptable? Acceptable? So, we quantify it. So many folks want to stay in the market. They like that market return, but they want to limit the volatility fixed indexed annuities with no caps that will allow us to accomplish that we have annuity products that have that have had some years where they returned 1719 21%. And on bad years zero, they certainly don’t lose any money, but they still get 80 90% of the upside of the market. So, some folks like that idea. And that maybe you may not. The other thing is a lot of folks, they don’t want to make any investment decisions. I have a lot of clients, that the spouse, okay, especially after the death of the first spouse, that they don’t want us to make an investment they want all they want is their guaranteed income, they want a tax efficient, and they want to make sure that the rest of it goes to the kids, they want to reduce their taxes, and they want to reduce their market volatility. So having a small piece of your retirement plan, and this is something we can organize. That’s totally not, has no market volatility at all. Sorry about stumbling over those words there. But at any rate, other folks don’t want to have any contribution limit on it. So, I’ve seen folks say, you know, I want to set this up for my daughter, I don’t want it she has a special needs. Okay, I want to set this income up, I want it to increase, but I don’t want anybody to be able to fiddle with it, right? Surrender it, cash it in. I want to provide steady income for maybe a special needs child or grandchild. An annuity may be something that you want to look at. Longevity, you know, many folks are more concerned with running out of money before they run out of life. I was in a conversation with one of our producers. Before I came on, we got off on a on a tangent on that, on that conversation about younger people are dying earlier. And they haven’t figured it out why yet. But for the most part, we’re living longer. And many of us are concerned about living to 9095, especially after the death of a spouse and running out of money. So, what I like to do is we’d like to put an income plan together. If this is you, or sounds like you, we want to talk about customizing an annuity plan that helps you receive tax free income tax free increasing income, and something that even when the money in that account is empty after say 15 years of collecting it, you’ll still receive income that increases for as long as you and your spouse lives. So many folks like that. It’s just kid it’s a calming effect. Absolutely. So, everybody’s different. But I can tell you this with respect to, to annuities, no, they are not all horrible. A large percentage of them I personally wouldn’t purchase because I have very high expectations when it comes to owning any type of product, financial or, or insurance product. But there are some fixed indexed annuities that provide all of the, you know, tax free benefits tax deferred benefits that we look for. And, and some folks the perfect fit. If you do have an annuity and you have no reason. You have no idea. The reason you have it, give us a call. And that’s another thing. It’s possible you don’t even need an annuity; you may want to move that into some sort of a bond or some sort of another safe type of asset. That’s something we can also accommodate as well.
That makes perfect sense, Bill, this is the best time for us to take that second commercial break. Do you agree?
I do.
All right to our viewers at home, the number to call is on your screen. It’s 888-818-6557 We know that you have a lot of questions for Phil about perhaps annuities that you have and you’re not sure if they’re the right fit for you anymore. Let him do that annuity X ray the Morningstar report. Let them take a look at what you currently have in place. And if it’s the night if that’s not the right product for you, this is the perfect time to make some adjustments. Again, this is complementary to the first five callers only the Morningstar report 888-818-6557. Or if you don’t have your phone, that’s okay. Just grab your smartphone or click on the QR code at the bottom corner of your screen that will take you right to the landing page for Empower Wealth and Tax. We’ll be right back after this very short commercial break. We’re talking about all things annuity related. Stay tuned. We’ll be back in just a moment.
We know the market is going to get worse from here. This is the biggest monthly decline in 10 years, people’s 401 K’s took a major hit.
My investments are tanking retirement isn’t going as planned. I can’t believe I let my kid talk me into buying crypto. I mean, what is that anyway?
This was the fourth worst contraction in history.
Sorry. are you two doing? Your financial future doesn’t have to be uncertain. I’m Philip Capriatti, CEO of Empower Wealth and Tax if you amassed a nest egg, it’s time for a financial advisor to help you reach your retirement goals. This is one of the greatest tax windows in history. Now is the time to take advantage of this tax discount while we can we specialize in retirement income planning, tax mitigation, estate planning, and so much more. So, plan your retirement right Call now for your own complimentary portfolio review and tax analysis.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, senior He is founder and CEO of Empower Wealth and Tax and we’re talking about all things annuity related today. Phil, this is a great show because like you mentioned, a lot of people may not even understand why they have an annuity or they’re not sure what function it serves. Don’t even know why they purchased it. So, you’re shedding some light on some possible scenarios to really uncover deep dive what people have in there, right?
Some folks may need one or may like one, but they’ve been brainwashed that annuities are horrible. You know, many folks, I’m just going to give you a few more reasons why you may consider one, the avoidance of probate. Okay, so, annuities can bypass probate if they’re set up properly. So, it’s a very smooth transfer of wealth to your beneficiaries, whether it be a spouse or children and grandchildren. So, we can set these annuities up to avoid probate as well, of course, tax deferral, some folks and I’ll tell them, they’ll have huge taxable accounts. And you know, at the, every year when we do their taxes, you know, they’re looking at dividends and interest that came in of 7580 $90,000, they have to pay taxes on that dividend and interest, but they’re not spending it, they’re leaving it in the investment account. So, this is a this is a problem as well. So, annuities are least fixed indexed annuities or even fixed annuities. They protect you against excessive taxation, because they’re tax deferred, I don’t pay taxes on the money until I take it out and spend it. And I don’t pay taxes on it at all, until it’s actually transferred after death if I do not need it. So, this is something this is another reason. The other thing is you may have filed for Social Security early. And between both of your Social Security incomes, your wife and you know, both spouses, you may be a feeling good about meeting your expenses in your daily needs. But at the death of the first spouse, you’re going to lose a spouse, if you feel uncomfortable, that your spouse will not have enough income. With that one social security check. We may want to set up an annuity using some of that 401 K IRA money to turn on tax free income after the death of the first spouse so we can guarantee the income for our spouse, and make sure that that income is tax efficient. I hear so many times folks come into the office and after the death of a first spouse. They’ve made a file too early. But they, they what, what normally happens is we have one social security check. That’s the survivor benefit. And they start taking income from other sources, and especially RMDs required minimum distributions. Next thing you know we’re doing their tax return. And their Part B and Part D premiums have jumped through the roof because they’re now filing a single return, not married filing joint. So, we can use annuities to organize and structure a tax efficient retirement income plan, not just while the two of you are alive, but after the death of the first spouse. So, this is a vehicle we can use. And it’s really one of the only vehicles we can use to guarantee that income. I’ll tell you another thing. Simplicity and psychological comfort. Yes, absolutely. I have folks that come in and they have five different annuities. They have checks coming in here, here, five different annuities. And I’m like, Why do you have five different annuities? And the gentleman said to me, I like getting checks from everybody in retirement, not just social security. And I’ve had I’ve had spouses of clients tell me to say thing, be you know, I take this check in this check in we save it I take this check this check and that check, and we spend it and so, so that’s called laddering. So sometimes we use annuities to ladder income, but again, there it’s not all horrible many times if you retire early. You retire at 60 you retire at 61. Wouldn’t you want to invest your money, but you’re going to defer social security because you were a high wage earner. So, from that 760 to 70, or that 60 to 270, we need income, we can actually set up an income plan designed specifically to come out of that 401k tax efficiently to provide income as a bridge to get you from 60 to 70 by using only a small percentage of your assets and not having to worry about excessive market volatility. So, there are a lot of reasons that it could be a beautiful fit and quite suitable. And there are a lot of reasons why they’re not absolute.
And Phil, what about health care costs? Can annuities help with health care costs,
A lot of these better annuities now, after you’ve had them for five years, they cover long term care, they’ll have a multiplier in their home or home health care. I’ll have folks that say, Phil, I don’t want long term care, I’m not paying a premium. By the time I get to Dean it, the premiums have tripled, quadrupled or worse. And by the way, I’ve seen that a lot, especially from folks that have come from coastal states, California, New York, and so forth. These premiums go up significantly after you hit age 80. So, we have annuity products. Now, if you cannot perform two out of six daily living activities, or you need custodial care, rehabilitation care, or skilled care, they will double the income. So, if your income say is 50,000, a year from this annuity or 40,000, they’ll double it. Okay to help provide benefits for that existing care. Again, you’re insuring your retirement and then insuring other options. So, some of it is I much would much rather have like I’ll tell a client, which account do you want to set aside for home health care and long-term care? And normally, they’re crickets okay, sure, right, because no one wants to set that aside and if you don’t use it, don’t worry about it will you’ll still have it, but what account what so many times we can kind of kill two or three birds with one stone. We could do the bridge; we can take care of the home health care if it’s that type of a product that provides that benefit and at a significant reduced or no premium. Wow
Phil, thank you for another amazing episode we just speak all about annuities This was amazing. To our viewers at home the number to call is 888-818-6557 what Phil is offering you today is that annuity deep dive the Morningstar report. Let him take a look at what you currently have in place and design a plan that’s going to suit your needs. Again, thank you for spending time with us today on retire smart Austin with Phil Capriati senior. Be safe, be happy and be blessed. We look forward to seeing you back one week from today. Take care now.
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