Retirement Expert Reacts To Dave Ramsey - YouTube

Hi, I'm Stan The Annuity Man. America's Annuity Agent, licensed in all 50 states.

Today's video is a little different. I took a Dave Ramsey video

that a client of mine sent to me and wanted me to comment on.

And I'm like, "Yeah, let's do that." By the way, just a disclaimer.

Dave Ramsey... I mean, the stuff he's done out there is fantastic from the

standpoint of getting people out of debt. I went to one

of his one of his performances shows,

presentations in Orlando, Florida years back.

He literally packed an arena. It was really cool. It was good. It was

informative. He had people stand up and talk about

them becoming debt free. You know, I've listened to his radio show. So, I

certainly know who he is. Everyone knows who he is. But I wanted to

talk about this video because I think it's important to

to for me to add some things. I think Dave Ramsey and his daughter have done

good work. I'm a fan. I'm offering my services

as the fixed annuity expert for them from here on in. Because

I really think i can bring some value to the table. So, what I'm going to do..

And this is unique for me. This is my first time. I've ever done this.

I hope to do some more. But I'm going to look at his video. I'm actually going to

put the the ear plugs in so i hear it. But you'll

see it on the screen. It'll be cool. And then i'm just going to stop it and

talk about some of the things that he said.

And his caller said, add some clarification points when needed.

Complement when needed. I think you're really going to like this. And if Dave

and his people watch it, I think they're going to like it.

Because what i'm going to do is bring value to his

followers, to his listeners. And actually to his organization because

as the top independent agent in the country licensed in all 50 states, I know

what I'm talking about when it comes to annuities. I've written

7 books. I've got hundreds and hundreds of articles out there

that have been published. I have a podcast weekly called fun with annuities.

I put these videos out every single day Monday through Friday.

We just got started last year putting these out. So, I'm

educating the public. But let's listen to the music first and then i'll come back

and we'll start on this Dave Ramsey video.

Okay. So, what I've done is I've gone through the video a couple times.

I've kind of time stamped some things that I want to address.

But if you want to pull the video up and just watching the full, it's called, "What

is an annuity and how does it work?" It was from

November 21st 2019, Dave Ramsey. The infamous Dave

Ramsey. So, the premise of the video is as Tanya

from Illinois calls in with Dave Ramsey. She's been

to Dave Ramsey, she's been sold an annuity by some people

inside of a retirement plan. So, let's go through the first

cut. -I would contact them and see if they can reverse that

and put it back into mutual funds. -Okay. Because they said it would be like a

10-year process of taking a tenth out each year

and so then that... -So, they put you in something inside of a

retirement account with a surrender charge? -Oh, I don't know.

-Oh, these guys are absolute screwballs. -Okay. So, Dave calls these guys

absolute screwballs. They might be. Now, you know, Tanya bought this annuity.

It sounds like a 10-year deferred annuity. It sounds like a

an indexed annuity inside of retirement plan. And so, you know, Dave's

comment was cash it out and buy mutual funds. Well,

I mean she can cash it out. There's a free look time period on all annuities

that you buy which is a good thing. And annuities have the only

what I call "Test drive" capability where you can actually get your money back in

full after you purchase it, after it's been

issued, after you receive the policy. So, she can get her money back if she

gets it within that time period. But if she doesn't free look it within that

time period, I guess she could use the squeaky wheel

theory and say, "Hey, this is bad." And and see if she can get her money back.

But in most cases, she cannot. Now Dave's comment

about an annuity inside of an a

retirement account or an IRA, I understand what he's what

he's saying, okay? But in my world, you buy an annuity

for what it will do not what it might do. That's the contractual guarantees of the

policy. Alright? So, in this case, if the

contractual guarantees fit, then I don't see any problem with it

being inside of an IRA. And Dave and I are going to disagree with that and

that's fine. But a lot of people just have IRA assets.

A lot of people. And so, when they need contractual guarantees, they're going to

have to use that IRA asset for the contractual

guarantee. In this case, I think Dave's right.

I think she was sold (say) an indexed annuity inside of an IRA. I don't think

she understands what she owns which is horrible. So, in this case,

hopefully she can get her money back. So, let's keep going.

The other thing you got to weigh it against is you're probably making 2%

on this thing instead of 10 or 12.

-Exactly. -And so... If your surrender charge is 10%,

take it. And move it and put it in something that makes 10 more the first

year. You recoup. -Okay. Got you. That makes sense. -You know?

I don't know what your surrender charge is though. The stupid thing might be 20%,

I don't know. Okay, so Tony and Dave are talking about

the surrender charge. And he's saying, "Hey, if the surrender charge is

this, you might want to get out of it so you can make 10%. Because

you're only getting 2%. Well, he's making an assumption of what type

of fixed annuity product is inside of there. Obviously, I think she bought an

indexed annuity. But you can't just Carte blanche say,

"Well, fixed annuities only get 2%. If he's only if he's talking

about multi-year guarantee annuities which is the annuity industry version of

a CD, well currently, you can get a 3-year piece of paper,

at the time of this taping, you can get 3.25, etc. In other words,

he's saying 2%, you can get 10%. Number 1,

he knows (and he knows this) he can't guarantee the 10%. Yes, mutual

funds historically have done x and x. But I'm not sure getting taking the

surrender charges and getting out of the annuity

makes total sense. Once again, I need to know this specific annuity. But I think

it's an index annuity that she was sold. But he's incorrect on the 2%.

And he's incorrect about that at this

point taping of this video which is when interest rates are low. Multi-year

guarantee annuities are fixed rate annuities.

And currently, they're getting more than two percent contractually. It's not an

index annuity. It's like a CD, it's the annuity industry version of a CD. Now,

Dave's not going to like the fact that it's inside of an IRA. But once

again, if you're buying annuities for the contractual guarantees what they will do,

not what they might do, it does make sense. Now, he mentions

also in this video the double tax deferral. He's right about that.

You know, annuities are a tax-deferred product. But if you're buying it for the

contractual guarantee, it is what it is. So, you know, the fact

that he's wanting her to you know cash

out and he she can get 10%, maybe, maybe. But maybe not.

-That they put you in a surrender charge product inside of a retirement account

which is absolutely screwed up. That's ridiculous. I mean, you got 2

sets of penalties on this money now if you get if you need to get to it.

-Right. -Okay. Once again, Dave is upset about a

tax deferred instrument being placed in a tax-deferred structure.

So, a tax deferred annuity in this case, an index annuity placed inside

of a retirement account. I don't disagree with him on that.

You know, you're not going to get double tax deferral.

But where I do kind of part ways is once again if someone just has

IRA assets and they're looking for contractual guarantees...

Not market growth. Contractual guarantees. Lifetime income or principal protection

then it can make sense in an IRA. It really can.

Let's keep going. -What is an annuity? An annuity is a life insurance company

product. It's a savings account with a life insurance

company. -Okay. So, Dave broke it down and says... He

says, "Stop, stop, stop. Let's talk about annuities what is an annuity.

It's a..." He says it's a life insurance... Let me just.

"It's a life insurance company product. It's a savings account

product." Again, he's talking about 1 type of product, alright?

Which is a multi-year guarantee annuity. He's not

looking at the fixed annuities from the standpoint of immediate annuities and

qualified longevity annuity contracts, etc. He's really doing a 30,000-foot view. And

an index annuity is a CD product as well. So, let's keep going.

-There are 2 types of savings accounts with life insurance companies --fixed

and variable. Fixed pays you basically a CD rate 1 or 2 percent right now

which is what she's in. -Okay. So, Dave once again talks about

there's 2 types of annuities. Fixed and variable. I'll go

along with that. But the fixed product, he's only talking

about one product. Under the fixed annuity category, there's

single premium immediate annuities, deferred income annuities,

qualified longevity annuity contracts, multi-year guarantee annuities and

indexed annuities, --fixed index annuities. Those are under the

fixed product. Now, when he says after that he says

with a fixed annuity, you're going to get 1 to 2 percent.

He's only talking about 1 product. 1 product out of those. He's talking

about the multi-year guarantee annuity. He's not talking about the immediate

annuity, the deferred income annuity, the qualified longevity annuity contract.

I guess he could be talking a little bit about an index annuities because that's

a CD type product. But those returns have been very

competitive with CDs since 1995 when they were first introduced.

So, he's saying there's fixed and variable and fixed is only going to get

you 1 to 2 percent. He's talking about one product. He's

talking about multi-year guarantee annuities.

And at the time of this taping, you can get 3%

guaranteed on a 3-year piece of paper or 3 and a quarter on a

five-year piece of paper. You know, that's going to probably go up

in the future as rates go up as well. But the 1 to 2 percent isn't

correct in the multi-year guarantee annuity world. You can go to my site at

the annuityman.com and pull up the fixed rates

for your state. The best fixed rates for your state and see for yourself. Let's

keep... Let's keep going continuing. I'm helping Tanya, I'm helping Dave.

This is good stuff. So, hang in there with me. -And you pay

extra fees for the annuity. -Okay. This was a short clip when he said,

"You pay extra fees for the annuity." That's not true with most

fixed annuity types. Single premium immediate annuities, deferred income

annuities, qualified longevity annuity contracts;

no fees, no market attachments, no moving parts, multi-year guarantee annuities, the

fixed rate annuities we've been talking about.

No fees, no market attachments no moving parts.

Indexed annuities if you don't attach an income rider to them, they have no fees

that have some moving parts. But there's no fees to that fixed indexed

annuity that you're buying. I'm not saying it's

good or bad. But what I'm saying is you're not paying fees with specific

fixed products. Fixed annuity products. And

again, there's there's many types of fixed annuity products. So,

I know what he's trying to do. He's trying to get her out of this index

annuity. I don't disagree with him. I don't think it was sold properly.

I don't think she understands what she bought. If she doesn't understand what

she bought, she should get out. I totally agree with him there. But from

the fee standpoint, we can agree to disagree. So,

let's keep going. -There's tax deferral on the tax deferral. You can't double dip on

this. You get one shot at this and she already

had all that for free because it's inside the 403B, it didn't

need to be in an annuity. -Okay. Dave once again is pounding the table on

putting a tax-deferred instrument and a tax-deferred structure. You can't get

double tax deferral. I mean he's correct about that. He's totally correct about

that. But as I said before, if you

have... If most of your assets in IRAs and you're looking for contractual

guarantees, you might have to hold your nose and say,

"Okay, I'm giving up the tax deferred status with that

fixed annuity. Fixed-rate annuity multi-year guarantee annuity,

whatever even though it's inside of an IRA." Does

it make sense to put annuities inside of a qualified plan?

you cannot carte blanchely say, "You can never do that." You just can't because

people need the guarantees. And if that's all the money they have in the IRAs,

you're going to have to use that IRA asset. So, in other words, if someone

needed immediate annuity income, then you buy an immediate annuity. Shop

all carries for the highest contractual guarantee

inside the IRA and it comes out. Same thing with a deferred income annuity.

And same thing with the qualified longevity annuity contract which is a

fixed annuity that was introduced in 2014 as a pension product

for traditional IRAs and

employer-sponsored plans. So, that one is specifically built

for traditional IRAs. Let's keep going. -There is

zero times, never. Not a case anywhere that a fixed annuity is the

answer. Never. There's always something better.

-Alright. This is the one where Dave and I... I'd love to just have a one-on-one

conversation with him because he's like there's zero times

you should never ever buy a fixed annuity. There's there's always something

better than a fixed annuity is what Dave said.

Hmm, that's tough. Because let's just go to the facts. Annuities

were put on the planet in the roman times. The single premium immediate

annuity as a pension payment for the dutiful roman soldiers and their

families. Annuities are the only product that can

provide a lifetime income stream that you can never outlive.

Now, I'm assuming Dave's going to probably combat that and say, "Well, you

can buy mutual funds and then peel off the

money from the mutual funds and create income as well." I agree with that. In a

market that's moving up you can do the 4-percent rule and peel it off.

But in volatile markets, that's tough. Annuities have a monopoly on lifetime

income. When people want lifetime income guarantees that

they can never outlive and they want to set up either life only,

life with installment refund, there's 40

different ways to do it. Where they want to do joint life. Annuities, fixed

annuities in this case, Dave said never buy a fixed annuities.

There's always a better solution not for lifetime income. There is not a

better solution on the planet for lifetime income

than annuities, period. End of story. It's a monopoly that annuities

have. And before all of you start

hitting me with emails and stuff and you can't and comment. Please comment

below. We'll answer, okay? You already own an annuity. Social

security is the best inflation annuity on the planet? Yes, it's an annuity.

It pays you a lifetime income stream regardless of how long you live.

The older you are, the higher the payment. That's an annuity. Pensions, if you're so

fortunate enough to have a pension, you know, if your employer or your union

has a pension, pensions are an annuity. What do pensions do? They pay a

lifetime income stream regardless of how long you live. The

annuity companies on the hook. You're transferring the risk to the annuity

company to pay that lifetime income stream.

So, fixed annuities, single premium annuities, deferred income annuities,

qualified longevity annuity contracts and income riders that provide lifetime

income guarantees, those all come from fixed annuities. Now,

income riders can be attached to variable annuities as well. But we're

talking about fixed annuities, you say, "Never ever ever buy a fixed annuity." You could

always do better. You cannot do better when it comes to

lifetime income. You cannot do better when you're transferring risk.

That's where we need to sit down at the table and have that conversation. I'd

love to have that with him because I think that people out

there with 10,000 baby boomers hitting retirement age every single day,

65. They're looking for guarantees. They're

looking to fill in that income floor. What is the income floor?

It's your social security, it's your pension, it's whatever is dividend

stocks. It's whatever creating that income stream coming into your account

every single month. Annuities can be part of that

guaranteed income floor. It can be part of that using IRA money. It can be part

of that using Roth IRA money. It can be part of that using

non-IRA money. The guarantees are the same. It's just the taxation of that

income stream is different. But contractual guarantees, transfer of

risk, lifetime income. That's an annuity. And by

the way, that's a fixed annuity. So, on this one, we'll just professionally

agree to disagree. Let's keep going. -You can also do a

variable annuity which is a fine product but not inside of a retirement

account. The variable annuities are mutual funds

inside of an annuity and they have some actual benefits after you've maxed out

all of your retirement accounts. -Now, I agree with Dave on this one about

variable annuities. I mean in a perfect world, if you maxed

all your retirement accounts, it does work in a non-IRA setting. But once again,

I think that a lot of people, their assets are

inside of an IRA. And they have to make

decisions on the contractual guarantees using

those assets. So, with that, I'm going to tell you right now, I love

doing these type of videos. You know, Dave, I'm on his side from the

standpoint of taking care of your money,

getting out of debt. But I do think that there needs to be

some additional facts when it comes to fixed

annuities. There's many different types. I encourage you to go to my site at the

annuityman.com and check out my podcast. These videos

that I release every single day. Please sign up for my books. I'll send

you those for free and under no obligation.

I'll see you on the next Stan The Annuity Man video.