WHY AN ANNUITY PURCHASE NOW IS IMPORTANT TO YOUR FUTURE.
Normally I’m a get along – ‘leave me alone’ kind of guy. Being sort of a laid back person. Little did I know my blood pressure meds would be sorely tested.
There I was, invited to a business meeting. I didn’t think much was going to happen, so, I sauntered in, grabbed a cup of coffee, and took my assigned seat. After a few minutes of the normal ‘insurance producers’ meeting’ banter from the speaker, I had to sit up and listen. What he was saying wasn’t about me, a planner, as much as it was about the rulings and actions of the IRS. I simply could not believe what I was hearing.
The upshot of the information was this: the IRS is mandating lower income payouts from insurance carriers to clients.
What does this mean to our clients? What can we do to help them? My mind had more questions, one after the other. How can the government talking heads complain about the rate of savings and over reliance on social security for citizens’ retirement income, and then turn on a dime and mandate what could be up to a 15% CUT in income derived from annuities?
Typically, this dissonance is expected from government. Yet this decision has far reaching effects.
Here is the score, as I understand it:
a. An annuity plan issued before 12/31/2015 will be grandfathered in under the current payout tables. All bonuses, income accounts, and settlement features will be in effect. THIS MEANS RATES OF ACCUMULATION AND PAYOUT WILL NEVER BE BETTER THAN THEY ARE RIGHT NOW!
b. If the plan is issued after 1/1/2016, the new IRS mandated settlement and payout tables will apply. THIS MEANS YOU WILL RECEIVE LESS INCOME PER DOLLAR OF ACCUMULATION THAN IF YOUR PLAN WAS IN EFFECT 12/31/2015!
The long term implications of this are obvious. If someone was using a planning figure of 5% income on their accumulation, that now might be 3.5% or 4%. This is catastrophic. What does a person do? Take the current plans, with current payout guarantees, and accumulation guarantees. Waiting is only going to ‘cost more’
This ruling is doubly troubling because it does not take into consideration the impending insolvency of Social Security. If your private plans (issued after 1/1/2016) can have their payouts reduced, how does a projected 23% DECREASE in social security payments help people retire successfully? What we see is a potential perfect storm. Just as retirees and soon to be retirees (who do not move funds to a plan before 12/31/15) will see lower income receipts on their annuity plans, so also will they potentially see an unbudgeted cut in their social security benefits.
WHAT TO DO NOW?
I can help. At Scheiber & Associates we have the plans with the most guarantees, current income payout guarantees, income and premium bonuses, and the least fees. If you have ever looked in to an indexed annuity, or need more information on how a transfer before 12/31/2015 can benefit you long term, CONTACT US NOW!!!!!!!
This is an important time. Rates and payout guarantees will never be higher. TAKE ACTION NOW!!!!! You won’t regret it.