Perfect IRA Deal- A Nice Deferred Lump Sum


Today I want to feature a deferred, lump sum investment that is just hard to beat.  We have two similar lump sums, from two different top rated carriers, AIG and Prudential.  Each have the same payment stream.

The AIG deal is this one:

What makes this so special?  Well, compare it to a CD or a fixed annuity.  For an investor with a bucket of cash and time to defer, there are few better ways to position assets today.

Take an IRA for example.  For a 50 year old, an IRA is a bucket of money that you can’t touch until you retire, age 59.5 at the earliest without IRS penalty.  What’s a 50 year old to do? You have to defer for 10 years at minimum…. and if you’re looking to retire at 65, this is a perfectly timed passive and safe investment.

Long term deferred lump sum investments make perfect sense in an IRA where you can’t do anything with the money anyway until you retire.  And concerns about a large amount of taxable income coming in one year are moot when you do this deal in an IRA.  It’s all tax deferred anyway.

Compare CD’s at a paltry 1.5 % rate, taxable annually… Fixed annuities at about 3%…. Muni bonds at 2% to 4% and susceptible to principal degradation if rates rise… and compare to Treasuries at 1%… ish.

These yields are you other ‘safe’ money options.  Why wouldn’t you seriously consider a fantastic  lump sum deferred deal like the one above that has a guaranteed price, and guaranteed payout, fixed and defined terms, and a great rate?

We’re waiting for your call- 2 of these are available today, one from AIG and one from Prudential.  800-438-5121.

Substantial Immediate Income & 5.5% Rate


Today I want to highlight two large immediate income deals.  It’s not often that we have substantial cases, because most settlements are smaller in nature.  However today we have a Genworth and a John Hancock case each nearly $2 million in size.  And each offers a long-term increasing income stream that is just perfect for retirement.

The most attractive case I have seen in years is this John Hancock case.  At a 5.5% effective interest rate, this is truly an outstanding deal.  With fixed annuities paying in the neighborhood of 3%, high quality bonds in the 3 to 4% range, and 20 year period certain immediate annuities in the 2 1/2% effective rate of return range, the 5.5% rate on the John Hancock case is an astounding value.

For an investment of just over $2 million, we can deliver a guaranteed 33 year income stream paying out $5,117,771.09.  Can your financial advisor guarantee you the same output?  I doubt it…

The beauty of secondary market annuities is that we can simply deliver more income, coupled with an outstanding guarantee, for a lower purchase price than other comparable investment options.    No other retirement income plan comes close to this level of return, guarantee, and safety

The downside of the John Hancock case is that it cannot be split among several investors, it cannot be purchased with IRA funds, nor can a trust be the purchasing entity.  But it is perfect for high net worth individual looking for a guaranteed income stream lasting 33 years, and we’re investigating the use of a simple LLC holding company to accommodate a couple of members to purchase the case.  Call for details

The case starts paying $4880 per month in January of next year, and that payment stream increases by 3% per year for five years.  Then in the middle of 2018, the income jumps from $5657 per month to $9478 per month.  That income stream also increases 3% per year, and lasts 27 years.  The final 12 months of payments are at $21,054 per month.

This is a substantial income from one of the top carriers in the business.  With uniform A to A+ ratings and a Comdex score of 93, John Hancock is simply at the top of the game.

As if the John Hancock case wasn’t enough, we also have a Genworth case nearly the same size that pays out over a shorter period of time. The Genworth case starts in just a few months with its income at $10,350 per month.  The income stream increases each year for 18 years, with a final 12 months at $17,620 per month.

Whereas the John Hancock case cannot be split, this Genworth case can be split among several investors, so if you are interested in a portion of this case, please let me know.

These two large immediate income cases show just some of the power of the secondary market for annuities.  If either one suits your fancy please don’t hesitate to call to learn more.

Is Your Home Equity Optimized?


Home equity has been unreliable  recent years.  Too many used home equity as an ATM, and the real estate downturn has left many realizing the folly of their ways with homes worth less than their mortgage.

However while  most of the visitors to this site have significant equity or paid off homes, most are only considering their homes as an asset to be utilized far in the future when they downsize.

I’d like to propose another way of using your home today, and capitalizing on the unbelievably low interest rates in the home mortgage market.

For many people with good credit, home loans can be obtained in the 3% to 4.5% range.  It doesn’t really take a rocket scientist to realize that investing money borrowed at 3.5% into a new investment yielding 5 to 6% is a good deal.

Consider these four current offers (as of 8/2/12): each one offers a solid cash flow, as well as lump sums.  Depending on how much money you borrow from your home, the income stream can be used to pay your mortgage, even pay it off.  This leaves you a lump sum that matures in the future as essentially free money.

Home Equity Secondary Market Annuities

The Genworth case is a perfect example.  It pays $4800/ month for 306 months, then pays $550,000 lump sum.  At 4% interest, you could borrow $1,005,413 on a 30 year home mortgage with payments of $4800/ month.   Theoretically, you could borrow the entire purchase price of $922,969, pay the mortgage off with the income stream, and be left with $550,000 at the end of the term.

Now, jumbo mortgage rates, your risk tolerance, and other factors may make this specific amount of borrowing not advisable.  But let’s say you have $550,000 to invest, and a paid off home worth $1M.  You could easily borrow $400,000, and rates on 15 year mortgages are as low as 3.5%.  The payment on this is 15 year mortgage is just $2860 per month.

Then, combine your mortgage proceeds and your available cash to purchase the $922,969 Genworth case yielding 5.5% over 28 years.  Utilize $2800 of the monthly income from Genworth for your mortgage payment, you are still left with $2000 month of income for the first 15 years.  Your house is paid off after 15 years, and your income from Genworth jumps to $4800 a month for another 10.5 years.  As a super bonus, you also have a $550,000 lump sum windfall- your entire invested principal is returned in full, and meanwhile your enjoyed 15 years of $2000/ mo and 10.5 years of $4800/mo.  That is a superb investment.

Utilizing home-equity in this way is very safe, as your mortgage payment is directly offset by your new income source, and the investment that you make yields a higher rate of return than your debt costs you.  There are home mortgage interest tax deductions to take into consideration as well that may make this even better.  For retirement investors looking to safely utilize home-equity, a strategy like the one described above is hard to beat.

It just so happens that we currently have four similar cases to the Genworth case that all would suit this strategy.  Each includes significant income streams and a lump sums.  For investors with home-equity, you owe it to yourself to make lemonade out of this lemon of a low rate environment.

Don’t let these low rates go to waste.  Grab some cheap mortgage money, and give us a call to secure one of these fantastic income with lump sum Secondary Market Annuities. In most cases, we can make arrangements to hold cases while your refinance is processing.

Excellent Deferred SMA’s


Summer  is heating up, and the deferred Secondary Market Annuities we have available this week are hot too.  For so many, just a few short years of SAFE, deferred growth can make a huge difference in planning stable income streams.  Locking in a future income stream now with a strong carrier can be a great move.

Below are selected deferred income contracts we have available.  Click the image to  see the whole list.

As you may  know, these move quickly so if there’s a deal you like, don’t hesitate to give us a call to reserve it.  They might not be available for long

Deferred Secondary Market Annuities

Also, these income + Lump Sum contracts have some attractive features.  The Prudential case #06460 is a solid long term income stream, with a decent lump sum not far out.

Deferred Income Secondary Market Annuities

If you have any questions about our Secondary Market Annuities do not hesitate to call or email.

Most of the questions we receive regularly are also addressed here: SMA FAQ

How Life Contingent Secondary Market Annuities Work


After several conversations this week with prospective buyers about life contingent secondary market annuities, I felt it was important to broadcast some information about these exciting high-yield opportunities to everyone.  The two deals that I am highlighting today are new on our list.   They might be gone soon, so if they look good, let’s chat soon! I will  quickly highlight a life contingent deal, and then explain how life contingent deals work.

The first deal is a large Prudential deal.  This deal will absolutely drench you in income for 30 years.  The final years worth of monthly payments is an astounding $17,875.56 per month- this contract pays out a total over $4 million over 30 years, on an investment of just $1.4 million today.  This astounding 6% yield simply cannot be matched anywhere.  The seller in this case is younger- in his 20s- and life insurance is already approved. 

Life Contingent Secondary Market Annuities

Life Contingent Secondary Market Annuities as of 6/27/12

The full payment stream is as follows:

4 life contingent monthly payments of $1,860.25 beginning on 09-01-2012 through and including 12-01-2012; 360 life contingent monthly payments of $1,916.06 beginning on 01-01-2013 with a 3% annual increase through and including 12-01-2042;

264 life contingent monthly payments of $7,181.79 beginning on 01-01-2021 with a 3% annual increase through and including 12-01-2042;

Plus Lump Sums:

01/01/26 = $100,000

01/01/31 = $200,000

 This is just an incredible, long-term, increasing income stream.

So how does a life contingent payment stream work?

 I am going to start out by saying that life contingent deals are not for everyone. If you don’t understand the Secondary Market for annuities, or feel unsure about handling investments, they might not be for you. They add a little bit more complexity to the secondary market annuity transaction, and honestly sometimes they do not close.  Where about one in 10 SMA transactions fail to get approved in court, we have an even lower success rate with life contingent deals.

 So with that disclaimer out of the way why am I telling you about these deals?  Because they come with a higher yield. 

 A life contingent secondary market annuity simply means that the payments due to the seller – and thereby due to you as a new buyer – depend on the seller’s life.  If the seller dies after you buy the payments, the payments will cease to be made by the insurance company. 

 Therefore, in order to make this an attractive and safe investment for you, life insurance is purchased on the life of the seller that will pay you any amount due to you under the remaining terms of your contract.

 Let’s use an example of a current deal on our list that is new today.

Life Contingent Secondary Market Annuities

Life Contingent Secondary Market Annuities

Looking at the CIGNA deal, the payments start in December of 2019.  On this deal, the first 36 payments are guaranteed.  The remaining 126 payments are contingent on the seller’s life.  In this case, the seller is a 40-year-old male. 

 The benefits statement is:

36 guaranteed monthly payments of $1,590 beginning on 12-11-2019 through and including 11-11-2022;

116 life contingent monthly payments of $1,590 beginning on 12-11-2022 through and including 07-11-2032.

 On 12-11-2022, the date of the 37th payment, your accrued principal and interest balance is $140,674.  Life insurance in excess of this amount has already been purchased by the seller, with you as the buyer of these payments to be named as a beneficiary under a collateral assignment. 

 If the seller is to pass away at any time during the life of this 14 year contract, the amount due to you under the amortization schedule of this deal will be paid to you.  If there are more life insurance proceeds than what remains owed to you, the remainder amount pays to the heirs of the seller.

Pros and cons of Life Contingent Secondary Market Annuities

Because life contingent deals are not absolute payment streams, they’re not for everyone.  Some investors do not want the uncertainty of receiving a lump sum in the future. 

However the flipside is also a possibility – receiving a lump sum might be an unexpected windfall.  It might allow you to reinvest in a different rate environment, or it may be flexibility that is a pleasant surprise.  There can be some complications purchasing life contingent deals with IRA money, so be sure to give us a call.

The important thing to look at right now is that life contingent deals have a higher rate of interest.  This reflects the added complexity, and sellers are willing to accept a higher discount rate to sell life contingent payments.

If you are seeking a higher yield, then a life contingent deal might be for you.  We do not publish all the life contingent deals available to us, so be sure to give us a call.  We can discuss your needs, and find the right deal for you.

Buying Trouble With Secondary Pensions


Frequent readers of Annuity Straight Talk updates will know that we are big fans of the secondary market for annuities. Well there’s another secondary market with high yields and assumed levels of safety but things aren’t always as they appear. I’m talking about secondary pensions, which come with a whole different set of rules and guidelines. In fact, it seems as though by participating in this market you’ll be buying nothing but trouble. Forbes published an article recently with a few horror stories. Read the article here.

Since we promote secondary annuities, it’s our duty to clarify things when something similar is peddled to unsuspecting investors. The transfer of structured settlements, or secondary annuities, is governed by federal statute, USC 5891. Court assignments are irrevocable and the transfer process has been refined to the point that it represents extreme levels of safety for consumers.

Secondary pensions, on the other hand, have laws that explicitly restrict and prohibit transfer. So when you purchase one of these, not only is there no court order, but it’s very hard to make the private-party contracts stick as well.  The original seller can simply decide to stop sending payments. The article does a good job of outlining the imminent legal issues and points to certain advisors who are misleading clients into thinking these contracts are legally binding. They are not and should be avoided at all costs.

If you’ve considered participating in the secondary market for annuities, knowledge of similar options is of paramount importance. Don’t believe anyone who tries to steer you toward a secondary pension. Let me be clear: the sale of pensions in a secondary market is strictly forbidden by law and I’d like to ensure that none of our readers makes a mistake with precious retirement assets.

Please contact us with any questions or comments. For more detailed assistance we are available by phone or email.

Thanks for your continued loyalty!

Bryan J. Anderson
Contact Us

Massive New SMA Inventory


Annuity Straight Talk is pleased to present a significant uptick in available inventory today.  We have a wide range of immediate income, lump sum, cost of living adjusted, and high quality credit deals.  These deals move fast so be sure to check the list. 

Of special note is a large New York Life contract- this is the top of the heap for credit quality, with a COMDEX score of 100 and an A++ AM Best rating.  This 15 year, increasing income stream can fund a great retirement.  Top it off with longevity insurance protection or a deferred lump sum annuity, and you have retirement income all sewn up.

 Give us a call for ideas on how you can secure your own high yield safe investment today, and see some samples below.  Get them while they last!

Secondary Market Annuities Inventory

Are Pension Forecasts Too Optimistic?


Pensions- in generations gone by- were a staple of the workplace.  Work for the company for your careeer, and get rewarded with a retirement pension.

As you paid in with time and money, the company matched and paid in with money and hired people to manage those funds and dole it out.  We know the theory… but what about the people behind the scenes running the money?

This distressing WS Journal article indicates some overly optimistic managers at the helm.

If you were a better stock picker than Warren Buffett, would you be punching the clock every day as the faceless manager of a corporate pension plan?

Judging by many companies’ recent financial statements, they must believe their pension plans are run by such unheralded baby Buffetts.

These expectations for future stock returns at major companies remain stubbornly high—often between 12% and 16%, or nearly twice what Mr. Buffett himself seems to believe the pension plan he oversees can earn on stocks. Such rosy hopes may not survive the collision with reality.

While the article concerns itself with future profits, if I  was a retiree depending on a pension, I’d be more concerned with liquidity and solvency than profits.  Making up for decades of over optimistic assumptions, compounded, can be impossible.

Of course, it’s just another good reason to put your own private pension in place to safeguard.

The article concludes:

With the S&P 500’s dividend yield at 2% and the long-term growth rate of dividends and earnings at 4.5% (including inflation), a sensible expectation for long-term annual stock returns is roughly 6.5%, says William Bernstein, an investment manager at Efficient Frontier Advisors in Eastford, Conn.

You should leave the fantasies of higher returns to the professionals—who probably won’t achieve them anyway.

Now with professionals, and Warren Buffet himself, braced for a long term yield from equities in the 6.5% range, and with all the volatility and risk that brings, why wouldn’t you seriously consider a stable annuity paying a similar yield?  Of course I’m referring to Secondary Market Annuities in this case, which routinely have yields in the 6.5% range, but the same logic can also apply to Index Annuities as well, with attractive yet no risk market participation.  

Give up a lot of volatility for a little yield, and gain a lot of safety and peace of mind…  That’s the premise of an annuity driven retirement.  Contact Us to get stated building your guaranteed income stream.


How Safe is the Secondary Market for Annuities?


The question of safety of the Secondary Market is one  we receive frequently, especially after sending out a list of currently available offers that pique reader interest.

Quite simply, we like  structured settlement secondary annuities  because  they offer the highest yield and highest level of safety available to consumers for retirement income purposes.  They are not the simplest  transactions for buyer or agents to complete, and they are not appropriate for all situations.  For example, for older investors,  other types of annuities may have more benefits in flexibility or longevity protection.  However as planning tools with excellent  yield and safety, they simply can’t be beat.

Be sure to reference our post on the difference between Structured Settlement Annuities  and viatical (life insurance) transactions

 So now that you know why we like them in general, the question remains, is this market for real and how safe is it?

Secondary market annuities can more specifically be called structured settlements in technical terms. A structured settlement originates when an individual wins a settlement- this can be a car accident, medical malpractice, or any other sort of award.

The settlement essentially takes the same form as an annuity contract that is available to anyone who invests retirement assets with an insurance company- it’s a promise by a highly rated carrier to make a series of future payments to the individual.

In this case, rather than an individual buying those future promised with a premium (AKA an annuity), in a settlement, the losing party in the case settles their obligation by transferring a sum of money to satisfy those future payments. The sum is transferred to an insurance company who then shoulders the future market risk and court-ordered obligation to make specific payments. The winning party- usually an individual- enjoys this income stream tax-free per IRS regulations.

However, circumstances change for people, and sometimes they wish to sell their future payments for a lump sum. This is where our ”Secondary Market Annuities” originate.

Because of this slight difference in origination of funds in the settlement, there is one critical difference that separates primary market from secondary market annuities. In addition I’ll add two other reasons that will show clearly why the secondary market is a much SAFER investment.

Safety Factor #1

An insurance company becomes party to a structured settlement as part of a final court order in a lawsuit. In the unlikely event that this specific insurance company fails in the future, an existing court order compelling the company to make payments would place that liability among the company’s most senior debt obligations. And that means it gets paid out ahead of all other company liabilities. The insolvent insurance company would be held in contempt of court for failing to make payments according to the terms of a structure settlement. The stream of income provided to you via the secondary market annuity would not be affected nor have to wait for further bankruptcy or liquidation proceedings.

Safety Factor #2

And now for the somewhat less critical but also quite relevant…

Each state has an insurance guaranty fund that covers the guarantees of insurance policies and annuities for insolvent insurance companies who can’t make payments. Let’s assume your state guaranty fund covers $100,000 for annuities but you need to invest quite a bit more money to cover your retirement income needs. Within the primary market, no matter what you decide to invest, you may only be covered to the maximum limit of $100,000.

By using the secondary market, you are subject to the guaranty limits of the state where the contract was initially issued, not necessarily your state of residence. Structuring an income portfolio in the secondary market typically requires multiple deals to complete. It is quite probable that each contract will have originated in a different state, which affords you the total protection of all states involved rather than simply the limits offered in your current state of residency.

Safety Factor #3:

The risks in an SMA are generally transactional in nature- meaning, it has a risk of not closing due to the seller changing their mind or the court not approving the transfer. In both of these cases, there is no financial consequence to you if the case fails, and your deposit is fully refunded.  This happens in about 1 in 10 cases where generally a court disallows the seller from selling due to the seller’s personal situation.

Other risks in an improperly handled SMA transaction are that a payment stream could be already committed or not transferable. Our process eliminates that risk as our outside counsel reviews and will not release purchase funds until a thorough checklist is complete.

Thus the three key items that ensure legal safety are:

  1. Benefits letter from the issuer to the payee, which establishes that the Payee has the payments to sell,
  2. Court order changing the payee to you,
  3. Acknowledgement letter or stipulation agreement after the court hearing from the Issuer naming you as the new payee of the specific payment stream you purchased.

Not surprisingly, these three key pieces are what must be in place before your funds are released to a factoring company and seller, and are what constitute our closing book after a transaction is complete.

Safety Factor #4:

And finally we’re going to talk about a safeguard that is inherent to any sound retirement income plan. Any advisor worth their salt will advise you to spread your assets between several different insurance companies. While this is a great recommendation, it rarely happens because most salesmen are lazy and benefits can vary greatly between carriers to the point where it puts you at a financial disadvantage.

Because a typical case involves multiple Secondary Market Annuities, purchasing contracts in the secondary market virtually assures that you will place assets in several companies with no sacrifice to average yield or overall performance.


A retirement income portfolio based on secondary market annuities thus offers unparalleled safety of 1) credit quality, 2) seniority status among the issuing company obligations, 3) rock solid legal review, and 4) diversity of carriers.

If you’d like to explore this profitable yet extremely safe opportunity for your retirement income plans, we’re ready for your call.

Annuity Straight Talk


Low Rates Expected Until 2014


Arguably the most damaging effect of low interest rates is the impact it has on people approaching retirement and looking for more safety. Traditional safe havens such as CDs pay very little interest in relation to the time commitment required. And I’ll admit that selling annuities in this climate is challenging to say the least.

Several articles available have pointed to recent Federal Reserve meetings that indicate plans to keep interest rates near zero through 2014. That means we likely have nearly three years of the same issues to deal with.

The article linked here mentions all objectives behind keeping rates low for the foreseeable future, most notably an attempt to keep long-term rates low in order to spur economic investment and growth. While this may be a useful step toward reversing the economic lull of the past few years it sure doesn’t give the retirement investor a lot of options.

So, how does a person develop a reasonable game plan in this environment? For every individual there is a balance between different strategies and products available to accomplish each goal. Here are a couple of options:

Guaranteed Lifetime Income Products allow you to achieve a base level of guaranteed income in the future. By doing this with a portion of your assets your future income needs are met and additional assets can be used to pursue greater returns with less risk to your overall portfolio.

Short-Term Index Annuities allow you to keep assets safe for the time being with greater potential to outpace currently low interest rates. Short time periods are key so that you are able to reposition assets when the economic climate changes.

Secondary Market Annuities offer safe money yields that stand above historical average interest rate levels. This presents a unique opportunity to achieve substantial growth while maintaining high levels of safety.

These three options show just a few of the ways you can take positive action against the dismal conditions that exist. Just remember the idea is safety in combination with growth. The last thing you want to do is go backwards.

Feel free to call us for a straightforward talk about how you can improve the outlook for your retirement income plan.

Have a great week!

Bryan J. Anderson
[email protected]

Calculating Yields in the Secondary Market


Nearly every time we send out an email with new secondary market annuity offers, several inquiries come back with people asking how the return is calculated.

The first resource is one from the vault- a piece we wrote several years ago that is just as accurate today- Which 10% Do you Want?

For more, let’s see an example that everyone can relate to…

Assume a purchase price of $282,951 where monthly income payments of $1500 begin one month from today and continue for 360 months. The effective annual yield is 5% and aggregate cash flow comes to $540,000.

Everyone has seen this similar loan and repayment amortization schedule with a conventional mortgage. With a mortgage you would be the borrower but with a Secondary Market Annuity you are essentially the lender.

The payments outlined above can be a good example of a 30 year mortgage or it could be an excellent income stream from the secondary market. Either would be calculated exactly the same way.

With Secondary Market Annuities many people want to assume that the $282,951 is simply growing at 5% for 30 years, but this is not the case, just as it is not the case with the amortizing mortgage either. Why is this? When money is paid out, the compounding asset balance shrinks.

Every payment on an amortizing mortgage is part interest and part principal, and Secondary Market Annuities are no different- each payment includes an interest earned component, plus a return of principal component.  We won’t bore you with an extensive amortization table here outlining 360 payments- if you really want it, just ask and we’ll send it over!

Alternative  Way of Looking at Secondary Market Annuities Yields:

There is another simple way to look at it so let’s have another example. Assume you placed $282,951 in a savings account earning 5% effective annual interest (unlikely, I know). If you were to withdraw $1500 per month, after 360 months you would have collected $540,000 and the account would be empty. While you are in fact earning 5% interest, you are not earning interest once the money comes out of the account.

The calculations for these returns are slightly more complicated than a simple (money ‘times’ interest rate ‘times’ time) formula. If that were the case, $282,951 growing at 5% for 30 years would compound to $1,222,886 which isn’t the case here. Money at work in the account earns interest while money in your pocket does not.

Secondary Market Annuities Yield Summary

These examples indicate that not all income deals in the secondary market are appropriate unless the structure meets specific objectives for your retirement plan. Immediate income works for some people and deferred income or future lump sum payments work for others. Which one is best for you? You must answer that question.

There are several ways to capitalize on the secondary market. What we have are above average interest rates and extremely high levels of safety, and a variety of available cash flows. The rate and safety are a compelling proposition in any economy and especially true now. The only thing to determine is what you are seeking, and then match your goal with an available offer.

To maximize the strength of this market, use the right tool for the job- don’t buy an income stream if you have no need for the payments. Instead, let it defer and accrue a few years! Likewise, don’t buy a 10 year deferral annuity if you need money every month.

Please don’t hesitate to call us if there are any specific questions you have about how the secondary market for annuities works, and for assistance selecting the right offers for your specific situation.

You can always view our available Secondary Market Annuities here, or give us a call or make an appointment to help setting your goals and matching appropriate tools for the job-

Have a great week!

Bryan J. Anderson
[email protected]

On Cashing Out In Retirement

Retirement Annuities

Retirement Annuities

The tools used to maximize pre-retirement asset accumulation are not the tools of retirement  income generation.  Maximizing retirement income is just outside the scope of expertise  for most traditional advisors and individuals because  of the biggest unknown: life expectancy.

An  individual seeking to maintain full control over their money, and setting their own withdrawal rate,  is carrying their entire longevity risk on their shoulders.  And an advisor that recommends a withdrawal rate or a stock / bond allocation to a client is making that client shoulder their entire longevity risk perhaps unknowingly.

This excellent article looks at various ways people consider using their assets in retirement.  It’s worth reading in its entirety, but what is fascinating is that annuities rightfully get their mention at the top of the list as a smart allocation for a portion of your assets.  This is uncharacteristic for main stream media, which  usually scoffs at annuities.

How to Cash Out in Retirement

A look at four strategies that could help make a retiree’s savings last a lifetime


There’s no rest for retirement investors. They spend decades worrying about the best way to put money into their accounts—and then they have to find the best way to take it out.
While saving for retirement can be tough, finding the right way to spend down your nest egg may be an even bigger challenge. Francis Kinniry, a principal at Vanguard Group, discusses some spending strategies with WSJ’s Eleanor Laise.

It’s a problem that’s starting to hit home for the oldest baby boomers, who turn 65 this year. Many don’t have traditional pension plans to dole out steady paychecks for the rest of their lives. They have to figure out the best way to pull money from retirement accounts so that they get a livable income each year—and the money doesn’t run out too soon.

And that means they have to account for a host of factors that are impossible to predict. “You can’t control how long you’ll live, which is a huge determinant of retirement income,” says Francis Kinniry, a principal at Vanguard Group. “And you can’t control the markets.”

Many people are dealing with the uncertainty by simply working longer. But for those who were looking forward to a more retiring retirement, there’s fresh hope.

Financial advisers are rethinking retirement-spending rules of thumb and coming up with new withdrawal strategies that help clients maintain their standard of living regardless of the stock market’s ups and downs. And financial-services firms are introducing new products to turn lumps of retirement savings into steady income without requiring people to lock up their money in an annuity. (Annuities, of course, may still be a good retirement-income solution for some people.)

Making the Case to Buy an Annuity

Below, we explain various strategies for spending down retirement savings. But don’t feel compelled to choose one and follow it for a lifetime. The key to developing a successful strategy is flexibility, retirement experts say. Given all the variables in retirement spending, advisers suggest that investors regularly revisit their approach rather than religiously following a preset path. Those who are willing to make small adjustments along the way will run the smoothest course through retirement.

Regular readers of Annuity Straight Talk should smile at this line, above. Flexibility has always been one of our guiding principles, together with Profitability and Safety.

Reviewing the 4% Rule

Faced with the question of spending in retirement, many financial advisers fall back on “the 4% rule.” With this approach, investors withdraw 4% of their retirement balance in the first year of retirement, or $40,000 from a $1 million portfolio. The dollar amount of the withdrawal is adjusted each year to keep up with inflation, and the remaining portfolio is rebalanced to the desired mix of stocks and bonds.

See how long a $2 million portfolio might last.

Different investors may follow different versions of the rule, such as initially withdrawing 5% or 6%. That initial withdrawal amount can have a major impact on the strategy’s success. Assuming a mix of 60% stocks and 40% bonds, an investor initially withdrawing 4% has a 10% chance of running out of money at age 97, according to T. Rowe Price Group Inc. With a 6% initial withdrawal, he has a 10% chance of running out of money at age 82. Many advisers have settled on 4% as the “safe” initial withdrawal rate.

The 4% rule helps manage two big risks in retirement: longevity and inflation’s tendency to gnaw away at your purchasing power, says Stuart Ritter, a financial planner at T. Rowe Price.

The rule also has the allure of simplicity, and at least in the short term, it gives investors steady amounts of spending money each year. The problem, critics say, is that this approach matches a rigid spending rule with an investment portfolio that can bounce all over the place. Given strong markets, investors may wind up with lots of money to leave their heirs. Given weak markets, they could run out of money halfway through their retirement.

“This is a prescription for getting people into serious trouble,” says Laurence Kotlikoff, economics professor at Boston University.

The 4% rule should be viewed as “a starting point,” Mr. Ritter says, adding that it “gives people the ability to adjust along the way.”

Getting Flexible
Another simple approach to retirement spending is to withdraw a set percentage of the portfolio each year.

Unlike the 4%-plus-inflation rule, this approach automatically adjusts an investor’s spending in response to market performance: If the portfolio grows, the withdrawal is larger; if the portfolio shrinks, the withdrawal is smaller. And investors will never completely run out of money.

Of course, that means there can be major fluctuations in the amount of spending money from one year to the next. Given that many people want to maintain a steady standard of living in retirement, those ups and downs can be stomach-churning.

Vanguard suggests a more flexible version of this strategy. Aim to withdraw a set percentage of the portfolio each year, but place upper and lower limits on the dollar amount, based on the prior year’s spending.

For example, an investor may decide that he’ll withdraw 4% of his portfolio each year, but he doesn’t want his spending amount to change more than 5% from one year to the next. Let’s say he took out $40,000 from his $1 million balance last year, and this year strong markets have boosted his portfolio to $1.1 million. A strict 4% withdrawal would give him $44,000 in spending money this year, but given his 5% spending band he’ll limit his withdrawal to $42,000.

This is “a middle-of-the-road approach,” says Vanguard’s Mr. Kinniry. Spending levels remain relatively steady year to year, but the strategy also responds to changes in investment performance, helping the portfolio last through retirement.

The bands around the dollar amount of spending don’t have to be symmetrical, of course. Mr. Kinniry suggests allowing for more flexibility on the downside than on the upside. For example, you might cap the year-over-year increase in the withdrawal amount at 3%, so that in a good year you keep more of your profits in your portfolio—but if your investments take a beating allow withdrawals to fall as much as 5% or 10%. If markets perform poorly, “you don’t want to compound” the effect on your portfolio by taking a large withdrawal, he says.

Let’s again assume that the investor took $40,000 last year from his $1 million portfolio. But this year his investments fell in value to $850,000. A strict 4% withdrawal would be $34,000. With a maximum 5% drop in the dollars he withdraws compared with last year’s $40,000, he would take out $38,000. With a 10% maximum drop, he would take out $36,000.

Build a Solid Foundation

To build confidence that a portfolio will sustain a lifetime of spending, it helps to take a page from the playbook of defined-benefit pension plans, advisers say. With this approach, investors should think of each year’s spending as a liability that must be matched with a chunk of your portfolio.
The best match for those liabilities is a bond ladder, advisers say. With high-quality bonds such as Treasurys maturing in each year of retirement, creating a “spending floor,” investors can feel confident their future spending needs will be met.

Umm…. Might I introduce Secondary Market Annuities??? These fantastic fixed income investments are of comparable credit quality as the best bonds, yet with yields in the 5-6 and even 7% range….  Hello!! Opportunity is Knocking!

Pouring all your money into bonds, of course, can reduce your portfolio’s growth potential. But it’s possible to create a mix of steady income, upside potential and some longevity protection by starting retirement with a blend of 80% bonds and 20% stocks, says Jason Scott, managing director of the retiree research center at investment advisers Financial Engines Inc.

With bonds to meet your basic spending needs, “you’re not subject to the vagaries of the [stock] market for that spending,” Mr. Scott says. And if the equity allocation does well, investors can use the stock-market proceeds to extend their bond ladder further into retirement or raise their spending floor. So payouts won’t drop when the stock market falls, but they can rise when stocks are rallying.

You can read the rest of the article here.  Annuity Straight Talk focuses on the maximum profitability portion of your Safe Money allocation- get the most income with the least risk.  Come talk to us and see what we can do for you.

Secondary Market Annuities Are Not Viaticals


At Annuity Straight Talk we encourage you to learn all you can about annuities so you can independently verify what we recommend, or what any advisor you chose to work with presents you for consideration. As many know, we often recommend Secondary Market Annuities as a very high credit quality alternative for investors seeking a yield above market for comparable safety.

Recently, a reader who inquired about Secondary Market Annuities did some research and wrote back,


We just wanted to let you know that we are not interested at this time to purchase any SMA’s, after reading several articles about insurance company’s being able to opt out of these contracts in app. 35 states.

Thank you so much for your time.

As it’s easy to get turned around in the World Wide Web, we thought it would be beneficial for all to read our response:

The article referenced is here. It may require a registration to that site, but the registration is free.  If you don’t wish to register and want the article, Contact us and we’ll email you a copy.

Our response to the reader is as follows:

The article you referenced points to the proliferation of a ‘secondary market for annuities’ which is actually unrelated to the contracts I promote on my website. It is confusing, however, due to the similar name both transactions share.

In fact, the contracts I promote are more properly labeled ‘resale of structured settlements’ and come in the form of a payment stream (an annuity) from an insurance company.

We call them “Secondary Market Annuities” because they are annuity payment streams being bought on the secondary market. Unfortunately, regular annuities being re-sold would share the same title, and therein lies the confusion.

Secondary market annuities as mentioned in the article have to do with investors buying an annuity in the name of someone else. Why would someone do this? Because certain annuity contracts have death benefits attached to them.

Take for instance a variable annuity with a death benefit. If the owner dies when the market is depressed, a death benefit of the original investment amount plus interest will be paid to the beneficiaries.

Now, the problem with this sort of transaction is that groups of wealthy investors and attorneys got together and solicited terminally ill people. The investors purchased annuities with a death benefit while naming themselves beneficiary and a terminally ill individual the owner. It offered a risk-free way to invest in the market by leaving the insurance company on the hook for a death benefit.

The problem is that it went contrary to the spirit of offering protection for people saving for retirement while trying to protect family members. It falls in the same category of transaction as ‘stranger oriented life insurance’ and other viatical transactions.

Many regulators felt that investors were taking advantage of terminally ill people and the result was a series of laws that allowed insurance companies to cancel certain benefits if contracts were transferred. I personally believe that was the right thing to do. Contractual guarantees are put in place for very good reason and I feel any effort to exploit that should be stopped.

But comparing those “stranger originated transactions” to the structured settlements we promote at Annuity Straight Talk is like comparing apples to oranges, as they say.

The transfer of the Secondary Market Annuities we sell- more properly labeled ‘resale of structured settlements’- is regulated by an act of Congress in 2001 that produced HR 2884 and is found in Internal Revenue Code 5891. As of 2008, all but a small handful of states enacted laws governing transfers to mirror the federal statute.

In summary, the legislation and tax guidance cited states that a structured settlement may be resold and that if it follows a proscribed process involving the Court in the state where the original settlement originated, that the transfer of payments would retain its tax treatment and not be subject to a penalty taxation.

As a result, each of the transactions we promote has a Court date wherein the transaction needs to be reviewed and approved. Court orders must be in place and all documents reviewed and approved prior to funding.

The transfers we promote receive a substantial amount of due diligence from our legal counsel for your benefit and ours. As such they offer the highest levels of safety and retirement income efficiency. Each case is treated with exhaustive care and the result is the greatest amount of benefit for our clients, all firmly within the confines of state and federal laws.

It’s critical to perform due diligence and this article (cited above) is important if you are considering the purchase of a stranger-oriented life insurance policy or an annuity contract on the secondary market with a death benefit attached to another party’s life. But it’s equally important to understand the differences between that marketplace and the structured settlement market.

We hope this discussion and links are useful to our readers. We welcome any additional thoughts or questions- simply email us or leave a comment below.

** You may also wish to reference this post with more detailed information on the safety of Secondary Market Annuities.

Great Short-Term SMAs Available Now!

From what I’ve heard, the information shared over the last few weeks regarding the secondary annuity market has helped several people gain a greater understanding of this product class. Stepping into a little-known niche of the financial markets is a major transition for anyone. Understanding all that goes into a serious financial commitment is essential to making a calculated decision.
Because the inventory changes so quickly at times it is my job to let you know where the value is with what is currently available. Most of you have unique objectives so I’d like to highlight one specific area where this market offers fantastic opportunity.
Right now, the short-term deals are hot! Without the commitment of long-term deferred income or lump sum payments, you can secure exceptional rates on three to nine year contracts. Today, those contracts are yielding 4.75%-5.75% in comparison to the rates on CDs and Money Market funds that run between 1% and 3%.
For instance, here are a few quality short-term deals…
·         $66,906 will grow to $75,000 in three years for an effective yield of 4.75%
·         $194,842 will grow to $240,000 in four years for an effective yield of 5%
·         $57,733 will grow to $83,000 in seven years for an effective yield of 5.5%
And that’s just a small sample of the available contracts…
This is an easy decision to make. With so many people unsure of how to allocate capital in a volatile market, many have decided to play it safe. Well, here’s your safety with a little yield to go with it. All of this in a shorter time frame that will give you plenty of flexibility for any changes that may come in the stock market or economy.
Check out the current inventory now and see for yourself. Call or email immediately to reserve a deal that suits your situation.
If this is the type of investment that works for you but you don’t see anything that fits just right, please let me know to keep an eye out for the perfect deal so it doesn't slip away.
Have a great week!
Bryan J. Anderson

[email protected]

Secondary Market Annuities In Corporate Finance

The secondary market for annuities is traditionally the secret domain of large corporations. With annual distribution of around $700 million it is one of the smaller financial offerings available. A recent press release offers a glimpse of how financial institutions use these secondary deals to profit using companies like for support. The other major benefit of a very bad loans with loans4u, is that the lender may report the borrower’s payment history to credit reporting agencies. This may help the borrower build a better credit rating when payments are made on time. Loan shoppers should confirm a lender reports to credit bureaus in order to ensure they enjoy this benefit.

If you have very bad credit loan, then the bank can run after the guarantor. Of course, you can’t find someone to do this unless you are very close with that person. It can also wreck your relationship if you are unable to fulfill your obligations.

This press release talks about how J.G. Wentworth, one of the biggest players in the industry, just completed a securitization of $265 Million of structured settlements. Wentworth buys various financial instruments like settlements, annuities, and financial obligations through aggressive direct-to-consumer advertising, offering cash now for future payments. You may have heard their catchy radio and TV advertising. 
Secondary Market Annuity... Image Via Wikipedia
J.G. Wentworth buys these contracts, packages them into a fixed income portfolio, and resells them to institutional investors. Of course, they pocket the the spread and make a good business out of doing it. Read the release here.
The key to this is that factoring companies like J.G. Wentworth create high-quality fixed income portfolios that are in high demand from banks, corporations… and insurance companies. An insurance company can conceivably buy a securitized portfolio which may in part be comprised of its own obligations! 
In this we can see the essence of Share Prices – they are such ultra safe and secure financial instruments that they are in demand by the most stable and risk averse institutions. Secondary market annuities thus may indirectly contribute to the safety and yield of primary market annuities.

Ultra Safe, Guaranteed Cash Flows:

Wentworth does on an institutional scale exactly as we recommend to our clients: they assemble many Secondary Market Annuities to create a desired stream of cash flow, but one that is of higher yield than what is available on the open market. Bundled together, these financial instruments become smooth payment streams.   Wentworth’s buyers have the same goals as you: they want ultra-safe, guaranteed returns to add stability to their investment portfolio.

Stefano Sola, J.G. Wentworth Chief Investment Officer phrases it like this:

“The driver behind this decision was the underlying investor appetite and demand for long term access to strong, consistent and predictable cash flows”

Does this sound familiar? Frequent readers of this site will realize that’s exactly the benefit I’ve emphasized all along. A strong, consistent, and predictable cash flow is precisely what individual investors should seek for guaranteed retirement income. Do you believe me yet? 
Consider this: Would you like to get a 3.5% fixed annuity from a company like MetLife whose assets may include this securitized portfolio from J.G. Wentworth, or would you rather get the SAME QUALITY UNDERLYING ASSET yielding 6.5% from me? Seems like an easy decision.

This Market Is Open To You…For A Limited Time:

As you may be aware, I have access to excellent Secondary Market Annuities for individuals.  Though they are available to individual consumers currently, this has not traditionally been the case, nor may this market stay open to individuals for long. While this limited opportunity is available I suggest you take a closer look before the demand from banks comes back, and J.G. Wentworth and others absorb all available inventory and shut off the valve for good.
All the details of these transactions are available for your due diligence before entering the market. Once you reserve a specific contract you can investigate all the underlying facts and make your own independent verification. Take advantage of this excellent opportunity while you can.
This is an exceptional opportunity to increase the yield substantially on the safe portion of your portfolio. Take the opportunity now to get on the institutional side of a financial transaction for a change!
Have a great week!
Bryan J. Anderson

Is the Secondary Market Too Good To Be True?

A fair number of people who have requested more information about the secondary annuity market have cast it aside as ‘to good to be true.’ Many other advisors might mention they have never heard of this market. I was personally in the same place six months ago. In order for me to become comfortable enough to recommend these products I had to go through the same process of discovery that you’ll want to go through before buying.
Every objection can be explained so I’d like to share the answers to the two most common skeptical questions in order to clear the air.
Why hasn’t my advisor heard of SMAs?
Secondary market annuities are better known as ‘factored structured settlements’ within institutional circles. You see, prior to 2009 these contracts were absorbed entirely by major corporations. After the credit crisis in 2008, many banks stopped buying these so the companies who sell them started actively searching for additional funding sources. Several partnerships were started with brokers who could offer them to individual investors as the yields offered exceptional value.
When financial institutions purchase these contracts, in many case they will be securitized and offered as a part of a bond or mutual fund, with a watered down yield of course. It’s not all too far-fetched to assume you may actually hold ownership in these as part of some of your other investments.
It’s important to understand the overall market is very small in relation to other financial products. The average annual market for these contracts is less than $800 Million. Of that, less than 20% is available to consumers. That may sound like a lot but it pales in comparison to the $200 Billion annual market for primary market annuities, including all fixed, variable, index and immediate annuities. If banks begin actively buying these contracts again it will no longer be available to you.
How do I know the insurance company will actually pay me?
I consider this a very reasonable concern since you need ultimate assurance when you part ways with a major chunk of savings. There are three key factors that offer certainty as to the outcome. 
First, we have attorneys that review each deal to make sure all issues that prevent the sale are remedied. These attorneys specialize in this type of transaction whether an individual or bank is the buyer. Since they are working on for your benefit they are willing to take time on the phone to explain their experience with this process. By the way, this legal consulting comes at no additional cost to you.
Second, all transfers are court approved and the issuing company is given a court order to redirect the payments to you. It’s easy to verify this through court filings and you are given a copy of this court order at closing of the sale to you.
Third, each issuing company will issue a form acknowledging the court ordered transfer. This document is issued from the home office of each company from a specific division that deals with structured settlements. This document is also including in your closing book and a representative within the company will confirm that your name is now listed as the person who will receive payments.
As I mentioned before, this is all due diligence I performed when deciding whether to offer these deals to my clients. When it’s all said and done, you’ll receive as much or more confirmation of the transaction than you’d get with any primary market annuity.
Since this market is only accessible to a very small number of advisors nationwide, it’s no surprise that few people know about it. Don’t let that stop you. Do your research and find the value. This could be a very limited opportunity so you don’t want to miss it because you didn’t take the time to investigate.
Please let me know how I can help.  You can click here to start learning about Secondary Market Annuities.
Bryan J. Anderson

[email protected]

Secondary Market Annuity Brochure Available


Many of you are interested in the secondary market for annuity products but are taking the prudent approach by doing a little research first.  I think that’s a great idea!  And now I have a little more to offer with a shiny new brochure that does a great job explaining these contracts.  The information here is similar to what is available on this site but will go into a little more detail so please let me know if you are interested and I’ll email you right away.

Read the Secondary Market Annuity brochure in order to answer these questions…

  1. What is a secondary market annuity?
  2. What are the risks involved?
  3. How do I buy one?

The secondary market for annuity products presents the opportunity for exceptional fixed interest rates that are likely to enhance the profitability of most, if not all, retirement portfolios.  Is an SMA right for you?  Get the brochure and find out.  The easiest way to get it is to send me an email and I’ll attach and return promptly.  Follow the email link at the bottom to send me a message and put “SMA Brochure” in the subject line.

As for what’s currently available, check out the Secondary Market Annuity Availability list on this site to see if there’s anything that sparks your interest.  You are likely to find anything from short-term deals that handily beat current CD or fixed annuity rates to long-term income deals that offer extremely profitable cash flow over time.

Whether income starts immediately or at a later date, these offers yield far more than you’ll find in the current markets.  The best part is that it comes with the same safety and guarantees of any top rated annuity product.

Check it out the list now and call or email to reserve one of these exclusive annuities today!

Bryan J. Anderson
[email protected]

Secondary Market Annuity Deals of the Week

As I spend more time reviewing this market, my creative tendencies are coming up with very effective ways of utilizing these great offerings to do some incredible things for retirement plans. 
The initial response has been very positive and several members of the site have been able to secure deals that made retirement dreams even more stable. Be sure to call or email with your parameters if you’d like first shot at a deal that may be just too good to pass up. 
I’ll give you a contextual reason for using each product, although specific objectives will rely completely on your personal specifications.
Call now for more information on how to make this part of your portfolio or for a list of other available offers. We’ve added more information on the site that explains secondary market annuities as well as the process involved in acquiring a contract. It is highly recommended that you review those requirements ahead of time so you know exactly what’s expected when you decide to act.


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