Business Innovators Radio - Interview with Arthur Cohen Founder of Arthur Cohen Insurance Discussing Annuities

Episode Date: June 10, 2024

With Over 40 years in the life insurance business. Creative and strategic ways of using our expertise in life insurance as a valuable tool to protect families and businesses. Expertise in Long Term Care insurance, having brought it to the attention of the public almost since its inception. Annuity planning using the most appropriate products for “safe money”. Board member of a nationally recognized neurocognitive research and care facility. Great reputation among our clients and peers for our dedication and devotion to our clients. Old-school sensibility and service combined with up-to-date expertise.Learn More: https://arthurcoheninsurance.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-arthur-cohen-founder-of-arthur-cohen-insurance-discussing-annuities

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with this Arthur Cohen, who's the founder of Arthur Cohen Insurance and we'll be talking about annuities. Arthur, welcome back to the program. Thanks, Mike. It's a pleasure to be back with you. Yeah, you know, I've been enjoying our talks and really getting some great value from that.

And I know that if someone says the word annuities, you might get two or three different answers. And sometimes there's misconception. So let's start with defining what is an annuity. Well, thanks for asking me that because sometimes annuities have a negative connotation. I don't know what's happened, you know, over the years before. was in the business and I'm in the business for over 40 years. But in my mind and the way I do retirement planning, annuities are a really, really important and valuable piece of safe money, not stock market money, not money that you have exposed to risk. This is a way of making sure

that your future is taken care of. We take money off the table. We lock it into certain kinds of annuities, which I guess we'll talk about, and make sure that not only can you not outlive the benefit from the annuity, but it's a safe haven, a place to park your money to make sure that it's safe. You know, I always love simplicity, and I think when you confuse, you lose, and I like what you just said there, and we're going to dive into some different examples of annuities and things, but a couple of the things that jump out at me is, you know, safe and secure because so many times I feel like people are like, hey, I've been in the market, you know, the stock market for decades. And man, every time I open my email or my charts or my statements, my, I get feel like I get the wind knocked out of me because my portfolio is taking a hit, taking a hit. And when you are talking about safe, now we're talking. And I really feel like that right there is going to be such a huge win for people is to learn. Let's talk. about where I can put my money to have safety because they're so they're so not used to that,

you know, so we define what kind of what an annuity is. What are some different types of annuities that people should be aware of? Okay. Well, so, you know, just to take it one step further, annuities definitely need to be part of your strategy as you move into retirement, not for all of your money, but again, just the money that you want to be safe. So, Again, I've been in the business for quite a while, and I used to have my Series 7 license like maybe 40 years ago, and I decided that's not for me because it's too risky. And when people lose money, you know, I feel bad. You know, I don't want that to happen.

So that's why I only do fixed, guaranteed annuity. So there are three different types that I could talk about. There is a multi-year guarantee annuity that's like a CD from the bank. And the interest rates that we provide are commensurate with whatever banks are offering. The big difference is that because it's offered by an insurance company, the interest that you're earning is tax deferred. So some people refer to it as a triple play to use a baseball term. You're earning interest, again, usually commensurate to a c-day. It's compounding because you're earning interest on your interest.

And you're also earning interest on the amount of money you would have paid in taxes. So that's one way of looking at it. And you could be locked into a rate for two, three, four, five years or more. And the rates are guaranteed. So it's a great place to park safe money. Okay. Then I'm giving it to you in a nutshell. I mean, I could elaborate as much as you want. But then there's an index annuity. Here's how it works. How'd you like to participate in the gains of the stock market, but not participate in the losses? And by the way, we don't charge fees. Stockbrokers charge fees. We don't charge fees. I get paid by the insurance company. So if somebody reallocates or reprehs, we don't charge fees, we don't charge fees. I get paid by the insurance company. So if somebody reallocates or repositions $100,000, let's say, the full $100,000 goes to work for you. And if you participate in the gains of the market but not participating in the losses,

I know this sounds too good to be true, but what's the catch? Well, so, you know, there are participation rates and caps on how much you could earn, so you're not going to hit a grand slam and you won't have huge increases. but you're guaranteed not to have any losses. Again, it's about the safe money. So I like to say when the stock market does well, my clients like me. But when the market tanks, my clients love me. Love me, right.

It's paid in the losses, you know? Yeah. Okay. And then there are income annuities. Here's what an income annuity does. You know how Social Security or pensions, give you income for the rest of your life that you can't outlive. The only other way to add to that is with an income annuity from an insurance company.

We reposition a lump sum of your money and turn it into a guaranteed income stream that you could either turn on immediately. That's called a SPIA, single premium immediate annuity, or at some time in the future, that's called a deferred income annuity or a DIA or you know, there could be combinations of an index annuity with a deferred annuity that turns on an income. And the thing is, in a nutshell, we convert wealth into income. People who know that their bills are going to be paid every month for the rest of their life have less stress and a greater enjoyment of life. Yeah.

So, you know, with these products, we help plan for your future retirement, and we don't utilize all of your savings, just the amount that you want to be safe. You know, you mentioned about safe and guaranteed, and I'll bet you that there's some people that have gotten into an annuity and years go by and their friends are like, look at my returns, I got in the market, and it's huge returns, and they're looking at their annuity going, well, mine's not all that great. But then when the market takes a dump, then their friends go, uh-oh, you know, my portfolio is horrible. And then your clients are like, yep, but mine's great.

And I think that, you know, some people want that upside, that excitement. But you give me steady, Eddie and like the tortoise in the hair give me the tortoise. And I want safety and security. Well, so, and to take that one step further, you know, let's talk about baby boomers, for example. Over 11,000 people are turning 65 every day and two-thirds of them on. aren't set up for their retirement. And, you know, I feel like I'm on a mission to educate the public about safe and sensible retirement planning.

And what you mentioned, if somebody is in the stock market versus somebody who's not, and they want to start taking money out for their retirement, if you're taking your money out while the stock market is down, what that's referred to is a sequence of returns risk. sequence i'm using air quotes like you do sequence of returns risk so if the market is down and you're taking money out you're going to you know uh you you're you're going to run out of money because it can't last the rest of your life if you're if you have if you're if you're fortunate enough to live a long life um you know one of the things that i've heard is you know what's worse than dying too soon. It's living a long life and running out of money. So we want to take

that longevity risk off the table by using annuity planning. That's a huge, huge mindset shift, I think. And I also think this, and you've touched on it, but I'm going to ask this question. So all of this sounds great, Arthur. So I've got all of my money that I can put into a annuities, right? So I'm going to put 100% of my retirement. Of course not. But how much money? What percent should you allocate to annuities? I actually, I like that question because, you know, oftentimes I get to question, you know, what portion should I use of my money? So there's a very simple common sense. And, you know, what I like to talk about is common sense. A rule of investing. And it's called the rule of

100. You could Google it. The rule of 100 is a common sense retirement planning tool that helps you determine how much of your portfolio should be subject to risk and how much should be safe. And it's so easy. You take your age and you subtract it from 100. So if you're 60 years old, you take your age, you subtract it from 100. And in that case, only 40% of your savings. should be in the stock market, 60% should be in safe products like annuities. That's a really, I like, again, like I mentioned to you a while back, I like simplicity, and that sounds simple. You take your age minus 100.

That's the percent into the stock market, and then the rest can be put into a safe, safe vehicle. So I'm hearing you say things, and I'm thinking as a consumer, I'm thinking questions. And so here's one that's probably like a strategy question, but are there types of annuities that you can set up with after tax money? So I know that sometimes you would say, oh, look, let's roll your old 401k into an annuity. But can you set up an annuity with after tax money where, you know, you've got it sitting in a savings account. And I just want to start an annuity with that. Yeah, not only that, we could do it with after tax money or before tax money.

So if somebody has a 401K, for example, that's what we, you know, called qualified money or an IRA, we could roll that without any tax consequences. We just do a transfer into an annuity. And that way, you're not subject to risk anymore. We make sure you're locked in, and the money is going to last the rest of your life. So that's a great question. You could do it with before tax money or after tax money. And, you know, the reason the rule of 100 makes so much sense is, you know, if you're 20 years old, you have time on your side.

Yeah. It goes down. It goes up. It goes down. But when you're 70 years old, you don't have the tolerance for those ups and downs anymore. So all the more reason why we need to make it safe. And, and, you know, even let's just use that example of 70. That means that you could have 30% of your money into the.

the market. And even though that is the calculation of the rule of 100, you might find that 70-year-old going, that's fine and good, Arthur, but I want 100% of my money in something safe that can't lose money. So it's just a thought on a recommendation. I'm certain that you would never say to a client, you must do this, you must do that. You're just giving guidance. Yes, yes. Everything has to be, you know, everything has to make sense for the particular person, in the particular situation. And, you know, again, we bring into play the beneficiary designations. It should the income only be for your life or your life and your spouse's life, you know,

if you pre-decease your spouse. So all these things are taken into consideration when we do planning and we design a program specifically for that need. You know, I think that's a, and I want to just kind of go back to a point you were making before based on need. You might have a, let's call it a chunk of money, you know, that you can put into an annuity. And like you were saying, like some can give income stream, some can give growth. How do you ascertain what type of annuity the client would need given their stage of life? So I might have a chunk of money and I don't need the cash flow right now.

I just want to know that it's safe. But you might have someone else that goes, I've got this chunk of money and I need to know that I'm getting X number dollars per month. How do you determine that? Right. So you kind of answered the question in your question because it's up to the person to help me decide what makes sense for them. So if you know that your mortgage is paid up, but you want to have, you know, $5,000

a month for expenses and you already have 3,000 a month coming in from Social Security. So we need an extra $2,000 a month. And I work backwards from, you know, and sell that way to see how much we need to reposition to create that kind of income stream. That's just one example of how we do. You know, and I love that because that makes me think of the word gap, GAP. So if you, when you're working backwards and you know you need X number, number of dollars per month in your retirement. And then you only have this much coming in from

whatever sources. Well, here's the gap. Well, how do we close the gap? Well, one way is the safe and secure guarantee annuity, put X number of dollars in. We have to do that calculation. But I want to ask you a question about that gap because I find, I feel that some people would go, oh, here's what I need in retirement, this number right here. But you might look at it and go, yeah, but did you consider this? Did you consider this? Did you consider this? Meaning, You know, like when you're working 40 hours a week or more, you might not have the time to go and travel and do this and spend in hobbies. So you might assume you need X number of dollars of retirement, but it might be an actual higher dollar figure because as you are retired, you've got more time to go out and spend. That's true.

And also some people might want to slow down and not spend so much. So again, it depends on the situation. and what we need to take into consideration also is inflation, you know. So do we create an income stream that increases as time goes by, or are you okay with keeping it at a level amount? And that also takes into consideration a person's age. What's the life expectancy? What's your health?

You know, what's your family situation? And so, you know, we look at things holistically and come up with a solution that makes sense that fits your philosophy as well as your budget. Yeah, that makes total sense. And I think if someone, you know, really took a look at this, you know, well ahead and just thinking, how do I kind of allocate my funds and here's my age and all of these persons, all these things we've been talking about, an annuity can be a very solid, safe, secure decision for a specific. percentage of your retirement funds, not everything. So I think if someone is interested in what we've been talking about, Arthur, what's the best way that they can learn more and then also reach out and connect with you? Well, a great way to reach out is by going to my website, Arthur Coheninsurance.com, or my phone number is area code 305-595-0-0-0-1. I was lucky enough to get that

phone number about 45 years ago. And you kept it. Perfect. That is so awesome. Well, Arthur, thank you so much for coming back on. It's been a real pleasure talking with you. Thanks, Mike. Likewise. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes,

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