Business Innovators Radio - Interview with Chuck DeLadurantey Discussing Annuities for Those in Pre-Retirement

Episode Date: February 14, 2025

Mr. DeLadurantey has provided consulting services to several verticals, including manufacturing, healthcare, and supply chain firms. In 2019, he became a. His mission is to help individuals and businesses understand the options for wealth building, retirement pension systems, and private financing available through uniquely designed products with an underlying life insurance and annuities base. Chuck and Michelle, his wife of 50 years, live on his ranch in Luling, Texas, where they raise beef cattle and enjoy hosting fun family events for their children and 26 grandchildren.Learn more: http://www.privatefamilybanking.com/chuck-deladuranteyAll content is for education, discussion, and illustrative purposes only and should not be construed as professional financial advice or recommendation. Should you need such advice, consult a licensed financial or tax advisor. No guarantee is given regarding the accuracy of the information on this channel. Neither host nor guests can be held responsible for any direct or incidental loss incurred by applying any of the information offered.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-chuck-deladurantey-discussing-annuities-for-those-in-pre-retirement

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 Chuck DeLauderante, and we'll be talking about annuities for those in pre-retirement. Chuck, welcome back to you. the program. Glad to be back with you, Mike. Good morning. Hey, you know, it's always great to kind of learn from different people's perspectives on topics. And I know that, you know, seeing the word annuities is

similar to like saying the word life insurance. People go, um, either I've got some or I'm not interested. And it's that knee-jerk reaction that I feel like people have a misconception about. So first of all, um, let's dive into what actually is an annuity and why do people have a misperception about them sometimes. Right. Well, great. So, you know, I also would liken it to, you know, when you say the word diet, you know, people like, I don't want to go on a diet. But, you know, if you're going to make progress, you've got to behave differently. So when you think about an annuity, it is a change. And you're thinking about, okay, I've saved up, I've worked. Maybe I had a business or I worked for a corporation. And I have a 401k or a 403B or 457 plan, government plan. Got these qualified, what's known as qualified, money, that means that you put them in pre-tax, but at some time, you're going to pay the tax man, right? And so there's some tax implications around those kinds of plans. And then towards the end of your career, you say, well, what do I do with this? Well, actually, you can roll over

some of those tax qualified plans into an annuity. Annuity is a product. It's created through the insurance industry by insurance companies that are very very. very solid performing companies that are successful and profitable. And so your money is safe. So the idea of an annuity is to take a lump sum, whether it comes from a 401k or from cash savings, post-tax savings, or wherever you might have that money, putting it into a legal, protected financial vehicle,

a product called an annuity, which will several versions of, but basically provide protection against market downside, meaning you won't lose your principle, and in some cases, depending on the annuity type, you can enjoy market gains and increase your nest egg. So it's a way to protect that retirement nest egg away from the downsides of a market. And we all know that the sequence of returns, that's a key term in retirement, meaning as the market goes up and down, if your returns go up 20% one year and down 30% the next,

and that's your nest egg for the rest of your life, that could be a fearful thing to have your money at risk like that. So that's what annuities prevent against. Yeah, that's really huge. And I think, too, when you hear about, you know, it's a contract between, you know, the insurance company and guaranteed returns. I think that when people start hearing that, it's like, ooh, that makes sense. And isn't it true that annuities, there's so many different types. So it's not like you can go and Google, I want annuity, click, set it up. There's some that provide, you know, returns, some that provide cash flow, some that have.

have different features and nuances. So talk a little bit about what annuities do to help people that are nearing retirement, make sure that they're not going to outlive their savings, because that's really a big fear for a lot of people, isn't it? Oh, it's huge. Yeah, fear of running out of money in retirement, especially with the cost of goods that have gone up since COVID and beyond and what we're experiencing. And, you know, I think we're on a great trajectory. I think, but Trump's not going to be in office forever. Let's face it. We don't know what's going to to happen in the future. We don't know what's going to happen to tax rates in 2006 as the current rates are going to go in the wrong direction unless things change. So

hopefully Trump will take care of that. But that doesn't mean that's going to stay that way. So you kind of kind of begin with the end in mind, right? You know, the old Stephen Covey line. Yeah. So, you know, so the annuity type that you might want, depends on where you want to be. Do you want to get immediate income? In other words, maybe you're already 70, some years old. And you really need to supplement Social Security. So you need what would be called a single premium immediate annuity or known as a SPIA in short terms. S-P-I-A. Now, that would mean that you're going to get that the rest of your life. You can get them where there's guarantees. You can leave some annuity payments to your heirs or your beneficiaries. There are other types of

annuities that are market affected in a good way on the upside, but not on the downside, as I mentioned earlier, and you might be able to get free access to some of your money, even though it's inside this annuity contract. And you made a key point there. It is a contract. So with contracts, there are obligations and guarantees. And that's what we're talking about here. And most of those are held by the insurance company. Once you put your money in the, you're on the leverage side of that contract and that there are certain things that you can expect to have happen. Yeah, you know, and I think that a lot of times people are so used to, I got a job. My HR person put papers in front of me to set up my 401K, so I'm signing, signing,

and then I go do my job. And they don't know some of the options out there. And so they think, oh, my money's in, 401K, the market, stock bonds, mutual funds, whatever that might be. Those are traditional investments. But an annuity could be a nice, either alternative at that point when you're at your job, but especially when you get to a certain age. And I want to ask your opinion on what do you think the age would be where someone should go,

okay, I know I started working at whatever, 24, and I've got that 401K, but now I need to start moving some of my money into a more safer environment. Right, right. One thing with 401Ks, IRAs, those type of, again, pre-tax, what's called qualified plans, At some point, you have to take the money out currently. That's age 73. It's called a required minimum distribution. And, you know, this gets into also Social Security planning where if you have a couple of a couple with several 401ks or two 401Ks, some IRAs, and all of a sudden you hit age 73 in today's world, and you have to start taking income, you might be over the Social Security limit for income.

And all of a sudden, your Medicare payments go up called the Irma. penalty basically on your cost of Medicare. So it gets way more complex. So an annuity, you can actually find another type of annuity is called a Q-LAC that's a qualified longevity annuity contract where you can extend those delay, delay those RMDs required minimum distributions. That's someone that some people don't know about. It has a limit of 200,000, but you can delay distributions up till age 85. If you're not going to do that, you know, at age 73, depending on how much money you have, you have to be very careful what your net income is going to be over a year's time and watch for those those dings that you're going to get on the Medicare side. So, yeah, so. Well, yeah, go ahead. Speaking of dings,

you mentioned required minimum distribution and the keyword there is required. And I feel like sometimes there are people out there that would go, yeah, yeah, yeah, yeah, I know I need to do that. I've heard that, but I'm good this year. I don't need to take anything out because I sold my RV. So I've got enough money. I don't need to pull it out. Talk a little bit about the ding that happens if you don't pull it out because there's some pretty severe consequences there. Yeah, the government's going to step in.

If you don't take out the RMD, so you need to work with your financial advisor to get into that. We can certainly help you with that too. But, you know, if you do an annuity with us, we set that up automatically because the penalties from the government are severe. and you're going to lose money and pay all kinds of penalty taxes and fees, rather, to the government. So you better have a plan and make sure that you start taking those distributions currently again at age 73. And I think in 2030, it goes up to age 75. So you can delay it a bit longer. But eventually you're going to have to take that money out.

So there's a lot of considerations to avoid these penalties. So let's talk a little bit about the concept of guaranteed returns with no downside. stock market exposure. That's one of the benefits of an annuity. And I, when I hear that or when I, when I see that kind of a concept, it makes me think about the market volatility that people experience in the market. When they have their funds in the market and they watch the news or they get their quarterly report. And now it's like, oh, my goodness, my portfolio took a hit. But if you have your money and annuities, that amount of money, boy, what a piece of mind that comes with that, right? Right. So what a retiree needs to consider are three things. They need to consider

longevity. That means how long do they think they're going to live? So, you know, a $2 million nest egg doesn't last very long if you live to 100 years old or 95. So if you have a history of long living or you think you're really healthy, you're going to live a long time, you better take a look at, you know, really how much would you need? And what annuity can prevent is the other two items. And that is, what is the sequence of returns, as I mentioned earlier. That means what's the stock market going to look like if you have that money exposed, the stock market. And if you lost 20% or 30% or 40% and in your 70s or 80s,

you're going to take a long time to recover that money. In the meantime, if you set up a lifestyle, and that's the third item, and that's the withdrawal rate, if your withdrawal rate was such that you were living a certain lifestyle, and all of a sudden your portfolio gown is down by 40%, you can't maintain that same withdrawal rate and meet your longevity idea of how long your money's going to last. So there's sort of that three-legged stool. Withdraw rate, how much can I take out per year?

Sequence of returns. What's the market going to look like if I continue in the market exposure? And three, the longevity of your life. And the way we offset that in an annuity is we set it up so that if the market goes down, your principle will never go down. So the insurance company is taking that risk. They're investing your lump sum, your nest egg money. But if the market goes up, you get the share in a portion of market gains with the insurance

company. And these are a billion dollar companies. They have a lot of money. They have a lot of experience, a lot of professional investment people that, and they all, you know, at least the mutual insurance companies have paid dividends for, you know, over 100 and 125 years in some cases. So you're talking about a pretty secure environment. And I would liken it to way better than depending on the FDIC to reimburse you from your checking

account, that's for sure. Yeah, if that happens. Yeah, we've heard some horror stories there. You know, you've mentioned a couple times a phrase called sequence of returns, and I know that is kind of confusing to people. Like, what does that actually mean? What is, what's a scenario where a sequence of returns, a scenario would come up? Yeah, let's look at, let's look at the 2008 housing market mortgage crash.

Many people lost maybe 40 to 60% of their, nest at their savings due to, the market volatility. The market went down. They had to wait. They had to sell other assets. Some people lost their, they had to, you know, go bankrupt, frankly, restart anyway. And so some were able to hold this through the storm and wait for their account to recover. So that sequence, there would be a big downturn of 40 to 60 percent and then waiting on an upturn over several years consecutively. And so the problem, what people don't understand, if you have a hundred thousand dollars and the market goes down by 40 percent you have 60,000 dollars now that's your base. So even a hundred percent return on 60,000 gets to 120 and a 40 percent return mathematically,

it's just simple math, takes a 67 percent gain. Well, you know, unless you're going to really start wildly speculating and that's even worse, people panic. And that's what you don't want to do is get in that vulnerable situation where you feel like, oh my gosh, I got to get all my money back. So that's what annuities can help level out. And actually, you can start an annuity in your 50s if you wanted to or even earlier. I have some clients that started earlier because they had a rollover from a 401k and they didn't want that to go into a new provider.

So they rolled that into an annuity, tax and penalty free before the age of 59 and a half. So it can be done. You know, and I think we're talking so many things here about risk and volatility. And does this mean that you need to take every dime of your money, you've set aside retirement and put it in an annuity. Of course not. Just like you would never put every dime in any type of investment. But when you're looking at your big picture, I'm hearing you having this explanation that annuities can provide that predictable financial return with no loss of principle. Now, in the example you gave where, you know, a market would, were to crash,

you know, all your friends might have lost that 40% or 20% or whatever that is. And you might have just not, gained anything, but you didn't lose a dime. So talk a little bit about how that is going to help retirees live comfortably without that financial anxiety. And what percentage of your retirement portfolio should you consider putting in an annuity? Yeah, you know, there are regulations where it's all about suitability for where you are. I think that the law requires people like me who sell annuities and life insurance to make sure that client has adequate cash to live their lives and they're not going to put all of the. So you

legally can't, technically, you can't really, and I wouldn't advise somebody to put all of their money in new annuity. So they're going to have to have some liquidity, meaning some cash on hand and some maybe income from sources like Social Security, maybe other forms of pension payments or whatever. So it all depends on where they're at. But, you know, I could see if you have, you know, those big chunks of savings from those qualified government plans like 401k and etc you could go 100,000 to 500,000 up to a million if you have other sources of income and liquidity. So it really is a matter of a case-by-case basis. And we, again, there are some regulations around what we're able to fiduciarily, if you will, advise. So it's a conversation that we need

to have. And there are some forms we fill out to make sure we're on the straight and narrow. We don't over-emphasize. And again, there are many types of annuities. They can even be short-term annuities. We call them CD beaters. You can get in for three to five years and make more interest in a CD and know that you're going to have that and then renew that annuity after three to five years. We're in a CD.

You're always renewing, you know, usually in a shorter time frame. And you never know what that interest rate's going to be. And so it's a great competitor. You know, the thing that I like about your answer when I said, what percentage of you didn't say, oh, well, 60% should be and then 30% should be because there is no cookie cutter template for every single person. And you've also said there are many types of annuities for different purposes. And so I feel like there are so many people out there that if they do talk to an advisor, they're just being shoved a solution that might not be the best for them

because the advisor didn't ask the right question, didn't hear the need. that they have because you become a life coach of sorts. You know, hey, where are you at now? Where do you want to be? And let's help you get there. Oh, well, this could be something to consider, not here's this sign here. So talk a little bit about that approach. Yeah, well, let me just give you a case. One of my clients, she came to me. She's 73 years old. She's a nurse. She's still working per diem. And she's making great money because she's a, you know, a very experienced nurse. She doesn't want to quit working and she had this money save. Part of it was in a 401k, some was in an IRA. And she said, you know, I don't want to take required minimum distributions. And so we took

50,000 and we put it in a regular annuity where she's getting a check every month. She's actually giving that money to her daughter to subsidize her daughter, even though it was her money. And then the rest of it, the bigger chunk we put in that QLAQA qualified an longevity, annuity longevity contract. And she was able to with it. to avoid taking those RMDs, requirement minimum distributions, until she's 83 because she didn't need the money. And she's in demand and she knows the community she's in. She's been there for 30 years.

She didn't have to sell her condo. She has money, access to money. And then we set her up for some other flexibility in that first annuity where she had some free access to up to 10% of the account value. So she was happy as a clam. And when she got a hold of me, she didn't really know a lot about annuities. She was, you know, like many who are still working, they're very familiar with those 401K and 403D plans, but she didn't really understand it. So there's an educational process. It's a conversation first.

It's not about product. It's about goals and where you want to be and what, you know, where you're at in life. And, you know, are you divorced, single, widowed? There's a lot of components of it. You know, that's such a neat example there because that client of yours that put aside a little bit for family, she didn't give that 50 grand. and to the daughter, she put it in annuity and is like giving the monthly cash flow there. And so that's spectacular. And then the big point that you brought up is people, they don't know what they don't know.

And you take the approach of teaching and educating. So I think that is just so important. So as we wrap up here, Chuck, with the conversation of annuities for those in pre-retirement, any final thoughts? And how could people learn more and connect with you? Yeah, just one final thought that you can design. these to also have a death benefit component. And you really caught the idea there with my client where she did not want to give a lump of money to her daughter. Plus, there's growth involved in the

money she put in the annuity. So the daughter may have gone out and didn't have good money habits. And so that was one of the goals she had. But she wanted to have compassion. Of course, she's got a granddaughter there and there's lots of other factors involved. So she just will love the idea and how we set that up. So just, but you can design death benefits into some of these annuities where whatever the account balance is, if you didn't, didn't, you die before it's all gone. And it sometimes could be quite substantial. So that would be a closing thought. People want to get a hold of me.

It's Chuck, C-H-U-C-K at Private Family Banking.com. If you want to call me directly, I can leave you a phone number 830-339-9-442. It would be best to send me an email at Chuck at Private Family Banking.com so we can set up an appointment time. I'll give you my calendar link. We'll schedule a 45-minute conversation. We'll go over whatever you need to, but it's really about you first. Products come second. It's all about your lifestyle, your desires, your hope, streams, and your current condition

and where you want to wind up. Well, Chuck, once again, thank you for coming on. This has been really enlightening, and I've enjoyed our conversation. Thank you, Mike. 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, visit www. www. influential entrepreneursradio.com.