Business Innovators Radio - Interview with James Johnson, President & Owner of All Mark Insurance Services – Guaranteed Income

Episode Date: February 27, 2024

James has been a business owner, a mentor, and an entrepreneur for over 28 years.As an ex-Marine and black belt in Judo, James does nothing in life he isn’t passionate about. His continual interest in provoking thought and conversation led him to the financial industry. “Being able to help hundreds of individuals, families, and business owners achieve their goals in life not only financially, but spiritually,” James states, “is a very powerful thing.”James has aligned himself with hundreds of his clients who are willing to learn and take control of their future. His core belief is only when we are learning, are we growing.James is consistently top in his field; staying educated and staying on the cutting edge of laws, regulations, and industry news. He is a proud member of Million Dollar Round Table (MDRT), and was a Master Elite Advisor for Ed Slott (America’s IRA Expert) for 9 years.With this vast knowledge of the financial industry, he was chosen as an expert on the “Ask the Expert” program series on AM radio in the Inland Empire.Learn More:https://www.yoursafemoneypeople.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-james-johnson-president-owner-of-all-mark-insurance-services-guaranteed-income

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 us James Johnson, who's the president and owner of Allmark Insurance Services, and we'll be talking about guaranteed income. James, welcome back to the program. Thank you. Well, thanks for having me back.

Well, you know, two powerful words that just really ding the bell for me is income and guarantee. So I think that you could pair these two together. That's quite an interesting topic. So first of all, let's just define what guaranteed income is as it relates to financial planning and retirement. Well, in order to talk about that, I think it's important to understand a couple of things. My expertise lies in retirement and estate planning. I always tell people, if you knew what I know, you'd do things very different with. Now, in order to retire, Mike, you have to have one thing. Do you know what that is? No. You have to have a paycheck. And without a paycheck, you're not retiring. People say, well, I got millions of dollars. It doesn't matter. I don't care how much money you have.

Did you know it's actually possible to have millions of dollars and not actually be able to retire? And that's called being house rich and cash poor. So in order to retire, you have to have a paycheck. And for the average person, their paycheck will be their social security check. Some will be lucky enough to have a pension. That's very few these days, all right? And then in addition of that, you could argue that your rental properties are a guaranteed stream of income. But the reality is that they are not because if you own rental properties,

you know that you don't always have that paycheck coming in, there'll always be something that'll happen. But we'll, for the sake of argument, we'll say that those are your guaranteed incomes. Now, there's our paychecks, but the problem is we have what's called our need. And our need is that we want to live the lifestyle we've become accustomed to, adjusted for taxes and inflation out beyond our life expectancy and our spouse's life expectancy. So that's the amount of money we must have in order to live. And there is almost always a gap between those guaranteed paychecks and that. Now, that's going to have to be made up by our other assets, such as our IRAs, our 401ks, 403Bs, stocks, bonds, cryptocurrency,

CDs, whatever it is that we have is going to have to make up for that. Well, when we go to get that money to make up for it, we want to make sure that that is guaranteed. Because people say, well, there's no such thing as guarantee, but death and taxes. Well, actually, taxes can be avoided, all right. And death, well, you're going to have to live with that. I actually believe the guarantees, the guarantees are headaches, heartaches, and death. Okay, the rest of it, you know, you could always count on headaches and heartache over time. But and change, by the way. But that being said, I digress. Let's go back there. We've got that gap we have to fill. Now, let's just pretend for one second that our gap is $60,000. And we have a million dollars in assets. That's all we got.

We got nothing else. So, Mike, if we make 6% on that every year, forget about inflation, forget about taxes. We just make 6%. We have $60,000. Life is good. Now, in one year, Mike, we had a million dollars. We need 6%, which is 60,000 to survive. And in one year, the market drops by 20%. How much money do we have left? 800,000? That's what everybody says, but the answer is no. We have 740,000. Because see, Mike, we still need the $60,000.

See, in the accumulation game, the market's going up and down and up and down, and it's no big deal. But when we get to this distribution game, if the market goes down, it's a very big deal. because we were working with a million dollars, taking 6% with $60,000, life was good, but then the market went down by 20%, and we took $60,000. We're now at $740,000. You can't recover from that. You cannot make enough money to get yourself back to a million dollars while you're

continuing to consume the money and eventually you run out of money. It's like reverse compound interest. You know, compounding is like, hey, look, we didn't touch. That's the principle. It made X percent. And then the next year, that percent is based on the bigger number. Then it just compounds, compounds. What you just described is like the reverse of that.

And it's like this, you know, slippery pig that you can never grab because it's like out of your reach. That's great. It's a slippery pig you can never grab. It's so true. And so the reality here is, is that we want guaranteed income. So if you can be rich or 100 percent guaranteed you'd never run out of income, what would you choose? give me the guarantee. Yeah, I'd want the guarantee.

I'd never run out of income. Yeah. Here comes that terrible word, Mike, because as soon as they hear this, their blinders go down, their ears shut, and everything is bad. And that's an annuity. And the reality is,

is that an annuity is the only thing that can guarantee you you run out of income. Now, for those people that have a pension, they understand what an annuity is. If you have Social Security, you understand what an annuity is, it's a pension, right? And if you use an annuity for the right reasons, and there is nothing that will be an annuity, absolutely nothing. So I could give you case

study after case study, but we'll use this guy here. He's 54 years old, right? His actual need currently today is $52,348 a year. Now, would it surprise you to know that by the time this guy gets out to eight and by the way this is paying down his house and all the things going to happen along the way by the time he gets to age 80 he needs 112,892 that's what he'll need in order in order to make it going forward and by the time he gets to age 90 with inflation he's going to be out here he's going to need 151,000 a year so nobody ever factors in all these numbers So when it comes to that, he's going to want to make sure that his income is coming in. Now, in this guy's particular case, we did one small thing.

We took out of what we would call his risk tank, okay? So he had about $1.5 million in a risk tank and about $187,000 in what is this called his safe tank. And we took $270,000 today and we moved it over to his safe tank. And we put that in what's called an indexed annuity. and we used that for income starting at age 61. By making that one small move, not only did we guarantee his income would be there all the way out to age 100,

okay? By the time he was aged 90, we increased his net worth by $2 million. Now, that's a little hard to believe, but that's a reality of life. So he was taking it out, and the it was growing. That's correct.

And here's why, right? And the reason why is, and I can show anybody this in five minutes, okay? You take any amount of money, 100,000, 500,000, I don't care what it is, okay? You put it over in an index annuity and you turn it on for income at whatever point in time, all right? You take that same amount of money and you put it over in a brokerage count and you pick any rate of return. you want. We'll start off with a 5% average rate of return. And I guarantee you, well, let me just look at this guy's number right here, okay? In this guy's number right here, in a brokerage account at 6% taking the exact same drawdown rate that the annuities could provide, his money runs out

at 69. So he started his income at 60. His $270,000 grew to like $350,000. And it ran out. And 69. Using a 10% rate of return, actually nine because of the 1% cost, it ran, actually, this is using the last 22 years of the stock market, using the last 22 years of the stock market, he runs out at 65. Now, you know what? The annuity also runs out of money. There will be no money left for the heirs inside of the annuity. Over time, it will run out of money, and it will run out of money at 69 as well. But you know what the one thing is the annuity doesn't run out of? The principal? Income. Okay.

I said if you could be rich or 100% guaranteed you'd never run out of income, which one would you choose? So there's a difference between the income and like the principal balance? Yeah. So if I take $500,000 and I put it in one account over here in stocks, bonds, mutual funds. I take it to put it in an annuity over here and I take the paydown rate that the annuity guarantees. It gives a guarantee that will pay this amount of money as long as you're alive. And if you die prematurely, the balance in the account goes to your ears. If I apply that to the brokerage account with an average rate of return of 9% every single year for the rest of your life that is not going to happen, both accounts will run out of money.

in this case starting at 61 will run out of money by age 70. They'll both be out of money. There will be no money left for the heirs. The brokerage account will not provide any more income. The annuity will not only continue to provide an income, but the income will continue an increase based on what the market does going forward. Now, which one do you want? Yeah, that's really interesting.

The annuity, that's pretty eye-opening. The worst thing on the face of the earth will always ask yourself a question. What are they selling? And the answer is they're selling stocks, bonds, mutual funds. They want you to buy, or gold or silver, or whatever the case may be. But the one thing and the only thing that can provide a guaranteed stream of income you cannot outlive is an annuity. Nothing else can do that. Now, you have to, and I stress every time I talk to people that you're listening to generalized information. You cannot take what I'm telling you, go out tomorrow and buy an annuity. You've got to know more. You've got to know how does it fit into your program? What is your

program for making sure that you do not run out of money? You pass your money out of the most tax favor way possible. You get your money the least tax, pay the least amount of taxes while you're alive and you pay the least amount of taxes when you're dead. How do you become proactive to make all this stuff work. Following me? Yeah. I mean, you got to have the right, it's kind of like a recipe. If you don't put the right ingredient in at the right time and the right amount, then it's not going to turn out to taste the way you want it to. Mike, this stuff here, this retirement stuff, what it boils down to is it's very much like going out and climbing Mount Everest. All right.

What happens is, you know, urinate the accumulation stage of your life. And you're trying to accumulate as much money so that when you get to the top of the mountain and you start coming back down, you don't run out of money. You know, since 2000, it's 1994, 4,093 individuals have actually made it to the top of Mount Everest.

Out of that 7% of them, 282 of them, actually died. But here's the interesting thing about that. 56% of the 282 people that died died on the way back down the mountain. Now, you think that when they started off on that to get to the top of the mountain that they thought they were going to die on the way back down the mountain. Now, you got to the top, man, it's over, baby. I'm going to make it all the way home.

And this is what happens with the average retiree. they think, oh, I've got $2 million in the bank, man, I've got it set. But there's these little factors that are going to happen and they're going to be inflation and taxes and market volatility and all of these other things that are going to happen to you in retirement. They're like these little hidden bombs. And they're going to go off and then subtly you're going to find yourself, oh, that little thing called longevity. Okay, Mike, I have a rule. Live like you're going to die tomorrow and plan like you're going to live forever because you just might. And I can't tell you which one it's going to be.

And I can tell you this, for sure, you won't be laying on your deathbed going, I wish I saved another dollar. That won't happen. So you got to remember to live along the way. But if you don't design, and I mean literally sit down and figure out where you're at and figure out where your paychecks are going to come from, there is a good chance you'll be part of that 56%. You won't make it at the bottom of the hill, all right? We're living longer. You know, I call it Better Life Through Chemistry.

You go into actual old person's home and they've got all these prescriptions that they're taking. I don't know why they have so many. You know, it's kind of like when we're high school, they sold this drugs. Now on the way out, they're selling us drugs. You know, it's a crazy world movement. But the reality is, is you've got to have a plan. to get through retirement or chances are you're not going to make it. And also to get to and through retirement, which is like your analogy of Mount Everest,

just getting to the top is getting to retirement, but getting through is making it back down successfully. So, like to your point about longevity, we're taking better care of yourself. We're taking better supplements, better diets, better health care, and all of those things. So maybe those actuarial tables from decades past, now have expanded out, and you've got even more of a need for that guaranteed income to make sure that

your gap is covered. Our bodies like our car, we can go get a rebuild now, okay? They can take our DNA and grow body parts. I mean, it won't be long. They'll be able to transplant a brain, and that'll actually be a good asset for some people. But the reality here is, is that you've got to plan to live longer. never do a plan that's less than age 100. And I hear it all the time. I'm never going to live that long. Well, I got one question. What if you do? So when you do live that long, do you want to do it with money or without money? Which one do you want? Yeah, for sure, with. Now, do you want that money to be guaranteed? Or do you want that money to be a wish list? Which one you want? Yeah, guarantee for sure. Now, the great thing about this, Mike, is when you go out, you take your money, because most people have got their money in the market, and that's okay. There's nothing wrong with that, all right? But if you go out there and you take your money and you split it down, and you say, look, most of my money is over here in risk. And they say, well, it's not at risk. It's a low risk. My only question is this. If the market goes down, how much of it's not losing? That's all I want to know, okay? So if I take some of it and I shave it off and I put it over in what's called an index product, so how does an index work? Well, when an index does,

is your money is tied to the market, but it's not in the market. So it's getting some of the gains of the market, but when the market goes down, it makes zero. So how would you like to make zero in 2000, 2001, 2002, 2008, 2022? Those would have been pretty good years, right? So by doing that, we're able to remember, if you take that million dollars and you lost 20%, I don't have to make up for that loss. And even if I do run out of money, For my heirs, I don't run an income. So I take my money and I split it up. And I take a portion of my money and I go over and I secure my income.

Mike, once your income is secured and you have the money you need to live on, you could burn the rest of your money. It wouldn't matter what happened to it. The market goes up or down. It's not going to have a huge influx on you because your paycheck's coming in the door. Are you following me on this? Yes, 100%. So, see, you have to play.

this game differently. You're playing a game. I don't care who you think you are. You are playing a game. And you're in what is called the accumulation stage of your life. You're trying to make it to the top of the mountain. Now, to get to the bottom of the mountain, you need to make sure you build in some stairs and some ladders and some ropes in case you do fall, you don't die. In other words, you don't run out of money. And that's the trick to this game. And if you understand this and you take the time to understand where you are and what you're doing and whether your plan is working, you can do amazing things and live life very comfortably without worrying about what's happened in the market. Worry is a waste of time. So let's just eliminate some of that worry.

Let's go get some guaranteed income and make sure we don't run out of money. You know, I love the sound of eliminating worry, creating guaranteed income, and creating peace, you know, in your mindset, because that's what keeps you from having to watch the news and feeling horrible and opening up your quarterly statements and going, oh, man. So I think that's just so spectacular that that's an approach that you take with your clients, James. And let's wrap up with if someone is hearing these things going, give me some of that peace and clarity. and guaranteed income, how can they learn more and also reach out and connect with you? So, Mike, all they have to do is go to our website, which is www. your safe money people.com. That's Y-O-U-R-S-A-F-E-M-O-N-E-Y-P-E-O-P-L-E-O-P-L-E.

There they can connect to our YouTube page, learn more there. There is, I told you have a course on life insurance. I also have a course on annuities. I highly recommend. I won't get involved with you with annuities if you don't go through the course because I believe you should know what you own and that you should make a decision based on what you know and not what that person is trying to sell you and that you have a good solid plan. When you get together with us, we will sit down with you.

We will do a no cost, no obligation, full blown report, showing you what your retirement looks like, whether your plan is working, will answer the four most important questions that you need to know about retirement, and we'll give you clarity, balance, and focus like you've never had before. At no cost, I'd add. No cost. Keep your checkbook at home. So thank you so much, James.

That is spectacular. I just love how you lay things out so clearly and concisely. Thanks so much for coming back on again today. Thanks. Thanks for your time, Mike. It was a pleasure. 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.com.