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Producer:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Prosperity Principles with your host, Ed Cruz. Each week, Ed and his company seek to educate Americans like you by providing real strategies for protecting and growing their hard earned money. Get it for a full hour of financial information and economic news affecting your bottom line. Ed wants you to reach the financial freedom you've worked so hard for. So now let's start the show. Here's Ed Cruz.

Sam Davis:
Welcome to Prosperity Principles. I'm Sam Davis, joined by the host of the program and the founder of Prosperity Principles, Ed Cruz. How are you doing?

Ed Cruz:
Doing well. How are you this morning?

Sam Davis:
I'm doing well. I'm so happy to be on the air with you here, Ed, on the air across central Florida, particularly here in the Orlando area. You know, here on the show, Prosperity Principles, we're going to be bringing everybody some important information, know we're going to have a lot of stuff that pertains to retirees and pre-retirees, but really just some good financial information, prosperity principles, if you will, you know, really for all ages, because it's so important to have a plan. But I want to get started by getting to know you a little bit better. Ed, I know that you've been on the radio in the past talking about what you do and giving out important information to people. But tell us a little bit about yourself, who you are, and what got you into the business, helping people with their finances.

Ed Cruz:
Well, that's a loaded question. But here early on, I always knew that I wanted to work with people, find ways to create solutions for people. And I found myself in the financial business now, like most people out there, just to get started. I am a family guy. I have been married for 30 years. I have a son that served in the Navy, which makes me quite proud. Now he's a cabinet builder, a daughter who has attended college. And the biggest joy of my life right now is she has provided me with my first grandchild. And of course, that's always special. So that's a little bit about my my personal self. But going back to business, you know, I just I think about what people what's most important to people and obviously health is number one, finances being number two. And when I think about that, that's what really got me in the business. People need help. You know, there's there's not a lot out there in terms of getting that type of education or that type of help from someone, although it's a it's a growing industry. But finding good help is, is it's always a niche. And I just found myself needing to talk to people about some core values in in investing. And that's what brought me here.

Sam Davis:
Yeah. And it is you know, we were talking before we got started here on the show today, Ed, that you don't know what you don't know. Right. And if you grew up here in the United States and attended the public school system or even many of the private schools, you don't get much of an education with regards to personal finance, good decisions, how to manage money. And so, you know, we just want to let people know that it's okay not to know these things that we're talking about. And that's why, Ed, that you're coming on the air bringing this important information to people each and every week. Right.

Ed Cruz:
Right. And, you know, what I found was, after ten years out of being out of school, going into the trades, I found myself in that situation not knowing a whole lot about the subject. So I joined the I became an advisor at a firm for seven years, learn quite a bit there. And it was the foundation for, for, for my career. And but what I did notice was that being a captive type agent didn't allow me to to specialize in other areas because, you know, certain agencies want to take you in one direction. So I found myself telling myself that I could do better out there for clients. And I knew that the industry had a lot more to offer. And it's, it's it's been quite the journey, and I have no regrets.

Sam Davis:
That's that's fantastic. You know, it is it is important to make good decisions with your money because no matter how much money you have, you know, if you're listening to the show and you don't have $1,000,000, it's okay. This show is for you. If you're listening to the show and you don't have $500,000, it's okay. This this show is for you because no matter how much money you have, the money you have is important to you. And one of the main principles that we'll be discussing, not just in this episode, but in episodes going forward, is protecting and growing the wealth you have because you've worked so hard to earn that money. And in some sense you worked even harder to save that money because, you know, it's it's really difficult to earn. But, man, is it difficult to stash it away and save it for the future? So we're going to help people and offer solutions for protecting and growing their wealth. You know, and one of the reasons why you need to grow your wealth and not just protect it is that here in the United States and really everywhere across the globe, we're living in an ever more expensive world. And one word that you'll hear in the news a lot lately is inflation. You know, it's in the political news, it's in the business news. And basically what inflation is, is that we're paying more for everything, particularly the things that we need the most, like food, clothing, shelter, energy. You know, and we've got a few examples here of just how prices have changed over the last 30 years. And number one on that list for me, you know, if you go back 30 years, the gallon of gas at the pump was about a dollar 14. But I just looked this morning in the state of Florida this weekend, you're paying an average of about $4.75 a gallon. Can you believe that, Ed?

Ed Cruz:
It's it's crazy. And, you know, we could talk about inflation. We could talk about many things our economy. But, yeah, this the the prices are going up so much that your wages just can't keep up with what's going on.

Sam Davis:
Yeah. And so, you know, kind of some more examples there. So from $1 14 to 475 in about 30 years. And if you if you're listening and reading what's going on in the news right now, you know, a lot of factors play into this, but they expect gas prices to continue to increase a little bit as we move forward here in 2020. To go back 30 years, the price of a new pickup truck, about $15,000. Today, you'd be lucky if you could find a new truck for $40,000. So go.

Ed Cruz:
Ahead. And I'll say that's correct, because my son just bought a pickup truck and I couldn't believe the price. How much things have gone up myself with an SUV. It's just it's it's ridiculous to see what's going on out there, but we have to have a plan. And that's what this is all about.

Sam Davis:
Yeah, that's right. So, you know, not just the vehicle, but the gas to put in it. Those things are going up. Average price of a home 30 years ago, $145,000 today, first time home buyers, they're paying around 450,000. And in a state like Florida that so many people want to move to because of the good weather, the great outdoors, great place to retire, prices for homes in the state of Florida are up even higher than that.

Ed Cruz:
And when you think about housing, you also have to consider what comes with the house. There are many things that you have to continue to improve in a home. But here we are entering June. And welcome to hurricane season. And hurricane season brings along the concern of what's going to happen to your property. We think about insurance, how much insurance has gone up. There are a lot of insurance companies that have left our state, which means that it leaves more of the of the risk on the remaining insurance companies, which continues to drive up the prices on our on our homeowner's insurance. So those are added costs that we have here at this time.

Sam Davis:
Yeah. And I just want to share a quick anecdote. I actually lived in Orlando and in central Florida for a couple of years myself. I moved there in 2017, in June of 2017 and just a couple of months into living in Florida, we experienced Hurricane Irma and I grew up in Kansas, so I was familiar with tornadoes. And luckily, because Central Florida is quite protected by the land from either side, it wasn't too bad, but I was just amazed by the power of that hurricane as it came through. And everybody that lives in Florida, you know, that's something that has to be on their mind every year around this time.

Ed Cruz:
You know, now, fortunately, we can prepare for hurricanes. It's hard to prepare for tornadoes. Right. But I mean, as we continue going through price changes over the last 30 years, we think about food prices. You know, I recently and I don't do this often, but I recently joined my wife at a Sam's Club and I was wondering what was going on as I was doing my self checkout and watching that thing crossed the 200 to 300 threshold approach, the $400 threshold, you know, it hurts all of us. And these are things that we all must be concerned about. And going forward, you know, the dollar ten years ago isn't the dollar today. And we have a lot of reason to be concerned about inflation at this point.

Sam Davis:
Yeah, and that's exactly what inflation is. It's it's the reduced buying power. You know, what can we get with each dollar that we work for and we earn? And another example, look, 30 years ago, the federal minimum wage, $4.25. Today, the federal minimum wage is $7.25. So what does that mean for for young people that are entering the workforce? It means that in order to better their situation, if they want to be able to afford a home and a vehicle and put gas in it and put food on the table, that's always more expensive. Every time you go to the grocery store or Sam's Club, you need to seek out an education or a trade, something that will advance your prospects for earning and education. The price tag on education has gone up quite a bit as well. So that is kind of the the whole encompassing problem that we're dealing with with inflation. And that's why you want people to be prepared.

Ed Cruz:
Yeah, and I would say think of it this way. Inflation reduces your hourly wage or your salary, right? It's it's you have a lot less money to spend on the things you want to do and you have to spend on the things that you have to do to to continue on on a daily basis. You know, when we think about it in different definitions in in economics, inflation is a general increase in the prices of goods and services. And in a in an economy when the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation corresponds to a reduction in the purchasing purchasing power of money. Economists believe that high levels of inflation and hyperinflation, which have severely disruptive effects on the real economy, are caused by persistent excessive growth in the money supply. So the bottom line is that most economists would favor a low and steady rate of inflation in order to reduce the severity of economic recessions.

Sam Davis:
Yeah. And so basically, as these prices grow faster than wages, it makes it harder for families, especially those that are in retirement and are now living on more of a fixed budget to pay and cover for all of those bills and expenses that you have to pay for. And, you know, we don't just want people to be able to cover the necessities. You know, we want people to enjoy the life that they worked so hard to build. Right. And these faster price increases are sort of leading to this vicious cycle. And inflation could also lead people to sort of change their spending behaviors. You know, how much more expensive does gas have to get at the pump before people really start changing their plans, maybe not taking that road trip to the beach so often, and really that that increased energy cost makes everything a bit more expensive. When you think about the cost of diesel, you know, all that food that we eventually put on that table, all of the products that we need to purchase in the store, all of that gets there by way of a diesel engine truck.

Ed Cruz:
That's right. When we think about how everything in this economy moves, we have to think about, first and foremost, the truckers. All everything from every type of transportation, everything that it takes to move, every product that we purchase. And when we complain about $4.75, these trucks are having to fill up at 550 to $6 a gallon, which is easily 100% increase from just about two years ago. That definitely has a real effect in our economy and a devastating outlook for for our future, because I don't see the slowing down any time soon either.

Sam Davis:
Yeah. And it's important to kind of take note and remember, you know, a couple of years ago when we were in the middle of lockdowns in a pandemic, how low gas prices got there for a little bit and how quickly things can change and they can come right back up to new all time highs. So inflation, one of the biggest headwinds that people are facing as they move forward in their lives, as they prepare to enter retirement, you know, and so how do you combat inflation? We're going to talk a little bit about that when we come back from the break. If you want to get in touch with Ed, you can learn more at my Prosperity Team dot com. That's my prosperity team or give Ed Cruz a call at 386228 5769. That's 386228 5769. So Ed, if they give you a call or if they visit and learn more at my prosperity team and get in touch with you, what's the process like when people give you a call and start to work with you?

Ed Cruz:
It's going to be a very simple process. In fact, what I'd like to do is also offer the listeners the Annuity 360 book, which will give them the basics of what it is that we're trying to help them do. And I think that they'll find that we'll just collect just a little bit of information just so we know where to mail this out to, who to get this out to. And and we'll just keep everything down to the basics.

Sam Davis:
That's awesome. So visit my prosperity team. That's my prosperity team. The phone number is on the website, but I'll give it to you here. 386228 5769. Prosperity Principles will be right back after this break.

Producer:
Say Hello. Is your retirement plan built to withstand ongoing inflation? I'm Matt McClure with the Retirement Radio Network. Hear that? It's the sound of prices launching into the stratosphere. Inflation is now at the highest point in 40 years, with the benchmark consumer price index climbing eight and a half percent in March. Energy prices, especially gas, accounted for much of the increase. Inflation affects all of us in different ways. Marketwatch reports that older Americans may not feel the pain of those higher gas prices if they don't have a car or higher home prices if they don't plan to buy a home. But where retirees are feeling the pain across the board food prices, for example, chicken prices recently rose more than 13%. It's especially tough for seniors on a fixed income like Social Security. The program does have a cost of living increase built-in, but payments only go up once a year.

Sam Davis:
Their COLA or their cost of living adjustment isn't keeping up with those other rising costs.

Producer:
Mary Johnson of the Senior Citizens League recently told PBS NewsHour. Seniors are not just feeling the pain at the grocery store, but also when it comes to paying premiums for Medicare Part B, it recently jumped by 20 bucks a month.

Sam Davis:
Medicare Part B has increased over the years three times faster than the annual Social Security COLA. That's been true for decades.

Producer:
But prices then did not go up as much as they are now. Inflation has increased so much lately that some of the foremost experts on senior savings and spending are changing their recommendations, like Bill Bingen, who devised the so called 4% rule in the mid nineties. He used to advise seniors to spend 4% of their savings or investments in the first year of retirement and then adjust upward each year after that. But now he tells The Wall Street Journal that older Americans need to cut their spending now to avoid running out of money in retirement. Benjamin is feeling the pain himself. He told the Journal, quote, I won't eat in restaurants as much. I live a fairly simple life. I don't take a lot of trips, and I'm happy with a deck of cards and three other bridge players, end quote. But how long will inflation last? Well, economists don't really seem to agree on that. So you should probably be prepared for just about anything. After all, as Yogi Berra once said, forecasts are difficult, especially about the future. Are you properly budgeting and planning for retirement? That is a key question to consider as prices continue to. Launched to new heights with the Retirement Radio Network. I'm Matt McClure. Fixed annuities, including multi-year guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

Producer:
You're listening to Prosperity Principles to schedule your free no obligation consultation visit my prosperity team dot com.

Sam Davis:
Welcome back to Prosperity Principles. I'm Sam Davis with Ed Cruz happy to be on the air here in Orlando and across central Florida. And before the break, we were talking about inflation. One of the biggest challenges that retirees are facing currently that pre-retirees are are facing as they prepare to enter retirement and and really a challenge that everyone is going to face in America, we believe, for years and years to come as we live in an ever more expensive world. You know, Ed, you mentioned in the first segment, you know, the dollar is is not worth as much as it was 30 years ago. So, you know, we know that people get a little bit of relief with Social Security. Social Security is able to provide you with a little bit of an income. Once you enter retirement, you start taking Social Security. And we'll talk more about Social Security in future episodes. And for more information, you can always learn more at Saga. But how do you protect and grow your wealth? Because you know that Social Security is is only part of that income picture. So that's where we think annuities can be a solution. So lay the groundwork and tell people about annuities.

Ed Cruz:
Well, what I can say is that when we think about annuities, we can't think of them as the annuities of past, because annuities have been around for a very long time, in fact, well over probably a couple of hundred years. But they have evolved and there are different types of annuities. But the one that I will focus on right now is is called a fixed indexed annuity. And something important to say about all annuities before I go there is that all annuities will provide you with safety. All annuities will provide you with tax deferral. They will all provide you with a way to pass your assets probate free. Right. But they won't all provide you with a high yield and and they won't all provide you with increasing income. So when we when we think about the the foundation of of annuities, they're all more or less created the same with a few exceptions. And so what I like to tell people is that when we think about what we'd like to earn, well, if we were if we were interested in something safe and we just wanted to earn, let's say, three, 4% today because of rising yields, we might shift our money over to a to a CD. But that doesn't excite many people anymore. And we all know that that's definitely not going to keep pace with inflation. In fact, if you're earning 3 to 4%, you're actually losing money because of inflation.

Ed Cruz:
So you want to position yourself somewhere where you're going to have some room in the future so that you can not just grow your money and not just receive an income, but you want to make sure that you have an increasing income because again, like I said, a dollar ten years ago is not the same dollar today. And so you want to position yourself somewhere where you're going to be able to take advantage of cost of living increases. And when you think about income, you have to think about that as more than just one source of income. If you want to have some level of success in retirement, you want to have two, three, four sources of income, right? Social Security being one, annuities being another. Maybe you have a brokerage account and you're taking, as they always say, the 4% rule they're out of out of that nest egg and you may possibly have a pension. So if you if you have several sources, that's going to help you be a little more successful in retirement. But if you don't have all of those, it makes it that much more important to have an annuity that provides you with a guaranteed income source and and also make sure that it has some sort of way to give you increasing income in the future.

Sam Davis:
Yeah. And so annuities can be sort of that safe leg of your retirement plan. You know, in previous years and decades, bonds were what people use to kind of offer themselves some protection and safety. But lately, bonds have been really underperforming and annuities are a great solution for a few reasons. They offer this downside protection. So, Ed, tell people about how when they invest in an annuity, their principal is 100% protected.

Ed Cruz:
Well, absolutely. When you participate inside of a fixed indexed annuity, you don't own an actual stock or a mutual fund. You're participating in an index. And that index, should it perform positively. That's where your return is going to come from. But if it were to perform negatively, the the the zero is your hero. And so what I mean by that is obviously, if you have a negative return that's going to take away from your nest egg and that's what you don't want to happen during your retirement lifetime.

Sam Davis:
Yes. And these annuities, you know, compared to if you're if you're pulling money out of an IRA or a 401. K, you know, you just mentioned something a minute ago, the 4% rule, which is sort of a general guidance that people give out, that you shouldn't withdraw more than 4% of your assets from that IRA or 401k each year in order to make sure that money lasts for your entire lifetime. So if you're drawing down, think if you have $1,000,000, just as an example, and you're pulling out $100,000 to live on each year, that's 10%. Well before long you're going to run out of money. But if you have $1,000,000 and you're pulling out only 4% each year, that money can continue to grow a bit and last for your entire lifetime. But with an annuity, an annuity is a contract with an insurance company that actually provides you an income for life, right?

Ed Cruz:
That's correct. And, you know, going back to you had mentioned bonds and there are many opinions on bonds nowadays, but views from many economists have have clearly stated that if you're going to have a stock and bond portfolio, you're you're going to you're going to have negative consequences or I should say, less favorable consequences over the the new view from economists that says you're better off having a stock mutual fund and fixed indexed annuity type of portfolio. Why? Because it provides you with that safety, that guaranteed income it provides you with. Your retirement needs, whereas with with any of the other securities, you may end up running out of money. And again, that's one of those one of the largest concerns, one of the largest fears that seniors have is is running out of money. And so we want to make sure that we protect against that.

Sam Davis:
Yeah. So as you're enjoying your retirement, you know, you've already spent 30, 40 years, if not longer working. You don't want to spend every day waking up in retirement thinking about what's going on in the stock market. How healthy is the economy with a fixed indexed annuity? That portion of your portfolio, that portion of your income plan is guaranteed for life, right? It can be a relief.

Ed Cruz:
Yeah. And I say, you know, and sometimes it doesn't register with clients until they see their statements. You know, I've received calls and the market's going down. How much have I lost? And they're in shock to know that 100% of their money is protected, growing. And then the next concern is, well, how is that going to affect my income in the future? And I tell them, well, it's not going to affect your income in the future. And so the one thing I like to say is that our clients aren't afraid to listen to the financial news once they become better educated. They're not worried about the headlines. They're not worried about waking up in the morning. They don't have to run to the TV to see what's happening in our economy. They understand that our strategy gives them safety and peace of mind. You know, it's it's possible possible to participate in the upside of the market and be 100% protected from market declines. We like we refer to this as gain and retain. And it's the very foundation of a safe money plan. So, you know, I want you to dwell on this point. No matter what you see on TV on any day, no matter how bad Wall Street is, your account will never go backwards. It will never have a decline. And if the market performs, you'll have the opportunity for the gains. If the market crashes again, you don't have to worry about participating in those losses. And I think, you know, peace of mind is part of the big plan here. When we talk about annuities in general and in particular with fixed index annuities.

Sam Davis:
Yeah. So to reiterate 100% principal protection and you use the term zero as your hero. So even if there's a bad year, you have that 0% that downside protection, but you have a chance to participate in that index. So whenever the index that your annuity is tied to, if it's a fixed indexed annuity, has a good year, you get to participate in a portion of those gains. So that's when we talk about protect and grow, you're protected by zero and you grow by participating in that index.

Ed Cruz:
And I was going to say, you know, interestingly, I've received calls in the past in these and these better than average years clients that are concerned that they've earned too much. Can you imagine that call? It's a fun call to have, actually, when someone says to you and, you know, I think there's a there's a mistake on my statement and and I tell them, what do you think is a mistake? What's happening here? And they say, well, you know, my account just grew by 50,000. And I tell them, well, that's no mistake, you know, and don't make me get on the phone, call the company, verify that that money is theirs. And it gives me a chuckle, but I'll do it just to just to give them that peace of mind that, yes, you don't owe anyone anything. That is your money.

Sam Davis:
Yeah, that's fantastic to hear. So if you want to get in touch with Ed, you can learn more at my prosperity team dot com. That's my prosperity team dot com or give them a call 386228 5769. That's 386228 5769. And right now, Ed, you're actually doing a book giveaway. It's Annuity 360. Learn all you need to know about annuities, which ones to avoid and which one to buy for a successful retirement. So if they get in touch with you, Ed, how can they get that book?

Ed Cruz:
Oh, very simply by just making that request. We'll take some simple information just to know who to who to get it out to and where it's going. And we will quickly get that out to them.

Sam Davis:
And we're going to go ahead and play an audio book chapter from that book Annuity 360 to sort of help explain a bit about the history of annuities, but also enlighten people about some famous people, some you may have heard of who invested in annuities. So Prosperity Principles will be back in a moment. We're going to play this audio book chapter from Annuity 360 chapter.

Audio Book:
Or three famous people who invested a significant amount of their hard earned wealth in annuities. Big idea. Annuities are for everyone. Even if you're not worried about outliving your wealth. Annuities are safer for your money than investing in stocks or bonds or simply not investing at all. Babe Ruth, known as the Sultan of SWAT. Babe Ruth came into his glory days during the Roaring Twenties, and his manager was worried that he was blowing through all of his money without putting any of it away. He introduced Babe to an insurance agent from the Equitable Insurance company, now AXA Equitable, from 1923 to 1929. The slugger contributed more than half of his salary annually, purchasing between 35,050 thousand worth of annuities each year. The Great Depression hit the country hard. In October of 1929. Babe Ruth was forced to retire from baseball in 1935 due to health reasons. He was unemployed during the worst time in history, but Babe Ruth had his income annuity. It's been reported that he received an income of $17,500 a year, which would translate into an annual salary of more than 290,000 in today's dollars. His famous quote still resonates today. He said, I may take risks in life, but I will never risk my money. I use annuities and I never have to worry about my money. Steve Young. Steve Young was signed out of Brigham Young University into a $40 million contract with the USFL. That was the headline, at least in reality.

Audio Book:
Young was given an annuity that would pay out something like $40 million over the 50 years that followed. Given the fact that some players were not paid for playing in the final season or other seasons of the USFL, accepting the annuity appears to have been a genius move on the part of either young or his agent. The annuity payments have lasted longer than the league, and it's safe to say that he's made more money than probably anyone else involved with the league. To be fair, it couldn't have happened to a nicer guy. Even with a large signing bonus and salary, he continued to wear old jeans and drive a 19 year old Oldsmobile dynamic in addition to outlasting the league. That annuity even outlasted the Oldsmobile car company. With a staggering number of pro athletes going broke after they retire. It's refreshing to read stories about players who made smart financial choices. Shaquille O'Neal. One player who's used annuities to his advantage is retired star Shaquille O'Neal. Over his 19 year career, he generated $292 million in total compensation in retirement. He is projected to make as much as $1,000,000,000 from endorsements, even after his career is long over, thanks to a wise agent who made him put $1 million annually into annuities from his rookie year onward. Shaq lives off the income the annuity generates with his endorsement legacy for his children. Shaq scenario demonstrates how pro athletes and other prodigious earners can protect themselves against their own personal spending errors.

Audio Book:
Allen Iverson. Nba player Allen Iverson earned $200 million during his career, $155 Million in salary and 40 to $50 Million in endorsement deals. Iverson ended up going bankrupt because of his overly lavish lifestyle. In a December 2012 court filing, Iverson told the court that his monthly income was $62,500, but his expenses were 360,000. Luckily for Iverson, Reebok saved him from becoming destitute by paying him an annuity worth $2.3 million in 2001. Iverson made a very smart decision that would ultimately save him. He signed a unique endorsement deal with Reebok. Not only will Reebok pay Iverson 800,000 a year for life, they set aside a $32 Million trust fund that he can begin accessing when he turns 55 years old in 2030. Since he divorced his wife in 2013, he will receive half of the trust. Another way that Iverson will be able to protect himself against future bankruptcy is his access to the NBA pension. He is eligible for another 8000 a month. The lump sum of this pension is between 1.5 and $1.8. Most pensions are set up with single premium immediate annuities. Benjamin Franklin. When Benjamin Franklin died, he requested that the 2000 sterling he earned as the governor of Pennsylvania from 1785 to 1788 be divided equally between Boston and Pennsylvania. He wanted the money to be dispersed as a legacy 200 years later in the spring of 1990. The balance in the Philadelphia account was valued at approximately $2 million, and the balance in the Boston Trust was about $4.5 million.

Audio Book:
This was sometimes called Franklin's IRA. The money in the Boston Trust was invested using a new take on an old idea. The annuity using a tax deferred index variety. The money was able to benefit from exposure to stock market growth without stock market loss. This allowed the trustees of the Franklin Institute in Boston to turn an estimated $4,400 into 4.5 million, even while it was paying out an income for 200 years. Beethoven, the social luminaries of Vienna, wanted to keep Ludwig van Beethoven from leaving their country. And so in 1809, two princes and an Archduke Guarantee the musician a generous annuity. All he had to do was stay in Vienna and compose and perform his music. His benefactors have supposedly been quoted as saying something along the lines of only a man free of worries can create with such genius. Interestingly enough, Vienna also saw its time of economic downturn, and one of the annuities guarantors tried to stop paying Beethoven claiming financial hardship. Beethoven sued one and continued to receive his annuity payments. Perhaps this is what inspired the literary genius of Jane Austen, whose character Fanny observes in sense and sensibility. People always live forever when there is an annuity to be paid, and annuity is serious business. It comes over and over every year and there is no getting rid of it.

Sam Davis:
Welcome back to Prosperity Principles. I'm Sam Davis, joined by Ed Cruz. You can learn more online at my prosperity team dot com or give them a call at 386228 5769. And during that break you heard a chapter from Annuity 360, which, by the way, if you want to get a copy of Annuity 360, you can go ahead and visit it online at my Prosperity Team, get in touch with him there or give him a call and he can get you a copy of that book right out to you so you can read and learn for yourself and then get in touch with Ed with any questions you have. You know, it's an interesting chapter explains that annuities have been around for a while, but what that means is that there are a few different types of annuities out there. So, Ed, I was hoping that we could maybe go over a few of the different types of annuities, maybe the ones to steer away from and maybe some ones to consider for people's portfolios.

Ed Cruz:
Absolutely. And we can we can talk about this in a way where we could start with the simpler annuity and go to the more complex annuities that are out there. And so we can start off by saying an immediate annuity, immediate annuities are similar to saying Social Security payments, pension payments, lottery payments. And immediate annuity is just there's a sum of money that goes in and there is a specific payout that comes out. And so for someone that is looking to just make sure that they receive the highest income and are not worried about their principal, because now you're talking about just like Social Security, you're not looking at your your lump sum. You're looking at making sure that you have a lifetime income that's here with you for the rest of your life. And you don't have to worry about anything else. That's what an immediate annuity will do for you. Then you have fixed annuities where you can put a lump sum in. Let's say you put in 100,000, you let it defer for whatever number of years you want. And if you want to get an income from it, you can do what's called annuities, the product, or you can take fixed withdrawals out of it on a monthly basis and create yourself an income. That way, if you just do it through withdrawals, just know that you're not guaranteeing yourself an income for the rest of your life. You're just doing this because you may have a temporary need for that income because maybe you want to travel a little more in your earlier retirement years and then you don't need that so much in your latter retirement years.

Ed Cruz:
So that's what a deferred fixed annuity will do for you. Then I explained a little bit about fixed indexed annuities, but what's what's also nice about when you think about annuities, because most people don't even think about the tax consequences. If you have certain dollars that are set aside, let's say in a portfolio at a brokerage, you have $500,000 sitting there. Right. One thing to always remember is you have taxes to pay on growth with annuities. Remember that you can defer these taxes. So if you're in a high tax bracket, remember that your income will also be greater if you're paying less in taxes. So when we think about income, what also affects your income taxes? Right. Annuities are different and we use them for different purposes. And the tax deferral is one big key reason. But going back to fixed indexed annuities, again, there are the fixed indexed annuity that will give you in general the highest return bang for your buck and we'll give you a great income in the future. Because the greater your growth, the bigger your lump sum of money, the bigger the pot, the bigger your income is going to be in the future. And again, don't forget, fixed indexed annuities also have great riders that will provide you with increasing income. And and you want to make sure that you have that in your annuity.

Ed Cruz:
Then we could go over to variable annuities. When we think about variable annuities, it's just like a security. The only difference is you're going to protect a death benefit inside of an inside of a variable annuity. But you are participating in the stock market. You buy mutual funds inside of there. Now I bring up mutual funds because as you buy securities, we think about the fees associated with those. And so the level that I explain these annuities, also, it has another consequence and that are fees, right. You really don't have fees inside of a inside of an immediate annuity. It's all built-in fixed annuities generally. Again, no fees, fixed indexed annuities can have some fees. So always make sure to ask what your fees may be. And then you have again your your variable annuity, which typically can have anywhere from, let's say, two and one half to five and one half percent in fees. And I've seen higher than that. So make sure that you get full disclosure on anything that you do. And when I speak to my clients, not only will I give you the material, we're going to go over and make sure you understand any fees that are involved. The transparency is key to all this as as you understand it, it will it will just go much easier for everyone if we just have full transparency when it comes to annuities.

Sam Davis:
And knowing now that there are so many different types of annuities out there, we kind of just reviewed kind of the five main types. You know, I'm sure people are coming to you, Ed, more and more wondering if the annuity they currently have, if they have one, is still the right one for them. You know, variable annuities we just mentioned come with high fees. I've heard people even call those, say variable annuities instead of variable annuities because of those high fees. You know, nobody wants to be paying more than they have to. So if someone gets in touch with you, Ed, and they currently hold an annuity, what can you do to make sure and check and see if that's still right for them?

Ed Cruz:
I can do a full side by side comprehensive review on what they have fees versus the indexes that they hold the the variation because there are indexes that perform globally. There are indexes that perform domestically. There are some that are just a combination of the two. And you really want to know what you what you have yourself into. There are modifiers inside of all these different types of indices inside of these annuities. So when I when I compare annuities, you will see side by side what you have versus what you can have to improve your situation. In some cases, you may have the best, not even know it. It's rare, but it can happen. And so but you will get an honest opinion from me. And if it's even if it may not be as good as what you may be able to get, the timing may not be right to make a change in that annuity. So just because an annuity is more superior, another one that you're looking at doesn't mean it's the right time to make that change. You have to take other fees into consideration when making these exchanges. And so we take a very deep look into a side by side comparison into what you can do, what you may have available to you. But it doesn't always guarantee that it's something that you should do.

Sam Davis:
And if you want to learn more and read for yourself, all you need to know about annuities, which ones to avoid, and which one to buy for a successful retirement. You can get in touch with Ed to get your copy of the book Annuity 360. Just go over to my prosperity team dot com. That's my Prosperity Team dot com his information is there you can get in touch with him or give him a call at 386228 5769. That's 3862285769. And Ed will get a copy of that book Annuity 3060, right out to you. And we're going to be speaking more in future episodes about annuities, educating you guys out there, playing some more chapters from that book Annuity 360. But we want to get into. Our next segment, which is the five important things to own during retirement. Of course, you want to have an income during retirement. Of course you need a portfolio of assets that that can provide you with what you need to to pay for your basic expenses. But we're going to go over these five important things to own during retirement. And number one on this list is is a reliable vehicle editor.

Ed Cruz:
That's right. Well, you know, and when you speak to seniors, everyone wants to have their independence. And what more of a better way to have independence than to have a reliable vehicle? Right. You don't want to have to call your son or daughter or a friend every time you need a ride to a local store or for your medical appointments or or to go to church or, you know. And how fun is it to use public transportation? Most of us have grown up not using it and don't want to use it. So independence is is key in this. And so our reliable, reliable vehicle is is number one on the list, being able to get your yourself to the point from point A to point B when you want to and how you want to do it. But with today's gas prices, you might consider a little more ride sharing, right?

Sam Davis:
Absolutely. Yes. Something to consider. So a reliable vehicle is number one on our list. And number two on the list kind of makes sense. Is is a home.

Ed Cruz:
A good, secure home? Nothing like it. Watch out for the hurricanes, as we said earlier. But, you know, having your your own personal space, there's no substitute for it. You know, I've I've run into people in the past where, you know, they're sharing a room in a home. They talk about their misfortunes. It's no fun. They're wondering how I might be able to help them. And I can't help everyone. But when you run into that situation, you come to realize how important it is to be in your own home, to have that freedom. You know, you don't always you don't wake up looking your best. And so being in your own place is always important. Now, you know, a home also is a valuable asset, right? It continues to in general continues to increase in value. And we've seen that movement here recently where homes have increased by about, oh, good, 40, 50%. At minimum, here in the state of Florida, it's been astronomical. The prices of homes, people moving from from up north and coming down here and and just driving the prices up. And, you know, you get to set up your home the way you want to. It's not someone you know. I again, I know clients that have lost out on their freedom because their health is not as great. Now they live with their children, but their children run their household a certain way. And and maybe that that parent doesn't agree to the way the the household is run. But you know what? When you have your own place, you make the rules and there's nothing like it.

Sam Davis:
Yeah. And again, I think back to that word, freedom. You know, if you have a home, you make the decisions. If you want to wake up one morning and decide to repaint the walls, then you can absolutely do that head on down to Home Depot or Lowe's or wherever and throw some paint up on the walls. So number one on the list are reliable vehicle. Number two, a home, and number three is an emergency fund.

Ed Cruz:
You should always have a place that you can lay your hands on, grab some money and take care of these emergency needs. You should invest every single dollar. You should have cash accounts. You should be able to cover yourself for six, nine, 12 months, whatever makes you comfortable. Because I have some clients that are comfortable with not having anything less than a 100,000 in their checking account. And some of them that say 20,000 will last me a year. So it just depends on your your comfort. But, you know, there are times where I tell people you should keep some more and there are times where I tell people you don't need that much. And when we do an overall review, they come to find out and they come to realize that, okay, you're right, I don't need to keep this much cash because trust me, I run into these people that want to keep a quarter million dollars. But regardless, whatever makes you feel comfortable, you should keep but also have an open mind. Take some advice if you have to. But it is important to have an emergency fund.

Sam Davis:
Yes, definitely want to be able to cover unforeseen expenses and be able to go on living your life like there was no problem ever at all. And that leads us to the number four item on our list of things you want to own during retirement insurance.

Ed Cruz:
Insurance. Boy, when we think about insurance and we think about how much insurance has gone up, you know, long term care, for example, if you don't have long term care. Coverage. You could see yourself. And I've seen this happen to families where they go bankrupt because of health care. But there are ways to cover yourself for long term care, home health care and any other type of issue that you may have in annuities. By the way, have you covered when it comes to death or health reasons? They actually become fully liquid so that you can take care of these needs. So when some people say, well, I don't want to have my money tied up, well, it's actually not tied up. You know, when you have a need for your cash, it will be there for you. So an annuity is a way to protect yourself. And then in any way, if you have free flow and cash, you can overspend. The annuity provides you the insurance of of overspending at times. And with the lifetime income, of course, it will protect that you will never run out of that income stream. That is important for you to survive going forward. Gosh, 2030. I have clients that are in their nineties, retired in their in their fifties. So we have some clients that are living well into 35 years of taking annuity payments, Social Security pension. So that's insurance when you can count on something to be there for you, that's what insurance is all about, providing you that peace of mind.

Sam Davis:
So reviewing the first four items on our list of the five important things to own during retirement. Number one, a reliable vehicle. Two is a home three emergency fund. Four, we just talked about insurance and the last one on our list is your schedule. Because you want to own your schedule, you want to be able to enjoy that life you worked so hard for, right?

Ed Cruz:
That's right. You know, you go out there, you you perform at your best during your twenties, thirties, forties, fifties, and then you enter the sixties and you're you're thinking, och, my, my time is coming here. I'm ready to go on road trips, enjoy my time. Some of us do it in between, but not like you really want to do it when you're retired, right? That that one month trip out to Hawaii or the ages or whatever it might be, you work so hard to get there now. Now comes time for you to enjoy the fruits of your labor. Right? So the one thing that we don't want to do is we work hard. We play hard, but we didn't plan well. So now here we are in our seventies and we're saying, gosh, I might have to go back to work, or we just don't do a good job of planning and you never got to leave that job. But again, you want to be able to create your time in the future. You want to be able to just do what you want to do when you want to do it. I want to make sure that my clients don't have to wake up in the morning, rush their TV and look at where the financials are for the day. Because if you're waking up and worrying about that, how can you enjoy retirement? You don't you don't want the market dictating your retirement. You want to be able to manage your own retirement. And again, annuities are the perfect way to do this. So I would say that it all comes down to spending some of that time, time with the people you want to be with, going around this great country, traveling the world, whatever it may be, and enjoying your time.

Sam Davis:
So if you were ready to build your plan for a more enjoyable retirement visit Ed and his team online at my prosperity team dot com that's my prosperity team dot com or give them a call at 386228 5769. And this is also the number to get in touch with it and request your copy of Annuity 360, which we've talked about earlier in this show, 386 2 to 8 5769. And that brings us to the end of our show today. So, Ed, say goodbye to the folks and and let them know one more time how you can help.

Ed Cruz:
Thank you, everyone, for your time, for listening. And remember, for a free copy of the Annuity 360 book, just reach out to me at my Prosperity Team dot com or you can reach out to me at 3862285769.

Producer:
Thanks for listening to Prosperity Principles. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money to schedule your free no obligation consultation. Visit my Prosperity Team dot com or pick up the phone and call 3862285769. That's three eight. 62285769.

Producer:
It's not affiliated with the United States government. Edwin Cruz does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. A married life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or of the results obtained from the use of this information.

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