This week, Ed discusses the latest news about inflation and interest rates and how recent events could affect your bottom line. We hear from an economics professor about what the Federal Reserve may do in the future to help with rising costs. Finally, the Smart Retirement Plan series continues as Ed makes sense of the often-confusing Medicare landscape, and encourages listeners to reinvest money for a better retirement.

Is your money safe and protected from loss? Are fees dragging down your savings?

Schedule your free meeting here.

Call Ed Cruz today at (386) 228-5769

this week in history
market update

9.15.22: Audio automatically transcribed by Sonix

9.15.22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

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 Crews. 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 Kruse.

Ed Cruz:
Welcome to Another Week of Prosperity Principles, where we aim to educate our audience. And there are still things happening within our marketplace. And I'd say for us central Floridians, there are three things that we would like to to see kind of settle down. And that's our markets, our inflation and our weather. But before we cover all of this, I'm going to bring in my co-host, Matt McClure. Welcome, Matt. Hi there, Ed.

Producer:
How are you?

Ed Cruz:
Doing wonderful. As I said, there are some things that are on our minds and I guess we'll cover some of this. And there are things that are out of our control.

Producer:
Yeah, there are definitely weather. Obviously the biggest one that's out of our control. Right? Like we can't really do anything about that. You can take yourself an umbrella or you can stay indoors. You know, there's there's about that's about all you can do. But, you know, I mean, with your own. The good thing, though, is with your own personal finances, your own personal situation, that's something that you have control over. Right. So it's that's at least an encouraging thing for folks.

Ed Cruz:
You know, when people ask me, you know, what's going on with this market and, you know, how can we change things? And, you know, what should I do? I tell them, turn off the TV and, you know, don't give yourself a heart attack. But, you know, the one thing that's really driving this and we all know this inflation, just when we think that we're going to get a little relief in inflation because gas prices have continued to to drop here, we see that inflation actually still rose a year over year. And for some reason, our our government keeps wanting to tell us that it just rose by 0.1%, but that's month over month. And but I think that's very deceiving to our to our audience, to our people, to the American people. And, you know, when we look at this inflation that's been above 8% for this year, and when we look at our our core things that we especially at the grocery store up from 10 to 15%, commodities up 10 to 25%. We have some real problems. And these these are the driving issues in the markets. And just when we think that we're about to see some good news, we just get hit with reality again. And back to the drawing board.

Producer:
Yeah, it's true. I mean, you know, they were expecting a drop in inflation month, month over month and not not a drop year over year, but a cooling off of that year over year inflation that we've seen. And it just just didn't really happen. You know, I mean, the year over year was a little bit above what they were expecting. That month over month, they were expecting a drop. They got an increase. So, you know, it's it's gas prices have been coming down from those big highs that we saw several weeks back, but apparently not enough to make up for the prices that have been rising in other sectors of the economy. And then you've got on top of that the Federal Reserve raising interest rates to try to combat inflation. And I actually did add a little bit of a piece. I put together a piece this week on that. I spoke with an economics professor at Georgia Tech. And let's take a listen to it. I want our listeners to hear that, get some background on what the Fed has done already, what the Fed is considering now, and what they might do in the future. And I think this is some great info. So let's share it with our listeners. We'll talk about it here on the other side. The Federal Reserve keeps raising interest rates to combat inflation, but how could it affect your retirement? I'm Matt McClure with the Retirement Radio Network. Powered by Emera life supply chain issues, the pandemic, energy prices and Russia's invasion of Ukraine have all been contributing factors to runaway inflation to fight rising prices. The Federal Reserve has been using one of its most powerful tools, raising interest rates.

Economics Professor:
So they started increasing the interest rates about, I guess, two meetings ago. So about three months ago when when they had the first increase of three quarters of a point percentage points to 75 basis points, which at that point was the largest increase in about 30 years.

Producer:
Tibor, besides, is an economics professor at Georgia Tech. He says it's surprising that the August reading for inflation did not see a decrease, especially given gas prices have been plummeting from recent astronomical highs.

Economics Professor:
Inflation is not going to stop all of a sudden, but what's one want is hoping for is that the increases start to decrease so that we start getting to levels that are a bit more manageable and more pleasing to the eye. If nothing else was, it was very surprising.

Producer:
That's why Bacevich says many analysts now expect the Fed to be even more aggressive with interest rate hikes in coming months. So what does this mean for you? Potentially higher payments on mortgages, other loans and credit cards.

Economics Professor:
So carrying any sort of balance on any loan that doesn't have a fixed interest rate, is it going to become more expensive?

Producer:
Bostic says it's important for consumers to cut back where they can to lessen the blow of inflation and interest rate hikes. And if you're in the market for a new home, it could be good to delay the purchase until rates or home prices come back down. So how do the Fed's actions on interest rates affect your wallet? That's a key question to consider. As higher costs eat away at your hard earned money with a retirement radio network powered by a life. I'm Matt McClure.

Producer:
Money. It comes in handy now and in the future. That's why we're covering both. You're listening to Prosperity Principles.

Producer:
With Ed Kruse. So there you go, Ed, with the look at inflation and interest rates and how those two things are related, what do you think? I mean, you know, the Fed, they're saying now that we could see even higher interest rate increases than anticipated. And that's what last week sent the market into into a tizzy, if you will.

Ed Cruz:
And it's going to continue. I did see a report out there where interest rates now for new homes. 30 year rate mortgages are now touching 6%. And the numbers that they show based on a half a million dollar priced home, that means that out 30 years, you're going to pay an additional $200,000 on this home. There's a reason that we've seen new home sales drop, forecasted sales drop, just the market. Everything is being affected. It's a domino effect, the compound effect, as we always say, and I don't see this slowing down. I think it's only going to get worse throughout the next several months.

Producer:
Yeah, we can hope and pray and cross our fingers and, you know, do all of the things and just see see what happens. Because as you say, we can only control certain things. But the important thing is that we do control the things that we can control. And that's kind of where the rest of this show will go here, because we get a lot, a lot of great stuff to talk about with our listeners. We're going to continue our Smart Retirement Plan series today. And, you know, it's something that we've been doing now for several weeks. Took a bit of a break from it last time around. And we're going to continue our Smart Retirement Plan series today with smart health, smart care and smart reinvesting. Those are a couple of the things that we are going to to discuss. We're also going to talk about a little bit about annuities in our discussion. And I know, Ed, that one of the things that you really like to do for your listeners is give them the opportunity to learn a lot more about annuities with a free book. Tell them about that opportunity.

Ed Cruz:
That's right. The Annuity 360 Learn All You Need to know about Annuities book is a complimentary gift from me to the to to the caller. And I think it's a it's a very important tool to have because you can have all the conversations in the world. You're only going to remember a part of it. And by having this book in your hands, you could always reference back, look it over. It's a simple read. And I promise everyone, you don't need an attorney to go through this book. It's it's super simple, it's informative. And and just give me a call to receive this book, go on our website and just give us a little bit of your information so that we know where to get it out. And, you know, I'd love to do that for our audience.

Producer:
Yeah. And as you said at it's it's not war and peace that we're asking people to read. It's not a legal manual of any sort. It is you know, it's it's a it's an easy read. It's understandable. It's information that people can grasp and really hold on to. And that website that you can go to folks to get the annuity 360 book is My Prosperity Team. My Prosperity Team. Or you can give out a call 3862285769. That number, once again, 3862285769.

Producer:
And now for some financial wisdom, it's time for the Quote of the Week.

Producer:
Well, today's words of wisdom come from a guy who knows a little something about money. He is one of the more famous radio hosts actually out there who gives out advice. And his name is Dave Ramsey. And this week's financial wisdom is, quote, It is human nature to want it and want it now. It's also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity at your wage, not your age, but your wage. I like.

Ed Cruz:
That. Absolutely. You know, the first time I read that quote, it actually gave me a little chuckle. And I actually went over to my wife and shared that with her. And I got the same reaction from her. And and Dave Ramsey is someone that I'm quite familiar with, because when I was over at another radio station, I actually followed Dave Ramsey. So I listen to him all the time and, you know, throughout the years and I will say this wholeheartedly, I definitely followed his his advice on getting out of debt, going back well over a decade. And it served me well. So, you know, when there are people that have certain wisdom you want to follow, that wisdom don't continue to make the same mistakes. You know, take the advice and and improve your life.

Producer:
Yeah. And I love it. You know, he does have a lot of simple advice for folks to follow the things that are easy to remember and, you know, not necessarily easy to do all of the time because it takes discipline, you know. But as far as getting out of debt, especially if you're deep in debt. But yeah, great. Some some great advice there. And I love that act. Your wage is just a great little great little quote. And also, folks, you know, we mentioned the book Annuity 360, and you can get that by calling or going to the website. But also, if you call or if you go to the website, it will be glad to give you as a listener of this very show Prosperity Principles, a free, full retirement plan, consultation. Give them the rundown about what exactly that entails.

Ed Cruz:
Absolutely. You know, we'll provide a comprehensive consultation at no cost to our listeners. There's no obligation. You only work with us if you think it's best for you. We'll help you analyze your specific and unique financial situation. We'll closely examine any annuities that you may currently have. We'll discover exactly how much you're paying in fees and help cut that out of out of your financial products. Any unnecessary cost that you may have in IRAs, a bonds for one case or any other retirement savings account. We'll also help you with Social Security planning and Medicare. And we're going to cover a little more about that today. And and we'll compare your current situation to what's possible if you work with us, if you haven't heard from your advisor lately and trust me, most of them today don't want to contact you, please reach out to us for a second opinion. You know, we want to help you reach your financial freedom. And just like a medical procedure where you would ask for a for a second opinion, why not get a second opinion on what's going to be super important to you in your retirement days?

Producer:
Absolutely right. And for that free consultation, folks, you can go to my prosperity team. That is my prosperity team or give out a call once again, that number 38622857693862285769. Well, you teed up just a second ago there, Ed, with the subject of today's show being a lot about Medicare. And this is part of the Smart Retirement Plan series that we've been doing here for several weeks. And in this latest installment, we're going to talk a lot about Medicare, as I said, as part of smart health, having a smart health plan. Start us off here. I know that a lot of people get confused by Medicare because of all of the different parts that are out there, the different options that they might have. Let's start running through some of the nitty gritty of this and hopefully clear it up for people.

Ed Cruz:
Well, you know, when we take a look at Medicare, let's remember something, right? We talk about income all the time. But you can have the best income in the world if you don't have your health in order. You're just going to put a lot of that your assets into into your health. And so but how can we put a smart plan together when it comes to your Medicare, your health care? Let's talk about this. You know, there are there are more than 61 million Americans that are covered by Medicare health plans right now. And four out of ten Medicare consumers are also enrolled in the Medicare Advantage plans, and that is provided to us by the Kaiser Family Foundation. And 65% of respondents say they wouldn't even know which parts or part of Medicare they should enroll in. And for 2022, Medicare beneficiaries have access to 39 Medicare Advantage plans. You know, you need a professional. I know I will need a professional to go over a lot of this with me in the future as well, because I may be looking at it one sided. So with the friends that I have in this industry, they'll help to clear my mind up when it comes to this. Because again, I will also use the the second opinion approach for myself, and it's just a smart thing to do. 89% of Medicare Advantage plans offered in 2022 include prescription drug coverage. And we all know how important that is because there are many seniors out there and I see them, you know, they can't afford their medications. They get plans that don't have prescription drug coverage and they go without. And that's not always the right thing to do. It's I do believe that many Americans are overmedicated, but there are situations where it's absolutely necessary and to to kind of finish this off. 18 and a half percent of the population is on Medicare. And with baby boomers retiring at record levels today, you can expect that number to more than likely topple 20% here in the near future.

Producer:
Yeah, that's right. And that just sort of shows you, you know, how big of a deal this is, how big of a program it is, and a little bit about how confused people are by it, because as you say, there was that one survey that was a survey this year by single care that said 65% of respondents said that they would not know which parts or part of Medicare that they should enroll in. You mentioned that a second ago. So let's go through now the parts of Medicare and maybe we can help people at least clear it up in their brain as to what the parts are, starting with Medicare Part A.

Ed Cruz:
Yeah, Medicare Part A and most people will understand a couple of these parts and most people won't understand two or the other parts. But Medicare Part A, everyone knows or most people know this is where you get the hospital insurance, right? This is what covers a good portion, 80% of of of your care. And so our covered inpatient hospital stays like skilled nursing facility care, hospice care and a little bit of short term home health care. Same thing with skilled nursing. It's all short term and that's what we must remember. These are these are parts that are involved in in this part A, you can get part a premium free if or at 65 years old, you and your spouse paid Medicare taxes for for a certain amount of time while working. So you will already get retirement benefits from Social Security or the railroad retirement board. So if you are eligible for retirement benefits but haven't filed yet, do I always tell people, don't wait until your birthday to file for Medicare? In fact, you may face a penalty for doing these things. So you want to do this ahead of time. Also, you or your spouse had Medicare covered government employment call.

Producer:
So that kind of covers like the basics of of part a medicare part A, right. So it's in as you boil it down to its essentials, A is the hospital insurance, right. So so A, I'm getting my alphabet wrong, but A stands for hospital. The the Sesame Street folks are not very happy with me right now. But A is for hospital as far as Medicare goes. So Medicare Part B covers different things. So so walk us through that.

Ed Cruz:
Well, Part B is also known as medical insurance. That covers the the 20% part that is not covered under part A, and it also covers certain doctors services, outpatient care, medical supplies and preventative services. Some people automatically get part B, but others have to enroll. You could be subject to a late enrollment fee if you don't sign up for part B when you first become eligible. Unlike Part A, you will definitely pay a premium for part B. Part B, premiums are typically deducted from your benefit payments. If you get benefits from Social Security, the or the Railroad Retirement Board or the Office of Personal Personnel Management. And so that pretty much covers part B.

Producer:
Yeah. Part B is. So what I like to say is that, you know, part B is the is doctor. So if if part A is hospital, part B is doctors, you're going to have to pay that premium, though. And as you say, when you get that, if you're on Social Security, if you receive Social Security benefits, it'll be taken out before you get either that check in the mail. If you still do things the old fashioned way like that or that direct deposit to your bank account, that will be taken out if you have Medicare Part B. So skipping a letter in the alphabet, let's go to Medicare Part D here. You see why people get confused and skipped letters and all this stuff. So now let's go to Part D and talk about that for our listeners at sure.

Ed Cruz:
And I will say, yeah, we skipped Part C, but I think that's the one that makes a lot of seniors happy today.

Producer:
So yes, it does.

Ed Cruz:
I think that'll be a welcomed at the end. So we saved the best for last. But Medicare Part D this was the one that's that we always say is rightfully named because it's for drug coverage. So that's a lot easier to remember. Right? So this plan covers a wide variety of prescription drugs and there are protected classes such as drugs that that treat HIV AIDS that most plans covered. A plan's list of covered drugs is called a formulary, and the Part D plans have drug tiers with lower tier drugs cost costing less than higher tier drugs. So what do you pay for in Part D plan? You pay a premium, a yearly deductible. There could be co-payments and co-insurance coverage gap cost, extra help cost, late enrollment penalties, which can be permanently added to your premium. So why would you pay a late enrollment penalty if you don't enroll in Part D during your initial enrollment period? There are 63 days or more where you don't have Medicare drug coverage or other credible prescription drug coverage. So there's a there's a lot to, you know, to keep track of there. And it's highly unlikely that you will at the first turn. But there are there are information or booklets that are created that you can that you can spend more time on and and get to learn this a little better.

Producer:
Yeah. Which really helps, you know, spell it all out. So. So Part D, as you say, stands for drugs, right? It's the prescription drug benefit, part of Medicare. And as you say, there are a lot of different sort of nuances and rules and regulations in there. But at its very basic level, Part D is drug coverage. And one thing I think, though, Ed, that people get confused about a lot is a medicare supplement or Medigap versus Medicare Advantage. Let's go through those and talk about the difference between those two things.

Ed Cruz:
Boy, these these subjects, when it comes to all this Medicare and supplements and it could really throw you into a little tailspin. But these types of insurance are designated to to fill coverages in gaps that are in parts A and B, you can't have both. And about 81% of beneficiaries who have parts A and B supplements, they supplement their coverage with Medigap Medicaid or employer sponsored plans. And I would say that if you have one of those, you're you're pretty much in luck. But 48% of beneficiaries pay for Part D coverage. And then we get into our Medicare Medigap. And, you know, they're more expensive than other plans, but they do cover any hospital or doctor that accepts Medicare. There's no need for prior authorization or referral from your primary doctor. It's covered anywhere in the US, which is great for people who travel often, and it's also good for people who have. Who have specific doctors or hospitals that they want to use. And then we have our Medicare Advantage. And this is the part that a lot of our seniors like. This is what's also known as Part C. And with this with a medicare Advantage plan, you will have either no premium or a low premium versus a medigap plan. And Medicare Advantage plans cover hospitals and doctors and often include prescription drug coverage and the other coverages that are not included in parts A and B, Medicare Advantage operates as a health maintenance organization and HMO, and they do provide limitations to people who are covered in this plan to doctors and hospitals that are in their network. So there's a little give and take, but if you're looking to economize, if you're if you're on a tight budget, this could be a very welcomed way to to handle that part of Medicare.

Producer:
Yeah. And it's good that you, you know, spell it out like that about, you know, Medicare Advantage operating as an HMO because people obviously are familiar with that that term and know what that is. You know, is that in-network coverage like you have to be covered under that network, whereas something like the Medigap plan will operate something more like a PPO. In other words, where there's that the preferred providers that they want you to use but you know, there are other doctors available, you might pay a lot more for them, but they're there. So there we go. So yeah, so that's a little bit look at Medigap or Medicare Supplement versus Medicare Advantage. Now, we talked a little bit about the, you know, paying your your premiums. There are certain parts of Medicare, obviously, that you will have to pay premiums for deductibles, co-pays, coinsurance, all of the above in different parts of of Medicare. But there is something here that I think we see sometimes people do that. That might be something that our listeners might want to consider doing to help pay for that in retirement.

Ed Cruz:
Absolutely. And it is actually something that I talk to my clients all the time. You know, what have they done to set aside funds for health purposes in the future? And many have never even been told, you know, such as or have given have been given that type of thought. And, you know, some people do buy annuities to cover those costs. Some people buy annuities for long term care for for those different purposes to have those those guaranteed funds for when they need it for that purpose. And I think our clients will would be would be happy to know that there are solutions out there. Instead of buying a long term care, let's say, type coverage to cover those health care needs. There are solutions out there where you can put let's let's just say 100,000. You'll have 2 to 300000 available for long term care. That's a real solution in a world where we're living longer, that longevity risk is going to lead to more of this type of care being needed. So we have to we have to protect ourselves, not just for Medicare, but long term care. And so if you're looking for a way to protect yourself, an annuity can help provide that safety, that guaranteed income source that will that will pay the premiums for for these types of care. And so it's definitely something that you need to think about. And the sooner the better, because the the better the better the of money becomes for that type of care. And trust me, as I always say, retirement is more expensive than we think. So, you know, take money from an old source. A lot of people have money sitting in CDs, money market accounts, and I call that dead money. You know, I always say take that dead money and let's do something with it. And so that's my advice. Use an annuity to cover some of those medical costs.

Producer:
Take that dead money, bring it back to life. I love it. Get out the old defibrillator for that for that dead money and get it back to to working for you. That's that's some good stuff. And folks if you would like to get you know walked through that process maybe if that sounds like something that would be possible for you, you can explore more by going to my prosperity team. That's my prosperity team and reaching out to Ed and all of the team there. And you can get a free consultation at. Absolutely 100% free of any charge and free of any obligation to continue on as well. You only will end up working together if you feel like it's a good fit on both sides. No pressure there. You can also call 3862285769. That number once again, 3862285769. Well, as we continue on with our Smart Retirement Plan series today, Ed, we've got smart care. And when we say care, you know, we've been talking about health care. Well, in the smart care part, we've been talking more about long term care. Right. And there's a lot to consider here.

Ed Cruz:
Yeah. And that's why I was bringing that up, tying that those two things in as far as how to how to use an income to cover all these costs. But, you know, again, as we live longer, more of us are going to need long term care. And the estimates are that more than two thirds of all Americans will require some sort of long term care or assisted living during their retirement years. So how do you plan to handle the the exorbitant cost of long term care and assisted living? It's expensive. And Genworth, an old company that's out there that has provided a lot of has provided us with a lot of information and they have a lot of policies out there. So they're the right company to speak on this. Back in 2021, just going back right before inflation really tore us up, the the average hourly rate for home health care was $27 an hour. I don't know about you, but this would bankrupt a lot of of middle income Americans. That's that's a little over 61,000 a year. And the annual median cost for a private room in a nursing home was $108,405. The annual median cost for assisted living was about 54,000. And I see more and more of my clients going to assisted living and and it's expensive, you know, when you start talking 4000 a month, 5000 a month, it's I don't I don't know where these people get all this money from to do this, but they've done quite well for many years.

Ed Cruz:
And and I'm glad they have. But the ones that don't are the ones that have to depend on Medicaid. And well, I don't know about you, but I don't think that the our government does the best job for for for the American people when it's when it's through the state. So something that I would definitely try to avoid. Again, the annual median cost for assisted living was about 54,000, with monthly rates ranging from 3000 in Missouri to about just a little under 7000 in the District of Columbia. Overall cost of care increase from 22 to 21, and that has been happening forever when it comes to health care, costs just continue to skyrocket. And of course, over this period of of COVID, the increased use of PPE by health care professionals and enhanced training and protocols and medical facilities due to COVID 19 represented a portion of that increase, which should be expected to dissipate over time or not, just depends on the state and what type of what type of law they keep in place.

Ed Cruz:
When it comes to PPE, of course, we all know that the main driver is always supply and demand. And again, we talked about baby boomers every day until 2030 there there will be 10,000 baby boomers that will turn 65 and seven out of ten of them will require long term care at some point. So again, there goes that supply and demand, high turnover rates and insufficient supply of professionals to meet the growing long term care demand was around before COVID 19, but now our amplified by the exposed the exposed risk and opportunities with more competitive salaries. And always remember and I said this earlier, Medicare does not cover long term care needs. The only cover, short term care. They want to get you in and out within 3 to 5 days out of the hospital. And life insurance policies and annuities are out there and they offer benefits for those needing nursing, assisted living or other type of long term care. So assisted living care is two and a half times more expensive than adult health care. And if you're concerned about the cost of care, call us.

Producer:
Now, that's a lot of people are, you know, hearing a lot of those numbers in there or just kind of astronomical. And you say, well, how can people. Afford this. You know, a lot of people can't. And you and you, if you're going to afford it, start planning. Now, I think we often say, you know, it can is never too early to start planning, but it can definitely be too late. So you don't want to wait until it is too late. And you find yourself in a situation where you need care that you can't afford. And then, as you said earlier, you're kind of forced into a situation where, you know you are you're basically a ward of the state, in other words, and and you are in a facility or a situation that is not ideal. So that is definitely a concern for a lot of folks. But there are options out there. There is help available out there. And one great place to get it is by going to my prosperity team dot com. Well that is is a look at kind of all of the health and care aspects of what we're discussing today as our series on a smart retirement plan continues here on Prosperity Principles. So let's kind of move on to a different subject if if we can, and that is smart, reinvesting. And when we talk about reinvesting, what exactly are we talking about here, Ed?

Ed Cruz:
Well, you know, when we sit there and talk to a lot of our. Clients, though, have their let's say, their brokers, their advisors. They'll sit there and the money does get reinvested for the most part. But then that's a segment of our retirees. Then we have another segment of our retirees that don't reinvest the money that they receive. They'll receive it in income. They might receive dividend checks because they never chose to reinvest it. And what ends up happening to that money, like we said before, it becomes dead money. It sits inside of their bank accounts or they, their banker might tell them, put it in a CD or any one of those scenarios where these clients are making from 1/10 of 1% to 1%, one and one half percent at best, which is rare. But we might see that. And, you know, and I tell them, putting your money into checking savings or a bank CD is a melting ice scenario. But you could do so much better with a multi year guaranteed annuity or a five year fixed index annuity. You know, a lot of people don't know that they can get fixed indexed annuities with with short five year surrender periods. And that's because the the more prevalent way to invest in a fixed indexed annuity is and it's more common practices is more in that seven, eight, ten year range.

Ed Cruz:
But they do exist they're rare but but they're out there. And so if you're concerned about the market, as we should be today, let's go ahead and invest into a five year fixed indexed annuity with a with a three year or two year protection period. We actually have indexed annuities out there that have guaranteed rates, guaranteed what's called participation rates. So you don't have to worry about those rates fluctuating on you. And the old annuity didn't have that. But they keep progressing, they keep getting better. So if you haven't heard about annuities lately, you should definitely freshen up on them because they keep evolving for the better for the client. And that's our goal. And so the performance of that index over the next three years will determine your gains, your principles protected and gained in an investment. I like this looked like a stair steps instead of an up and down EKG, like the equity market. So think about it. Every time that you that you earn a rate of return, look at that as being your new floor and never having to worry about looking back.

Ed Cruz:
And that's what my clients enjoy. They enjoy seeing that their their monies never go backwards again, unlike their portfolio accounts. And I can say and I will say that during these periods, we can say that we've outperformed in the market versus versus what these clients have done while taking all this risk. So there are times that that we we have to sit there and strongly consider what our future is going to look like. It's not just when times are good. Let's look at it when times are bad. With fire, your money is invested into 100% safe product like a ten year US Treasury with interest rates higher than they than they've been in a long time. Insurers have more to invest in the US Treasury for you. Your money is protected in a fire, so you're better off when the market loses value. Believe it or not, we have products that are illustrating well over 10% a year. Of course, past performance is not indicative of future results. Our products with three year protection periods have delivered returns of up to 36% and higher because I've seen it. And so give us a call if you want the potential for those types of gains.

Producer:
Yeah. And once again, folks, if you want to call it that sounds like something that you might be interested in. 3862285769 is the number for Edwin Cruz and all of the team. That's one that is actually 3862285769. Once again, another thing I know that folks are concerned about when we talk about annuities, if people have exported if people have annuities, they say, oh, you know, how do I avoid fees? They're all, you know, and my am I going to just get killed with the fees there? There are ways to not get killed with the fees, right?

Ed Cruz:
Absolutely. First of all, avoid variable annuities if if you want to lessen your that goal of having less fees. Because when I sit there and discuss variable annuities, as I did this week, again, it happens every week. You know, we're looking at the different types of fees. We're looking at the mortality fees, expense fees, administrative fees, sub account fees. And I can keep going on with fees. We want to avoid those fees. And then there are fixed indexed annuities that have some some high fees as well. These additional riders that get attached to annuities. And you really don't need that if you if you have an annuity that that performs well, you don't have to throw riders on this. So, you know, you can get into a fixed indexed annuity with no fee. Then you have for fee index accounts and fee free indexed accounts, you'll have the choice to select among amongst those so you can control how this annuity performs and how much you pay in fees. You will have all the control in your hands. And I will fully explain these things to you so that you don't make a mistake or that you can, or so that you can maximize what you want to do here in the future. But again, it'll be your choice, not my choice.

Producer:
Yeah. There you go. And that's really what it boils down to. And we talk about this a lot with the no pressure situation here is that you're not going to try and force anybody into, you know, making some decision that they're not comfortable with. It's it's a two way street, right?

Ed Cruz:
Absolutely. If I wouldn't want that done to my parents, I don't know why I would do it to anyone else. And my goal the first time around and I and I speak to my clients clear, I tell them if you feel pressured at any time, you're welcome to just bounce me out. But my goal the first time is to educate you. Second time that we meet is for discovery, and then you will have the opportunity after having all the education, you'll have the opportunity to make the call for yourself, and you'll see that it's beneficial most of the times because we're going to make sense of what's what's right or what's wrong in your portfolio. And even if something's wrong in your portfolio, it may only it may only be five, 10% of your portfolio. In some cases, it's 50% or more. But again, once you receive all of the education, you'll you'll be able to make that call.

Producer:
Yeah, and that's right. And you could have just a little tweak here or there to make, but a little tweak here or there could make a huge difference, you know, in your financial situation. Or it could be that you need some big changes there. So so there is help available, folks, and when Cruise is the place to get it. If you need it and talk about this. I love this. I'm having flashbacks to like like preschool years and hearing, you know, fairy tale stories and stuff like that because there's this sort of Goldilocks and the three bears comparison that we have with different types of of annuities. Say that for our listeners, if you would run down that that and then we'll talk more about it.

Ed Cruz:
Yeah. You know, a variable annuity is too hot, right? In the market, it's at risk. A lot of fees. A fixed annuity is too cold. You know, it's like a bank CD not beating inflation. Low interest, but a fixed indexed annuity is just right. And and the reason that we say it's just right is because it will provide you with the safety that you want. Right. So that's why it's it's preferable over a variable annuity. All annuities are tax deferred. But then when we look at the return of fixed annuity, we'll we'll give you to three today. You might get four, four and a half percent. And for some, if you want, that guarantee could be right for you. But for most, I will say that they're looking for a better, better than average rate of return. Right. You're looking for the sixes and sevens, the eights and the opportunities for double digits. So a yield is important liquidity. You know, we always want to provide our clients with some sort of liquidity, but we will discuss liquidity above and beyond that. And we also want to help help clients avoid probate. If you don't have if you don't have $2 million to protect and you don't have a trust or a will, you can leave your money inside of an annuity and it will help you in the state of Florida. It will help you avoid probate. So that's an important topic for many. And while you're while your funds are in under the surrender period, your funds are also creditor proof inside of an annuity. So those are the the main features of or the differences of these annuities. And also, remember, the icing on the cake is always that if you need an income that you can get a guaranteed income inside of annuity. So those are your those are your benefits as an investor inside of inside of annuities. Yeah.

Producer:
Well, there you go. And let's hear a little bit more about annuities, specifically the fixed indexed annuity variety through the book that you can actually get folks free of charge from Edwin Cruz by going to my prosperity team. That's my prosperity team. And you can also give a call 3862285769 for a copy, absolutely free of annuity 360. That's the book we're going to play. Just a snippet from a couple of minutes here. It's for Stokes, the author of the book Reading This. And this is actually, in case you're wondering, chapter 13 of the book. It's called The Annuity. That's just right. Fixed indexed annuities, fias. Let's listen to this. And we'll have more prosperity principles as we continue.

Producer:
Chapter 13, the annuity. That is just right. The fixed indexed annuity. Big idea. A fixed indexed annuity gives you a portion of market like gains without market risk. Your investment is tied to an index, but not directly invested in it. How does it work? And fire gives the owners or annuitants the chance to earn higher yields than fixed annuities when the index they are tied to performs well. They typically will also provide some protection against market declines. The rate on an fire is calculated based on the year over year gain in the index or the average monthly gain over a 12 month period. Fiis often have limits on the potential gain at a certain percentage. This is known as the participation rate. The participation rate can be 100%, which means the account would be credited with all the gains, or it could be as low as 25%. Most FIIs have a participation rate between 80 and 90%. Benefits Guaranteed Income Stream. With Americans living longer and spending more time in retirement, many retirees are concerned about outliving their savings. In turn, they're searching for a product that can help ensure a steady income stream. Fas are designed with guaranteed lifetime income so you can never outlive your earnings. Diversification of portfolio. A balanced portfolio is essential for managing risk and reward in the financial markets designed for the long term. Fas are a great retirement vehicle to ensure you are not putting all your eggs in one basket. Fas offer the ability to make some money without the risk of losing it. Secure principle. Even with market volatility, investors will not lose value on their fixed indexed annuities. Your savings aren't exposed to market fluctuations, so even in a negative market return, you will not fall below zero.

Producer:
You can never lose your interest once it is credited to your principal. Tax deferred growth fears offer long term tax deferred savings. As long as your money stays in the annuity, you will not be taxed on the interest earnings. Once you receive a payout, the annuity will be taxed just like ordinary income predictable earnings. Because FIIs offer predictable income, Americans feel more comfortable when withdrawing funds from these retirement vehicles as opposed to an IRA or 400 and K. Choosing an fire is an efficient way to plan for your future, as your interest earnings rate always remains somewhere between the interest rate floor and the cap. No matter what happens to the market, you can still count on payments throughout your golden years. Potential Drawbacks of fixed indexed annuities Surrender Charges. A surrender charge is a type of sales charge you must pay if you sell or withdraw money from a fixed, indexed and even a variable annuity. During the surrender period, a set period of time that typically lasts 6 to 8 years. After you purchase the annuity, surrender charges will reduce the value and the return of your investment. Withdrawal Limits. Almost all fixed indexed annuities play surrender free withdrawal limits within the annuity contract that generally range from 5 to 10% of the principal. While all annuities must be armed, friendly and provide for a penalty free withdrawal from a qualified annuity account equal to the RMD requirement for the client's age carriers limit the amount of withdrawal to enable them to grow the money invested for themselves and the client not suitable for short term investing. If you want to grow your money, but you also need access to 100% of your money, then a fixed indexed annuity may not be right for you.

Producer:
Fixed annuities, including multiyear 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:
Methods are many. Principles are few. Methods always change. Principles never do. You're listening to Prosperity Principles. Once again, here's Ed Cruse.

Producer:
Well, that was a little bit of the book Annuity 360 by Ford Stokes and the author there reading the book himself. You can get a copy of it, folks, by giving a call to Edwin Cruz at 3862285769. That's 3862285769. Now, we've had our, you know, Smart Retirement Plan series going on here for a few weeks. One of the things that we talked about was smart rule. Following a couple of weeks back. We discussed this on the show and we wanted to kind of bring that back as a recap this week, Ed, because, you know, folks, when it comes to planning, there are different rules that you need to follow. These are kind of the good kind of rules to follow. And they bear repeating here. So let's go through these. If we could add, starting with the rule of 100.

Ed Cruz:
The rule of 100. And yes, you're right. It's it's great to recap these, because I think they give you a healthy guideline into what could what could really make a difference in your future. So the rule of 100, this is it simply states that your portfolio should contain a risk percentage equal to 100 minus your age. So for example, if you're 70 years old, your portfolio should contain about 30% risk. You know, and however, now that we have talked about the the risk of living longer today, right. Longevity risk being that we're living longer and are spending more in retirement years, you know, the old rule may not always provide you with enough money to maintain your current standard of living. So we have to sometimes adjustments need to be made, but just to keep it simple, it's just that it's the number 100 minus your age. And then we could take a look at it from there.

Producer:
Yeah. People are going to come up with, you know, like the rule of 105 and 110 and go on and on as people keep living longer and longer. But there we go. Rule of 100 is a pretty simple one, as you said. So that's that. What about the 4% rule?

Ed Cruz:
The 4% rule, I always say, is tricky because it's very difficult for most for most investors to follow this rule. The 4% rule says that retirees can withdraw an amount equal to 4% of their savings in their first year of retirement withdrawal. Percentages in every subsequent year would then be adjusted for inflation. As with any rule, there are some exceptions and depending on the situation, some experts suggest abiding by the 3% rule to help with protection and growth. And the reason that I find this rule very difficult to to to follow is, okay, you start 4%, you go on with inflation adjustment. But then what happens when the market drops? Are you you adjust in your income to that. And I've never heard anyone say yes. And so for that reason, I find this rule to be quite the tricky rule. But there are obviously solutions to that.

Producer:
Yeah, absolutely. It's it's hard to it's easy to adjust up when you're talking about, you know, bringing in more more money, taking out or taking out more money from from your different investment accounts or, you know, whatever type of vehicles you have to to use during your retirement years. But yeah, adjusting down not quite so easy. So that's rule of 100, the 4% rule. Now talk about the rule of 72. This one, you know, folks might have to do a little math, at least it's a little simple math.

Ed Cruz:
Yeah. Generally, the happier rule, if it's working right for you, the rule of 72 is a way to estimate how quickly your investments will double, given a fixed interest rate so investors can divide 72 by the annual rate of return to get an idea of when your investments will double. For example, if you invest a dollar at an annual fixed rate of 10%, the rule of 72 states, that it will take 7.2 years to grow your $1 to $2 and vice versa. If, if if it's growing by 7.2%, you could say it's going to double in ten years. Right? So the rule of 72 is only an estimation tool, but with lower rates of return can be very accurate.

Producer:
Yeah, definitely so. So a good guideline there, you know, with a high even with a higher rate of return, but definitely very accurate with that lower rate of return. Usually that's what we see. Well, so those are some smart rules to follow when you're doing some retirement planning there, folks. The rule of 104% rule, the rule of 72, hopefully that helps you out and sort of clears things up for those different rules here. Well, at just about time for us to wrap things up, but quickly here, talk folks through one more time, that free retirement plan consultation offer that they can get just, you know, by giving you a call or going to the website.

Ed Cruz:
Well, it all comes down to getting to know one another, knowing what you have in your portfolio, knowing what's working for you, what's not working for you, and making the appropriate adjustments again when we get together, it's a simple process. It's not complicated. You won't need your attorney present. We will keep it simple for you.

Producer:
Good. Good to know. I love that. And you can get that free consultation, folks at my Prosperity Team, that's my prosperity team. Or call 3862285769. That number once again 3862285769. Well, editor, just about time now for us to wrap things up, but I have enjoyed it once again, sir, and I hope you have a great rest of the week.

Ed Cruz:
Thank you. And thank you all for listening.

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.

Producer:
Your hard earned.

Producer:
Money to schedule your free no obligation consultation. Visit my Prosperity Team dot com or pick up the phone and call 3862285769. That's 3862285769.

Producer:
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 a. 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. Remember, all of Ed's listeners receive a free financial consultation just for listening to the show. Visit my Prosperity Team to learn more and schedule an appointment. Thanks for listening to Prosperity Principles and subscribing wherever you listen to podcasts. Any bonuses mentioned may be subject to additional restrictions and regulations based on the offering. Annuity Company. You may not receive the bonuses if the contract is fully surrendered or if traditional annuity zation payments are taken and if the policy is partially surrendered, it could result in a partial loss of bonuses. Because these are bonus annuities. They may include higher surrender charges, longer surrender charge periods, lower caps, higher spreads, or other restrictions that are not included in similar annuities that don't offer a bonus feature.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including world-class support, automated translation, advanced search, share transcripts, and easily transcribe your Zoom meetings. Try Sonix for free today.