The Seventh and final mistake Savers are making with their money is that they don’t have enough Mailbox Money®. Mailbox Money® is defined as ‘guaranteed lifetime income.’ Income you cannot outlive, no matter what happens.
There are basically three forms of Mailbox Money®.
- Pension Plans/Defined Benefit Plans
Let’s cover the first one. Most of you have probably heard of these or are familiar with it. It was the same thing my granddad received from BellSouth. It’s called a employer sponsored pension plan or what we like to call a defined benefit plan. So this is employer sponsored corporate or business pension plan or defined benefit.
Now you might be wondering, you might say, why do they call it defined benefit, Tony? Well, basically, after you worked a certain number of years, and you are a certain age, they would have a benefit defined out there. Let’s say in my granddad’s case, he was worth $200,000 at retirement. That was his defined benefit. Now we’ll talk in the third segment, if he wanted to, in his case, he elected to a annuitize that benefit. And that benefit that was defined now over his lifetime, based on whether he wanted income and wanted income for his beloved Hazel, OK?
But that’s called a defined benefit. Those are gone the way of the dinosaur. We’re not going to get into that. But a lot of people, especially if you’re under the age of 55, more than likely, you’re not eligible for the first type of Mailbox Money®, a defined benefit plan offered by your employer.
- Government Sponsored Mailbox Money®
The second type is what’s called a government sponsored Mailbox Money® account. Now, one thing I like to call Mailbox Money® is Social Security. Now ironically, not everybody’s eligible for social security. The reason most of you (if you’re not eligible) is because you have another government sponsored Mailbox Money® account or a pension. This might get a little confusing, but hang in there.
Let’s say you’re not eligible for a pension, you work for a private employer, you’re going to get social security one day. And social security is basically Mailbox Money®. The longer you wait, the more the guaranteed lifetime income for you and possibly, a survivor. Now let’s say you’re a teacher. You’re obviously saying, Tony, I don’t get teacher’s retirement. Well, that’s because you haven’t paid into the system. But the government, the state of Kentucky in that example, is going to sponsor a pension.
Now that pension it’s a defined benefit. but you have to take it over your lifetime. You cannot take a lump sum pension. We have many people, by the way– it might be you. Maybe you’re sitting out there and you say, Tony, I’ve got a lump sum pension. My employer lets me roll that out lump sum, then we need to talk, because we do a lot of those. So before you annuitize it, you might want to talk with somebody like us, and look at taking that pension, that defined benefit pension, and rolling it over to us.
Now we can do one of two things. One of the things we can do– by the way, real quick graphic, we showed this last week. We can do what’s called The WorryFree Retirement® Split IRA Concept, where we use a Mailbox Money® account and we use our low fee platform through Charles Schwab. We do all of this internally. It is a great process, folks. And we’ve covered that on another show but that’s what we could do. So if you have a lump sum pension, 401(k) plan, and you want somebody to really watch over this, we can do the Split IRA Concept.
- Private Annuities – Life Insurance Companies
Which now leads me to our third form of Mailbox Money®. You say, Tony, you don’t work for the government, or you don’t sponsor pensions, how do you provide Mailbox Money®? We provide Mailbox Money through the third type of institution that offers it, and that’s insurance companies. You see, insurance companies are the only entity that can issue what we call private annuities. Private annuities.
So what we do with a private annuity, the private annuity can be rolled over for anything. We can set this up for we represent these insurance companies. And we write as many private annuities as anybody in the country. So for instance, you might have a 401(k) plan, and you say, Tony, I’m tired of taking a risk. I don’t want to be at the soup kitchen one day. I want my money rationed out over my lifetime, so I don’t run out of money. How does that work? Well, we would take that for a 401(k) plan, and our office would move into action.
And we would contact the person or custodian that has that 401(k) or IRA, and roll that over to us. We would put it in our split IRA concept. And again, some of that money would go into what’s called a private annuity. We would be able to defer that annuity until such time as you wanted your beloved Mailbox Money®.
Now another thing you could put into a private annuity with someone like us, you might have money languishing in the bank. And it’s just sitting there, and you’ve got $200,000 or $300,000 or $50,000– it doesn’t matter– you say, Tony, I want to turn that into a lifetime income at some point. I want to ration out that money over my lifetime. That too could go into a private annuity with Tony Walker Financial.
Another source of money to fund these annuities is nheritances. Gosh, we’re seeing this a lot. Whether the inheritance is just cash money or if you’re inheriting an IRA from a loved one, we can take that, and we can put that into a Mailbox Money® account. So there are lots of avenues that we can use for these private annuities.
Now with that said, you’ve been out there and you’ve paid any attention to the internet, if you’re over the age of 50, you’re probably getting bombarded by these dinner seminars, maybe even TV commercials, it doesn’t matter– more and more people are talking about annuities. They’re getting very, very popular. We saw this wave coming on after 9/11 because I realized when they flew into those Twin Towers, my clients and everybody else was going to want something that was more guaranteed than just blindly throwing it all in the stock market. And that’s why we started offering these products right after 9/11.