Hosts: Gary Abely, CPA, CFP®, AIF® and Joe Bert, CFP®, AIF®
Yes indeed, it is an Ask the Experts weekend on News 96.5, WDBO, and this is On The Money brought to you by Central Florida’s oldest and largest —
Independent.
Firm of certified financial planning professionals, that being the Certified Financial Group in Altamonte Springs, and for the last 25 —
Plus.
Years, Joe Bert, the Oracle of Orlando, and his colleagues have been coming into this studio and answering your financial questions every Saturday morning. We’ll tell you about what in just a second. First off, let me introduce everybody in the studio this morning with us. Gary Abely, who is not only a certified financial planning professional, but he’s also a CPA.
He is, he is.
Good morning.
Hi Gary, how are you sir?
I am wonderful. Beautiful day out today.
It is indeed. And as mentioned before, the Oracle of Orlando, Joe Bert, is back in the studio. Hi Joe.
Good morning.
I imagine Gary gets pretty good <Inaudible> around this office.
Yes he does.
I do get a few tax questions.
<Inaudible>.
We greatly appreciate his knowledge and years of experience, and it saves us a lot of time going to the library and trying to find — our internal library, or going online and trying to find answers. We just drop down to Gary’s office and get the answer.
Some of the things we’re going to talk with Gary about this week, one thing that is very, very interesting, and a must, how much should you budget for healthcare in retirement, and here is a question we often get. Why do I pay more for Part B Medicare than my neighbor, and we’re both the same age, doggone it.
Well you know, the funny thing is Joe and I were talking about that before the show started, and I had received a phone call, and it happened to be two flight attendants. They work together, and they both make the same amount of money, 90,000 as wages, and both have similar income in terms of dividend or capital gain, et cetera, and one of them was paying $122 for Medicare Part B, and the other one was paying $316 and some odd cents for Medicare, and they said why is there a difference. And it’s a little tricky because they’re the same age, and the same — they’re both married, and I had to kind of do a double-take and then finally I asked, well now how do you all file, and one of these flight attendants happens to file married filing separate. And so, that little change in how she files actually resulted in an extra $200 per month for her Part B Medicare premium, so sometimes just how we file can impact how much we pay for certain benefits.
Some people aren’t aware of the fact that what you pay for Medicare is a function of what your income is.
That’s exactly right.
The lowest premium you can pay is, what —
121.80 now, unless you happen to be grandfathered in, and then you’re around 105.
Yes. And that grows — that’s adjusted every year. And the highest premium is astronomical.
Yes it is.
Yes.
Gary Abely and Joe Burt are here to take your phone calls. Joe, tell everybody what you take calls about.
Once again, Gary and I — let me back up. Slow down. <Inaudible> years, thank you. Gary and I are here this morning to take any questions that might be on your mind regarding your personal finances. As we say, we go through life trying some of this, trying some of that, wake up one morning and say gee, you know, we’re not too far away from retirement and when those paychecks stop, what are we going to live on. The problem is that most of us don’t know this stuff because they don’t teach you this stuff in school. We learn this stuff as the school of hard knocks. We’ve talked to our neighbors, to our friends, to our coworkers, our brother-in-law, our tax man, and we find that we have a collection of financial accidents, so Gary and I are here kind of running the auto body shop this morning, and we’re going to fix you up with any questions that you might have regarding your personal finances. So if you have anything on your mind regarding an IRA or your 401(k) or a mutual fund or an annuity, or review mortgages, or life insurance, or Medicare, or any of that stuff, the good news for you is that Gary and I are here ready and willing and able to take your calls and when you call in you don’t even have to give your real name. You can pretend that you’re somebody else, and the good news for you is there is absolutely nobody in line this morning.
<Inaudible>.
Just pick up the phone and dial these magic numbers.
844-220-0965, 844-220-0965. You could also send us a short text from your mobile device. That texting number is 21232, 21232, and if you’re so bold and you want to use your voice to ask a question, you can use the Open Mic. You’ll find that on the News 96.5 app. Alright, again, 844-220-0965. You know while I’m thinking of it Gary, don’t you have some kind of workshop coming up real soon?
We’ve got a few workshops coming up, one real quick, May 14th, so two weeks from today, and that is from 11:00 to 1:00 on a Saturday, and it is financial basics for life, strategies for success.
<Inaudible>.
You’re doing that one.
I’m doing that one.
What are you covering?
And we’re actually going to be covering things — basics such as what is asset allocation, what is diversification, rebalancing, growth stocks, what’s a value stock, what’s a mutual fund, what’s a bond. So it’s designed for a starting out person who —
101.
101, and it would be great. Originally I used to call this Teen Financial Boot Camp and I would have adults bring in their teenagers and then I started getting feedback from the adults that whoops, they didn’t know this stuff either, and so we changed the name to Financial Basics for Life, so it’s appropriate for anybody I would say 13, maybe 15 or so, depending on the child, and up. Great way to help start teaching your child financial basics. Teach a person to fish, and you won’t have to feed him for the rest of your life.
It is free.
It is free, and we provide a lunch, and I have a passion for teaching young people, so if you have a grandson, granddaughter, or a child that you’d like to bring and teach them basics, we’d teach them how just working six summers, they can accumulate $1M by normal retirement age working only 13 weeks, 30 hours a week, and only at a 7% growth rate. So we teach compound money.
Good.
Compound is for adults as well.
Absolutely.
So once again, this going to be in our classroom, at our offices in Altamonte Springs right there on Douglas Avenue, 1111 Douglas Avenue. It is absolutely free, leave your checkbook at home. To get more information, go to our website, and that’s financialgroup.com, financialgroup.com. Click on the workshops tab, and you’ll see all the workshops listed coming up.
Social Security boot camp is coming up. We’ll tell you more about that as well. Your colleague, Denise Kovatch, and Nancy Hecht hold that. That’s always a popular one. Social Security questions, I don’t know how anybody keeps up with those issues. Karen in Orlando, you’re on WDBO.
Good morning Karen.
Good morning.
Thanks for calling, how can we help you?
I had a question concerning taking money from my IRA, taking money from my IRA, they always make you prepay your federal tax, and then at the end of the year, that gets taxed again, is that not correct?
No, and they don’t make you prepay your tax.
Generally speaking, if you take a distribution from an IRA, you will have 20% withholding. I think that might be what you’re referring to.
It’s not required.
No I know it’s not required but that is the general rule unless you select something different. So you’re not paying twice, anything you take out of an IRA, unless it’s a Roth IRA, is going to be taxable and basically they’re requiring withholding so that you don’t run into a problem later on when you file your taxes and have to come up with money that you may not have. Now, how old are you, if I can ask, Karen?
67.
Okay, so you’re — you sound a lot younger.
<Inaudible>.
I thought you were going to be less than 59 and a half, so —
No, I made sure I wasn’t <?>. What happened is that — when I took money out last year, and I withheld a certain amount, when check time came, I had to put the whole amount that I could <Inaudible> including the money that I — that they took for the — as taxable. Did the person make a mistake there, or —
No, that is correct. The entire distribution that you take out is in fact taxable. In essence what you’ve done is you’ve paid the taxes out of the IRA proceeds. Now you could have, as Joe was alluding to, let’s say you needed $20,000 out of the retirement account as an example. You could’ve taken the $20,000 out and then paid your taxes by April 18th in this year’s case <Inaudible>.
I think there is a better way. People don’t realize that they can — my next one this year, I just took out what I wanted, and I didn’t make any taxable contributions or whatever. I want to do it at the end of the year because you get taxed for the whole thing that you take out <Inaudible> includes the money that you have — that you took away for the tax.
Well, that is true what you’re saying, but Karen, I would caution you on one thing. If you do not have enough money paid in ratably throughout the year, you could be subject to interest and penalties for failure to pay in quarterly, so if the distribution is large enough —
Oh, I see.
That’s why they’re doing it. They’re trying to save you some money on a potential penalty and interest.
Karen, you’re not being taxed twice. You’re not losing anything by doing what you’re doing.
Alright, thank you Karen. We appreciate your call. By the way, Dave Wall is in the News Center, and he’s coming up in just a few minutes from now, three minutes — three and a half minutes to be exact. How long can we expect to enjoy this marvelous weather. Dave will <Inaudible> in just a little bit. This is Ace in Orange City. Good morning Ace.
Good morning Ace.
Hi there —
Ace — Ace — you know in all the years we’ve been doing this program I’ve never had anyone call in by the name of Ace.
Well yeah, when you’re number one, you’re number one.
There you go.
I like that answer.
How can we help you, Ace?
I’ve reached the age of 65, and I’ve — not 65 — 64 and a half. And I’ve been starting to get a lot of stuff in the mail, like Medicare and stuff like that, and I got something that looks official, it’s called an information card and it’s an open enrollment enquiry card. Is that something I need to fill out?
Not it is not, Ace, and let me just say this to everybody listening. When you get to be the ripe age of 64, you can put a box next to where your mail is and just start putting in all of the Medicare supplements and Medicare advantage plans and all of these booklets you’re going to be mailed because it will fill up a box in no time at all.
Oh good. It’s going to be a cold winter, so I’ll <Inaudible>.
There you go, Ace.
Now, that being said, you do —
That was more <Inaudible>.
You do have a lot of options once you turn 65, and you are going to want to make sure you sign up for Part B Medicare prior to turning 65 for your age 65 effective date, and the reason for that is Medicare only pays about 80% of the healthcare needs, typically. So what you do need to have is either a Medicare supplement, or what’s known as Part C Medicare, Medicare Advantage plans, to help breach that difference. So, you’re going to want to make sure you apply for Part B, and of course there is a cost for that. And then the other thing you’ll need is Part D, as in David, a prescription plan, and there are penalties if you don’t sign up for a prescription plan when first eligible at age 65. So we do — and in our workshops it’s a good point to mention, a good time to mention, we do two other workshops, when can you retire. The next one we have is Saturday, June 25th, from 11:00 to 1:00, and count down to retirement, Saturday, July 23rd, from 11:00 to 1:00, and then both of those workshops, we talked about both Social Security planning issues and also Medicare, the different options you have, and again as Kirk alluded to earlier, you may have heard, just what should we budget for healthcare and retirement, and a lot of folks are surprised to hear the number is about $0.25M according to the most recent AARP study conducted with Fidelity investments.
For more information on the workshops, once again, go to our website, financialgroup.com. That’s financialgroup.com. Click on their workshop tab, get more information, make reservations right there online. They’re all free. We hold them in our classroom in Altamonte Springs <Inaudible> state of the art equipment and give you some good information, and the reason we do that is to introduce you to what we do and perhaps whether you need financial planning now or some time in the future, you’d give us an opportunity to earn your business.
So again when you reach that magic age, expect a lot of junk mail. Right Gary?
Absolutely.
Okay, Sam in Bunnell, you’re going to be up next, and we’ll take your phone call as well. Here is the number to call. 844-220-0965, 844-220-0965, or text us at 21232 because Joe Bert and Gary Abely are planning tomorrow —
Today.
Today.
What was that?
Rocketman.
What did you say, Joe?
Rocketman.
Burning the fuse up here alone.
Burning out his fuse up here alone.
<Inaudible> you can ask the fellow who’s going to sing it next weekend in person, can’t you?
<Inaudible> you hear about his music, done by a tremendous tribute band, will be Saturday night at the Springs Community in Longwood. We’re proud to host for the fifth year in a row the Springs Concert, and this year we’re bringing you the music of Elton John and Billie Joel backed up to the full complement of the Orlando Philharmonic Orchestra, which is fabulous, and I believe it’s sold out, but you can go to our website, financialgroup.com, click on that, and you may be able to find a ticket or two if you get that quickly.
Quickly let’s go to Sam in Bunnell.
Good morning, Sam.
Sam, good morning.
Good morning. How are you doing?
Good, how can we help you? Thanks for calling.
I have a question about Social Security. I’m 63 years old, retired, and I heard there was law changes that are supposed to take effect May 1st, I guess that’s today —
Actually —
And you needed to take — you needed to do it before that time to take advantage of the law change or something like that.
Yeah.
Like I said I’m retired, I do not need my Social Security, I was going to try to wait until 70 to start doing the Social Security, but what is your take on this?
First of all are you married?
Yes.
Okay.
And secondly the cut off was yesterday. It was April 29th. You have to be 66 by May 1st and your spouse has to be 62 by January 1st to take advantage of it, but the cut-off was yesterday, April 29th.
We’re neither one of those, so we’re not that old.
There you go, so you didn’t lose anything. But you’re on track, you’re on track Sam, your thinking is right to wait until age 70. For our listeners that might not know why that is a benefit, why don’t we tell them, Gary?
Well, for each year that you defer Social Security, you actually will gain 8% per year increase in benefit. Guaranteed.
Exactly. And as I like to tell my clients, I can’t guarantee them an 8% return on their money, but Social Security will do that if you defer. That’s important to note that all of the Social Security strategies are really designed to be actuarially neutral, so in other words, if you take at age 62 and you have a normal life expectancy, it should be in essence the same benefit as if you were to take it at 66 or 67, assuming again a normal life expectancy. I think what’s important Sam is what would you do with the money if you did take it early, and if you said I was an aggressive investor, maybe you’d make an argument that taking it early wasn’t a bad idea if you were going to just put that money into an investment. But for most people, 8% is a nice additional amount, I would recommend just waiting to 70 if you don’t need it. Just for <Inaudible>.
No, we don’t — yeah.
Just for our —
We don’t need it.
I do —
My wife is still working. Okay, I’m sorry, go ahead.
No that’s alright. I do want to mention that there were two strategies that have been changed, and the first one was what you were referring to, file and suspend, which you would have had to have been 66 at the end of April, but the other strategy just to make sure our listeners understand is filing a restricted application for spousal benefits, and that requires somebody to have been at least age 62 by the end of December 31st of 2015, so that will still be available for individuals, and that in essence is taking benefits on a spouse who has reached full retirement age and you would take half of their benefits and allow your benefit to continue to rise, so there is still some Social Security planning, and a quick plug for Denise and Nancy’s worksheet on — let’s see when is the next one, I think it’s July 28th, Thursday night from 6:00 to 7:30, so it’s worth attending because there are still lots of strategies available. Thank you for your call, Sam.
Alright, Sam. Next up, we’re going to be talking to Sharon in Haines City and then Becky in Kissimmee, and we’ll take your phone call as well, here is the number. 844-220-0965, 844-220-0965, or entertain your text as well at 21232, right now.
Next week, folks. That’s back when you had hair, Joe.
That was 30 years ago.
Yeah. In <Inaudible> Stadium. He still rocks.
Oh he’s still rocking.
At 70, right?
Yea .
Yep, yep.
But I think the guy that they’re bring in next week is going to be as good.
Yes.
Yes, it’s going to be great.
If not better because he hasn’t abused his voice over the years.
That very well could be.
So next week —
<Inaudible> Saturday night as we said, this will be the last time we’re going to say it. We’re proud to be the sponsors for the fifth year in a row of the Springs Concert held at the Springs Community in Longwood. This year is a tribute to Elton John and Billy Joel, bringing in a tremendous tribute band, backed by the full complement of the wonderful Orlando Philharmonic Orchestra. It’s going to be under the stars with adult beverages on a blanket, and we look forward to seeing you there. Go to our website, financialgroup.com, and you can click on it, and you might be able to get one or two last tickets remaining.
<Inaudible>.
Have you and Carol decided what your tailgating thing is going to look like?
<Inaudible>.
Can’t say?
<Inaudible>. Carol is — okay. Let’s talk to Sharon in Haines City <Inaudible>.
Sharon, good morning. Thank you for calling.
<Inaudible> good morning Sharon.
Good morning, how are you?
Good morning.
I also turn 65 this month, and we’ve had a really difficult time because he broke is leg and had to have surgery and haven’t been able to get in to sign up, and so I need to know if you could help me get signed up, and the other question is, under Medicare and Social Security, if you’re covered understand a small group insurance plan, do you have to purchase both B and the prescription, or just B, and prescription can be covered understand small group insurance?
So that’s a great question, and unfortunately the answer is it depends because certain small group plans, as well as large group plans offered, they can be considered creditable coverage under the Affordable Care Act, but they may not be what’s called Part D creditable coverage, which is the prescription component, and if it’s not considered Part D creditable, he would need to sign up once he turns 65 for a Medicare Part D plan, and with regards to — if he’s still working, he most likely does not need to sign up for Part B Medicare under a small group health plan. Under a small group health plan which is a plan with less than 20 employees, Medicare pays primary, and the insurance is secondary. Now the reverse, for those firms with more than 20 employees. I’m going to say in general, and feel free to call me and we can look at the policy for specifics, but in general I would say, the answer is he does not need part B as long as he continues to work and he’s covered under a group health plan, but he may need part D, so you really need to look at the policy in more detail.
Okay. I appreciate it.
Oh and with respect to signing up for Medicare, he can do that at Medicare.gov, so you can sign up for the part D right online so it’s — and actually it works well for our listeners, you can enter in your prescriptions that you take and it will sort all of the different part D plans available and show you the best plan to buy based on star rating, based on cost, and based on the co-pays of your specific medications.
And you’re going to cover all this in your upcoming workshop?
Yep, we cover that in both of our workshops on when can you retire, June 25th, and then countdown to retirement, July 23rd.
So for more information, go to our website, financialgroup.com, click on workshops, you can make a reservation right there. Did that help you out Sharon?
Somewhat. I’m still confused. I thought it was I had to buy D versus B.
No, you most likely — most likely not. But again if you want to call our office, ask for Gary, we can look at that policy and make sure it is creditable coverage.
Yeah cool. That’s one of our texts here, says please clarify if you are still working with insurance at 65, do you still need to sign up for part B, D, et cetera. Thanks.
Yep, and that’s again — it really does depend on the policy in general. The answer is no, but you don’t want to just say no. You want to look at the policy to make sure that the coverage is creditable. A lot of people, including myself, I have my family on a $12,500 deductible, <Inaudible> savings account compatible health plan. That is not Part D creditable, so if I were 65, I would also need to have a Part D plan where I would be penalized 1% per month times the base amount which is around $32 for each month I did not have Part D, so it really is plan specific. You can’t just answer it without looking at the policy.
Okay we’re going to go to Vick in Brightenton in just a minute. Vick has some money to invest and he wants your advice on that, but first in line is Becky in Kissimmee, and she wants to talk about long-term healthcare. Good morning Becky.
Good morning.
Good morning.
Good morning. How can we help you?
Can you hear me well, I’m driving on 417.
We can hear you fine.
We can hear you fine.
<Inaudible>.
Go ahead.
My question is, tell us about how long-term healthcare insurance — my father took it out and when he needed up he ended up in a hospital bed in my sister’s house <?>, <Inaudible> there was no rooms to put him into for his long-term healthcare insurance. So I’ve been apprehensive about buying it for fear it may be a gimmick if there’s no place to put me when the time comes.
Well now, Becky, so there’s two questions there, two issues. One is the availability of a Medicare assisted or assisted living or a nursing home type bed, and we can say from time to time facilities do fill up. But if he has long-term care insurance, he most likely — if the policies had been written anything probably from the 90s onward, it would allow him to receive care most likely in his house with assistance versus being in an assisted living facility or nursing home. Most of the —
That’s what he got, but that wasn’t adequate because my sister had to take off work to be with him, and the visiting nurse came by two times a week.
Right, and unfortunately this is what a lot of our folks are finding is that just having the insurance depends on the limits of the insurance and it depends on how much of a monthly benefit somebody purchased. Often times the coverage that somebody has bought is not adequate for the cost of care, but I would suggest that the issue of finding a facility that has available is separate from the insurance — the proceeds. So I don’t know — do you know how much the monthly benefit was that he has available on the insurance?
He was paying almost $1,000 a month for his insurance. That’s ridiculous.
<Inaudible>.
BlueCross BlueShield, he didn’t get anything back.
<Inaudible>.
Well let me ask you this. Are we talking about health insurance, or long-term care insurance?
Long-term care insurance.
Okay, well it is possible <Inaudible>.
<Inaudible> it’s gone up and up and up over the years.
It is possible that somebody is paying unfortunately as much as 1,000 a month. I have seen policies that expensive, but if it’s that — I’m going to say rich of a policy, it would expect that the daily benefit amount would be quite high, likely in the 200 to 250 range, if in fact that’s the premium that’s being paid. I will say this, that’s probably 1% of the policies if in fact that’s how much is being paid for the long-term care. What I could say — and this is a good lead into something we like to say every time on the show is that we do offer a complimentary consultation in our office where when you have a specific question like this, we are happy to look at the policy to help you understand what the benefit is, do you have the best available coverage. Of course if he’s already using the care, he wouldn’t qualify for getting a different policy anyway, but we’d be happy to help you, but I think that’s about all I can add. Can you add anything, Joe?
No, and I’m surprised that the premium is that high. I’d really like to see that policy.
I would too.
I think we’re looking at more than just the long-term healthcare policy.
Might be, might be.
We’ll take a look if you want to come by.
Alright thank you <Inaudible>.
It’s 9:45, coming up on 9:46 on News 96.5 WDBO. Dave Wall is in the News Center, and he’ll be joining us in under five minutes from now. Police need your help in solving a crime that happened last night, and Dave will tell you about that coming up here shortly. Let’s talk to Vick in Bradenton. Good morning Vick.
Good morning guys.
Good morning.
Good morning, how’s it going?
Well, I’m living on a very tight budget, unexpectedly so, onto disability early in life. My problem is, I only have after wholesaling my budget $200 that I can invest and save, and I was wondering if you might have some good suggestions on what I could do with that to give me the best pay back, or income from it, or —
Well the first thing I —
You know what I’m saying?
I know what you’re saying. The first thing we need to do, Vick, is set up an emergency fund for yourself. Do you have any emergency money?
Yes I do.
Okay, how much do you have in the emergency fund?
Exactly 8,000.
Okay, that may help you. Alright, so what you’re looking at is you have next to a couple hundred dollars a month, so what you want to do is get that growing for yourself for the future, is that right?
Right.
And you’re not working, is that right?
Correct.
Are you married?
I’m divorced.
Okay, so we have $200 a month, and the best thing to do with that amount of money is to put it in a mutual fund and to let that grow for you, and you can set that up on a systematic approach to have it automatically debited from your checking account. Now if your budget is that tight, I wouldn’t put the full 200. I’d maybe start with 100 and see if you have money at the end of the year. If you have some money left you can add it to it, and I would put it in a mutual fund, pick any one of the number of funds, use a Vanguard, S&P 500 Indexed Fund, low cost fund, and get your broad exposure to the markets, and the money will grow for you over time. It’s not going to be a straight line, it’s not going to be a smooth line, but you’re looking for a better long-term rate of return, you can get out better than what you get at the bank, that’s what you want to do, and because you’re not working, there’s no opportunity for you for an IRA to get any kind of tax deductions. What do you think, Gary, do you want to add anything to that?
Yeah, I think the one thing I would add is we would typically as you to fill out a risk profile so we understand what your risk tolerance is, are you somebody who can take the ups and downs of a stock market investment like the S&P 500 index, or if you want a smoother ride, something more balanced that would have both equity and fixed income exposure. But dollar cost averaging at that <Inaudible> I would agree a Vanguard fund would be an excellent option. Many of these funds, Vick, do require you to start out with $2,000 as an investment, so what I might suggest is you wait for the full 10 months, save 200 a month, once you have that, I think that is the minimum purchase on that Vanguard fund.
Sometimes though if you do it through a bank draft, the minimum is less.
Ah, you’re right. You’re right. So that might work too.
Oh gosh <?>.
And you could go right online, do it right online, Vick.
Awesome okay.
Alright? Good luck to you.
Thanks for your call.
I appreciate it.
And we have an open line for you, telephone number is 844-220-0965, 844-220-0965. You can text us at 21232. We have some texts to read.
It’s an Ask the Experts Saturday, an entire weekend, of expert shoes on News 96.5 WDBO, and this is — I don’t know, you wanted to call it one of the heritage Ask the Experts shows on WDBO. I would call it that.
Yeah, I think we’re the longest running.
Oh, I think —
I think we are <Inaudible>.
<Inaudible>.
It is.
<Inaudible> I don’t know, maybe <Inaudible>.
Vince has been on the air here —
Vince is younger than me, it’s possible that we <Inaudible>.
Yeah but you look a whole lot better than he does.
<Inaudible>.
You’ve aged a lot better, Joe. Yeah. Dorian Gray over here, Gary.
Nope, it’s just <Inaudible> Gray.
Gary Abely and Joe Bert are both certified financial planning professionals with the Certified Financial Group, and for 25+ years now the Certified Financial Group has been coming in to do a Saturday morning call-in show called On The Money and have been answering your questions. We started off before there was computers, you know.
Yeah. How did we <Inaudible>.
How did we handle that?
The wall, the whole rack <Inaudible>.
<Inaudible>.
Card. They were <Inaudible>.
Yes they were, yes they were. And we had to line them up.
Yep.
Okay, so we have some texts here we have to get to. If I purchase an annuity, can I get out of that if — get out of that it —
Something better comes along, <Inaudible>.
Something <Inaudible> retirement comes along, I guess.
We can paraphrase. So, the answer to that is it does depend. You can always get out of an annuity but boy it can be costly to get out of an annuity if you’re still in a surrender period. So it is important to note when you purchase an annuity in Florida, you have what is called a free look period, and it just so happens I helped a few clients just in the past month exercise their free look to get out of an annuity when the policy received back was something other than what was expected. It is not uncommon for someone to receive a policy and to look at it and say gee, that’s not quite how I remember the insurance agent <Inaudible>.
I remember what they told me at the free dinner and lunch seminar that I went to wasn’t <Inaudible>.
Right. Now, we’re not somebody who’s going to poo-poo all annuities because they do make sense for certain people at a certain percentage of their net worth under certain circumstances, and there are a lot of caveats there for a good reason, is because you are locking up your money for a period of time, often times 6, 8, 10 years, sometimes longer. There are some annuities that will have a surrender charge period which is basically a penalty period if you decide you want to get your money out prior to that time period ending, and so annuities make sense, but if you have purchased the policy say within the last three weeks, and you are having second thoughts, make sure you don’t delay. You can send that annuity back to the company with a letter saying I want to exercise my free look period, and I want my money back.
They can call you if they want a second opinion <Inaudible>.
Yep, absolutely.
And you’ll walk them through it and show them what they have and explain to them exactly what the situation is.
Exactly. Now, one other thing that you can do is most annuities have a percentage you can take out each year surrender charge free. Many annuities allow you to take out somewhere between 7% to 10% of the annuity value, the prior ending your value, without any penalty. So if you have gone beyond your free look period and you’re not sure you like this, then I would recommend you take out of the annuity the full amount that you can without paying penalties so that you can dollar cost average into another investment. So hopefully that answers the text question.
Once again before we scoot out of here I want to remind everybody that next Saturday —
Not next. Saturday May 14th.
May 14th.
Well I’m looking forward to the concert <Inaudible>.
<Inaudible>.
Now when is your workshop?
It is Saturday, May 14th, 11:00 to 1:00, and that’s Financial Basics. Would love to see a lot of teenagers, maybe some college students. We talked about student debt, we talked about ways to get out of student debt, and maybe ways not to incur student debt, so there will be some of that as well in the workshop. So come all ye young folk.
You know who’s a big fan of that?
Who?
The state’s financial officer.
Oh that’s right. Absolutely.
What’s his name, <Inaudible> Walker? No.
Yes.
Is that it? Alright, listen, we’re out of here to make room for Dave Wall in the News Center with some news in-depth, some traffic and weather, and then it’s Florida Homes and Gardens, it’s a home fix-up show, you’ve got to stick around and listen to, okay? Give everybody the phone number of the Certified Financial Group.
It is 407-869-9800, and if they want to set up a complimentary consultation go to financialgroup.com.
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