Even if you have a plan that covers your income sufficiently and includes both low-volatility investments as well as longer-term investments, it is still a good idea to have readily available funds. You need cash in the bank that is set aside for a specific reason, such as a goal or emergency fund. It may not be earning much, but it is set aside for a purpose. That is different from lazy money because it serves an objective for you. 

Put Your Lazy Money to Work 

There is a lot of lazy money out there. Currently, $5.5 trillion is sitting in cash, bank accounts, money markets, and CDs earning little to nothing. That is a very high number compared to pre-pandemic. If you are part of this number, and your investments and emergency fund are taken care of, you could take advantage of a new life insurance product.

Why Do Clients Have Lazy Money?

Most clients that have lazy money put up with it because they want to keep it protected from investment loss and they want to have access to it. As a result, they won’t buy investments like stocks, bonds, or mutual funds with their lazy money because the value of those investments can rise and fall.  On the other hand, they want to have access to their lazy money. 

Even though they may not like it, some are content with their money sitting in a no-interest, or low-interest-bearing account. A savings account at a bank or a cash equivalent in a brokerage account are two common places for lazy money.

One of the primary reasons people are willing to put up with lazy money is that they do not know if an alternative exists. They may be completely unaware of options, like indexed universal life, that provide protection from investment risk, credit a competitive rate of interest, offer options to cover costs associated with long-term care needs and permit access to the money if it is needed through loans or withdrawals. If they knew there was a way to put their lowest performing assets to work while permitting access to their money if and when they needed it, subject to the surrender policy of the insurance carrier, which could include penalties or forfeiter of benefits, perhaps they would not be so tolerant of their lazy money anymore. Make sure your clients are aware of the different ways they can put their money to work.

So what is a Social Security Annuity? Is there such a thing? The answer is yes. Your Social Security Annuity is a guaranteed lifetime income stream backed by the full faith and credit of the U.S. Government. In essence, it’s a government-issued annuity.

Social Security Realities

Your SS represents a stream of payments based upon your lifelong work/earnings history.

When you start that stream of payments, it continues until you pass.  This includes passing in a few months or a few years, when you pass, the payments stop.

There are Survivor benefits available from SS for the surviving spouse and minor children.  Each situation is unique and SS will determine which benefit is best for the Surviving Spouse, their SS Record or the deceased Spouse’s SS record.

Other than a $255 Burial payment, there is nothing left to show for your accumulated earnings history, your payments stop.

Social Security Certain

Social Security Certain (SSC) is a strategy for those that reach their FRA and do not have a need for their SS income to support their lifestyle.

SSC uses a portion of your SS benefit to fund a Life Insurance policy that does the following:

• Creates a pool of money in the form of a Death Benefit that you direct
• That Death Benefit passes Tax-Free to your beneficiary
• The policy also includes Living Benefits that allow you to draw from the Death Benefit while alive for chronic, critical, or terminal illness.  The Living Benefits act like Long Term Care (LTC) in that you are not using your money to pay for services but are using the Death Benefit of the life insurance policy.
• The life insurance policy can be guaranteed to age 100.
• I structure the life insurance as a 7 Pay Plan meaning you only pay the premiums for 7 years at which point the policy is fully paid, with the Death Benefit intact and guaranteed to age 100.

To be clear, we are not actually ‘touching’ your SS income, it shows up each month as long as you live.  What we are doing is earmarking some of it to create a pool of money that passes tax-free as well as creating a Living Benefit in the event of a medical or cognitive event.

Why This Path

When we hit 60, it is very difficult to invest a monthly payment into an investment that can create significant returns.  There is just not enough time when we are only investing a monthly amount.

Life Insurance is one of the few strategies that maximize a monthly payment and returns the death benefit tax-free while at the same time, providing a Living Benefit in the event of a medical need.