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Double Your Retirement Income |
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Double your income in retirement with no risk, Guaranteed!
If you are living on a fixed income and you don’t have plans to double your income over a period of 20-25 years you will run out of money. One of the questions I always ask a new client, what are your plans once you retire to not only take income but to continually grow it in order to keep up with inflation of 3-4% per year? Typically our new client will say that they haven’t thought of that, they also say that they are too nervous to invest in the stock market. Most investing strategies will typically invest 25-60% of a retired person’s portfolio in the stock market which if you are lucky and the market grows, will grow your income by 5-7% per assuming also that the fixed income portion is also growing at 5% per year. I will show you how to take no risk with the stock market, nearly eliminate interest rate and inflation risk and double your income over a 20-25 year period. I will show you this using a combination of CD-Type Fixed Annuities and Immediate Annuities. Also, I will assume that any of the unused portions of the immediate annuities passes on to the beneficiaries of the client and not just given to the insurance company. I call this the split-funded annuity strategy with beneficiary protection.
In the split-funded annuity strategy we buy an immediate annuity to guarantee the baseline income level and invest extra moneys in CD-Type Fixed Annuities to Guarantee and Insure a rate of growth that will keep up with inflation in order to preserve your purchasing power. Every 5 years you will take money from the CD-Type Fixed Annuities and purchase another immediate annuity to give you the income boost that will continue for your life and pass on to your beneficiaries if you don’t use it.
In this example I will show you current figures for a 65 year old male retiring with $140,000 doubling his income as well as being able to pass money on to his heirs.
There are two ways to look at this if he wants to maximize his income and keep his money guaranteed and safe 1) the male can put all $140,000 into an immediate annuity and get $10,884/year for the rest of his life, guaranteeing to lose purchasing power and in 25 years he will still be getting $10,884/year. The other option 2) put $100,000 into an immediate annuity starting with $8,220/year and every 5 years get a 15.9% increase in income (just over 3%/year).
I am assuming that we can average 5% on 5 and 10 year CD-Type Fixed Annuities (with today’s low rates we still can, and that is still below the historical average).
1). With the extra $40,000 we will ladder out CD-Type Fixed Annuities placing $20,000 in a 5 year Fixed Annuity at 5%, and $20,000 in a 10 year Fixed Annuity earning 5%.
2). Age 70. 5 years later the 5 year CD-Type Fixed Annuity matures to $25,525 and you will put $15,280 of that into an immediate annuity in order to earn you an extra $1,309 per year amounting to a 3.2% per year or a 15.9% total increase in income over that 5 year period. This brings your total income to $9,529 per year.
3). You will now invest the extra $10,245 from that 5 year CD-Type Fixed Annuity into a 10 year CD-Type Fixed Annuity at 5%.
4). Age 75. In 5 years later, 10 years since you retirement your first 10 year CD-Type Fixed Annuity matures to $32,577 and you will put $15,750 into an immediate annuity giving you an extra $1,517 per year in income which is another 3.2%/year or 15.9% over that 5 year period. This brings your total income to $11,046 per year.
5). You will now invest the extra 16,827 into another 10 year CD-Type Fixed Annuity earning 5%.
6). Age 80. 5 years later, 15 years since you retirement your 10 year CD-Type Fixed Annuity from step 3 matures to $16,880 and you will put that into an immediate annuity giving you an extra $1,759 per year in income which is another 3.2%/year or 15.9% over that 5 year period. This brings your total income to $12,806 per year.
7). Age 85, 5 years later, 20 years since you retirement your 10 year CD-Type Fixed Annuity from step 4 matures to $27,409 and you will put $16,242 into an immediate annuity giving you an extra $2,040 per year in income which is another 3.2%/year or 15.9% over that 5 year period. This brings your total income to $14,846 per year.
8). You will now invest the extra $11,167 into a 5 year CD-Type Fixed Annuity earning 5%.
9). Age 90, 5 years later, 25 years since you retirement your 5 year CD-Type Fixed Annuity from step 8 matures to $14,252 and you will put that into an immediate annuity giving you an extra $2,364 per year in income which is another 3.2%/year or 15.9% over that 5 year period. This brings your total income to $17,210 per year.
We have now doubled our income keeping up with inflation and we did this taking on virtually no risk. If you would have put all moneys initially into the immediate annuity you would have earned $10,884 per year with no increases, ever. With our strategy in just over 5 years your income surpasses the immediate annuity only strategy and continues to grow every 5 year period after that. Also, unlike putting all money initially into the immediate annuity and by first keeping 40% of your money in CD-Type Fixed annuities, you have accessible funds in case of an emergency.
For more strategies like this contact www.annuityrateshopper.com
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Tired of Paying Unnecesary Taxes? |
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Tired of Paying Unnecessary Taxes?
Many CD and Bond investors are used to paying taxes every year on the interest that they earn. What if for some reason you didn’t have to pay the taxes on the interest you earned if you didn’t spend it? That’s one of the main benefits and reasons people use when choosing a fixed annuity over a CD or a bond.
When you invest in CD’s and bonds whether you spend the money or not you are going to get a 1099 and have to pay taxes on the interest you earned. What if you purchase a 5 year CD and don’t make any withdrawals during that time, do you still pay taxes then? The answer is yes. Each year you would receive a 1099 from the issuing bank for the imputed interest earned in that year. That does not seem very tax-efficient.
Annuities and CD’s are very similar in many ways. A CD is an insured investment purchased through a bank and an Annuity is an insured investment purchased through an insurance company. One of the huge benefits that insurance companies can offer is tax-deferral. Tax-deferral means that while your money remains with the insurance company (i.e. in an annuity) you don’t owe taxes on the gains. It’s not until you take the money out of the annuity that you owe taxes on any gains.
Many annuities that we offer have the same look and feel as a Bank CD. The major differences between the CD’s issued through banks and Annuities offered through us is that our rates are generally higher, we offer more liquidity and of course tax-deferral.
For more information please contact one of our licensed agents.
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