Is a split annuity worth it? There has been a lot of talk recently on split annuities. A split annuity is where you take half the money you have to invest and purchase a period certain annuity for 10 years. Invest teh other half in a fixed or fixed indexed annuity for 10 years. When the 10 years is up you take the balance from your fixed or fixed indexed annuity and purchase a life annuity with that money.
Why would you do that? Simple, you make more income over the long term. Lets suppose that someon is 65 years old and need lifetime income, and suppose they have $500,000 to invest. If they were to purchase a straight life annuity for $500,000 that guarantees $27,000 per year for ever. Instead suppose you purchased an annuity for $250,000 that would guarantee payouts for 10 years at $27,000 per year. You would then invest the other $250,000 into a 10 year fixed annity at 5%. In 10 years you would have $407,000 to withdrawal. You would then purchase a life annuity for $407,000 that would provide income for life. Since you are now 10 years older this annuity might pay $34,000 for the rest of your life. By splitting your annutiy purchases you can guarantee and increase your monthly income. Just an idea. for more information call us at 888-515-7152 or email us at ryan@annuityrateshopper.com