Summary

A 54-year-old couple seeks to secure $12,000 per month in retirement income and establish a tax-free wealth transfer strategy for their children.

Abstract

The couple currently has $1,263,000 in retirement assets, not including home equity, and aims to retire in 10 years with a guaranteed monthly income of$ 12,000. They are risk-averse and want to ensure that some of their money is not exposed to market volatility. The article suggests using an indexed, income annuity to generate maximum retirement income, which could provide 47% more income than the 4% rule from the market. Additionally, the article proposes a tax-free wealth transfer strategy using indexed, universal life insurance to transfer maximum tax-free wealth to their loved ones while leveraging remaining assets for their retirement.

Opinions

The couple should allocate approximately 60% of their current retirement assets to fixed, guaranteed, future income using an income annuity.
An income annuity can provide safe money not susceptible to market fluctuations, eliminate sequence-of-return risk, generate more income than the market, and ensure lifetime income.
The couple can add supplemental long-term care coverage to their income annuity for an annual cost of 0.1%, which would double their income value for up to 5 years with a 2-year waiting period.
The couple should consider repositioning $37,034 per year into a$ 3,000,000 tax-free legacy policy for a 60-year-old.
The couple should roll over their variable universal life cash-value into a low-expense, universal life policy and redirect their $1,200 per month premiums to the new policy for a tax-free transfer of wealth.
The couple should take the additional $2,149 per month of income beyond their income goal and reposition it for a tax-free transfer of wealth, potentially producing between$ 4-5 million dollars of tax-free money for their children.
The couple should connect with the author and access their resources for further guidance and support.

Full Analysis: 54-year-old Couple Wants $12k/mo. in 10 Years & $5M Tax-free to Their Kids

(be sure to checkout the video of this analysis too)

Retirement Goals:

1. Retire in 10 years with $12,000 per month of fixed, guaranteed monthly retirement income

2. Protecting your wealth & creating a tax-free wealth transfer strategy

3. Risk averse — ensure that some of your money is not susceptible the volatility of the market (i.e. safe money)

Financial Info:

Total Retirement Assets = $1,263,000 (not including home equity)

Retirement Asset Breakdown: $183k current 401k (maxing out annually), $438k old 401k #1, $250k old 401k #2, 7k Fidelity IRA, $22k Ameriprise cash, $28k Roth IRA, $65k wife’s IRA, $270k Riversource Variable Universal Life Insurance

Other Assets: social security, home equity (approx. $800k)

Estimated Future Retirement Values: 1,263,000 @ 6% per year = $2,261,000 projected @ retirement (10 years)

($757,800) — income annuity contribution today (see Retirement Income Analysis below)

Leaves Approximately $1,317,906 remaining retirement assets non-annuity in 10 years to spend flexibly

Summary of Safe Money Strategies:

Typically, you want what your age is in “safe money”, or money not tied to the ups-and-downs of the market. So, for example, when you turn 60 years old, you should have about 60% of your money somewhere safe, and about 40% can remain in the market.

1. Indexed, Income Annuity — designed specifically to provide maximum, guaranteed, lifetime income

o Does provide a small amount of growth if the market does well with no risk of loss, but the primary purpose is income generation

o Note: (see Retirement Income Analysis below for recommendations)

2. Indexed, Growth Annuity — designed to allow you to participate in the growth of the market with no risk of losing money if the market goes down

o Not at all designed to provide income, only risk-free growth of your investment

3. Short-term, Fixed Annuity — provides a fixed, guaranteed interest payment annual for whatever period you select (1-year, 3-year, 10-year, etc).

o Just like a CD, just issued by an insurance company rather than a bank

4. Indexed, Universal Life Insurance — designed for either supplemental tax-free retirement income, long-term care protection (without giving up accessibility), or as a way to transfer maximum tax-free wealth to your loved ones, while allowing you to leverage your remaining assets for your own retirement

o Note: (see Tax-free Wealth Transfer Strategy below for recommendations)

Retirement Income Analysis — Using an Indexed, Income Annuity to create maximum retirement income:

· Using approximately 60% percentage of your current retirement assets to fixed, guaranteed, future income ($757,800)

Income calculation report from American Equity

Highlights of using an income annuity vs. the market for income:

o Safe money not susceptible to fluctuations of the market (+ guaranteed growth)

o Eliminates the sequence-of-return risk for your retirement income (your retirement income is unaffected by what happens in the market now)

o Generates about 47% more income than you can from the market with the 4% rule

o Eliminates the possibility of running out of money in retirement (guaranteed lifetime income)

o Allows much more freedom & flexibility with your remaining assets

Income Schedule (you decide when to turn the income on):

Residual Value of this contract (never less than you put in):

The death benefit goes away but the income never does

· Review the cumulative income payments received at age 85 (above)

o $2,124,824 received vs. an initial contribution of $757,800 (+ income is still guaranteed)

· Long-term Care Supplement: You can add supplemental long-term care coverage for an annual cost of 0.1% (doesn’t affect the income of this annuity)

o This will double your income value for up to 5 years (with a 2-year waiting period)

Retirement Income Results in 10 years

$8,049/month (income annuity) + $6,100/month (social security) = $14,149/month (guaranteed for life)

Note: you will also have a projected $1,317,906 of additional retirement funds in 10 years that can be used to create additional income, to spend flexibly in retirement, or to reposition for a Tax-free Wealth Transfer (see below).

Tax-free Wealth Transfer Strategy

· Example of a $3,000,000 Tax-free Legacy Policy (for a 60-year-old)

Repositioning $37,034/year in Retirement will Guarantee a $3M Tax-free Death Benefit

o Currently putting $1,219/month into a variable universal life policy that could be redirected as part of a future tax-free wealth transfer strategy, also allowing you to reduce the overall amount of term insurance you have & ensure that you are protecting future wealth for your girls (and giving them all tax-free money)

My Recommendations:

· Approximately $757,800 to an indexed, income annuity based on Retirement Income Analysis for future, guaranteed income (bringing your total income to $14,149/month, guaranteed for life)

· Rollover the Variable Universal Life cash-value into a low-expense, universal life policy based on Tax-free Wealth Transfer Strategy (above)

o Redirect the $1,200/month premiums to the new policy to reposition more money for a tax-free transfer of wealth

o Take the additional $2,149/month of income beyond their income goal & reposition that for a tax-free transfer of wealth

o This will produce somewhere between $4–5 million dollars of tax-free money to leave for your girls

Connect With Me & Access All My Resources Here

Enjoy this blog? You’ll probably enjoy this one as well: 56-year-old Wants $7,000/month of EXTRA income @ 64 (+fully-funded tax-free retirement)

To your success,

Matt