Hi! Here is the first of several articles about how to plan for a successful retirement! Hope you Enjoy!
A little over 10 years ago, one of my elderly property & casualty clients came to me and requested that I help her file her income taxes. As I helped her prepare her filing I became aware that she was depleting her wealth at the rate of about $2000 per month. She had around half a million dollars in a retirement nest egg and was receiving pension benefits and railroad retirement payments. Nevertheless, even with those, if she lived a long time, it was apparent that eventually where she was now comfortable, there was a possibility in the future that she might run out of money.
As you might suspect, her attitude toward money was completely conservative and my suggestion that she invest a portion of her wealth in the stock market was met with a firm no. What she would do, with the assent of her children, was to invest enough of her wealth in a Fixed Interest Rate Single Premium Non-Qualified Annuity to generate her a monthly income of $2300 per month. With this additional income and her continued frugality, where before she was depleting her wealth at roughly $2000 per month, she then became a saver. And because of the tax favored treatment of annuities, nearly all of her income from the annuity was non-taxable.
Over time her savings grew. She then elected to take the excess and purchase a set of laddered Certificates of Deposit that then returned a nice amount of interest every 90 days which was reinvested into the CDs.
My client died a few weeks ago. Because of her and her children’s agreement to do some pre-emptive financial planning, what she left behind is nearly what she had 10 years ago due to her not having to touch any of her other investments. In the meantime, she never once had to worry about money.
Sometimes annuities get a bad rap – usually because they were purchased for the wrong reason. But used correctly, for a guaranteed income with little attendant income taxation, there is not another product that matches it.
If my client’s experiences have piqued your curiosity and you would like to know more about annuities and how they can fit into your retirement plans, I would love to speak with you. In the meantime, my wish for all is a happy life and a successful retirement. Planning is the Key!!
Geary Newman 404.427.1885.