Mike and Susie were searching for more guarantees.
The other day I met with a couple, Mike and Susie, ages 60 and 56; they had heard my radio show on WBOB AM 600.
I was getting all their financial information. He was interested in what to do with his 401k (about $400,000), which was with a significant investment company in growth mutual funds. I asked him how it did in the 2008 stock market correction he said it lost about 30%; my next question was, “how did that make you feel?” Mike paused and said that was awful, and he never wanted to go through that feeling again.
But he had no idea what to do, banks were offering very little interest, and the stock market was so volatile, so up and down. As we reviewed financial goals and information, Mike told me he wanted to retire in 5 to 6 years.
His social security is going to pay him $2,200 at age 65, and he has a small pension of $800 a month, and Susie’s social security at age 62 of $800 would get them to $3,800 with their expenses running about $3,500 a month. However, Mike wanted a little more monthly income for both himself and Susie so they could do a little traveling and spoil the grandkids.
Mike and Susie had a ticking time bomb they were dealing with. What if the stock market took another dive, like in 2008, and he lost 30%, which he could very well do by staying on the path his 401k was on?
After I had gathered all the financial information from Mike and Susie, I returned to my office, sat down, and crunched some numbers. My solution was a combination of 2 Fixed Indexed Annuities (FIA) with guaranteed income riders that offered guaranteed income for both Mike and Susie’s life no matter who passed away first.
The first annuity of $200,000 had an income benefit for Mike at age 65 and Susie’s age 61. The guaranteed income was just over $1000 per month, which will increase yearly. The second fixed indexed annuity with the guaranteed income rider will be accessed for payment in the 12 years, providing a guaranteed income of $1666 per month and growing each year to help offset inflation.
Mike and Susie’s income analysis
- Mike’s SS @ A65 $2,200
- Mike’s pension at A65 $800
- Susie’s SS @ A62 $800
- Monthly Expenses $3,500
- Monthly Income of $3,800
Added 2 Fixed Indexed annuities with guaranteed income riders
Annuity #1 $200,000 turn income on at age 65/61 $1000 per month with increases in income
Annuity #2 $200,000 turn income on at age 71/67 $1666 per month with increases in income
Now Mike and Susie’s monthly payment has an extra $1,300 per month in 5 years and $1,666 in the 12th year to help offset inflation, and all we did was reposition their money into safer investments. They now have extra income for traveling and spoiling the grandkids, all without having the stress of dealing with the stock market.
Mike and Susie were able to accomplish this without any possible market risk exposure. The benefits they have put in place are fully guaranteed.
