Income Annuities
Income annuities or immediate annuities guarantee income for a specified period of time and or lifetime. In today's low interest rate environment Income annuities offer a income with tax advantages. Read on to see how income annuities can help.
Case Study 1
Hugh recently turned 76 years young and feels great and likes to travel. Hugh has social security and a small pension that covers most of his living expenses. He uses interest from $180,000 he keeps in CDs to supplement his living expenses and fund his travel and entertainment budget. Over the course of the last couple of years the earnings on his CDs are just covering his living expenses. Hugh is frustrated and is considering taking a part time job so that he can start traveling again.
Solution to Case Study 1
Hugh is currently earning 2% on his CD deposits which gives him an annual income of $3,600 or $300 a month. Hugh repositioned $100,000 into an income annuity that pays him $863 a month or $10,356 annually 81% tax free. Hugh feels great because his cash flow just increased almost three times. Best of all Hugh has peace of mind because his income is guaranteed for life. Hugh never has to worry about falling interest rates, he can concentrate on planning his next trip.
Case Study 2
Thelma 70 and her husband George 73 were concerned about the downward slide in their interest earnings. Just three years ago they were earning $30,000 a year from their $500,000 in CDs. Now their income was down to $12,500. While they had income from social security and George's pension they were not feeling as secure as they did a few years ago. George also was concerned that Thelma have enough income if he were to pass away---------------------------------- SOLUTION: Thelma and George used $250,000 to purchased an income annuity that guaranteed both Thelma and George $19,750 a year for the rest of their lives. Their income now rose to $26,000 and because of the tax advantages of the income annuity they had as much money as when they were earning $30,000 a year. George was also happy because he knew even if he were to pass on, Thelma would continue to receive this income for as long as she lived.
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