Click the Video to watch The Retirement Architect, David Reyes discuss the important topic of creating an inflation protected source of income

Take a moment to read below to follow along with the show!

Imagine you can have a pension. Let’s say you don’t have a pension. Most of you don’t have a pension. Imagine I could create a pension for you that would give you income for the rest of your life. And, oh, by the way, income for your spouses life. If you have a traditional pension, it does not work that way. You know, 100% of the same income for the rest of your life and the rest of your spouses life, should you predecease her. Usually it’s the man that dies first, so the woman gets the money forever. And so you can never run out of income. You would each have a nest egg.

 

So what I call the “Perfect Annuity” is what if we had all those benefits but on top of that, we got income inflation protection inside of it. And I’m going to share with you – now, this is just for hypothetical, it’s an actual annuity, but this is, I’m doing this full disclosure because this is not guaranteed but I’m giving you an example, if I can find it here. I know I have it here somewhere. It’s right here.

 

Of one of the types of annuities that I use, one of the types of income annuities I use – there’s really three types. The first one is they’ll start giving you income immediately, increase income immediately. The second {1.12 – cuts out} income for a while and get increasing income in the future. In fact, there is one contract that I love the best. If you have time, we wait 10 years. You buy it early, but it gives you the most amount of income forever, plus it’s increasing income. But the one I use the most for clients – it’s more appropriate – is where our increase in income is tied to a market indices, like the S&P 500.

 

So I’m going to give you an example right here. So I have this actual client. So they put a million dollars into an annuity, into this increasing income – “Perfect Annuity” – and they deferred for five years. They were 60, they’re going to retire at 65. So at 65, they’re going to be able to withdraw 5.75% of the annuity value. At 5 years, it’s worth about 1.2 million. So they’re going to be able to take out $69,000 a year. Well, that’s a lot of money. That’s 6.9% of the original value. Think about that. Where else can you get 6.9% income guaranteed the rest of your life. And, oh, by the way, this income is going to go up over time.