$150k Target Income in 7 Years

[DennisTheMennis]

Hi,

52y/o female in Texas, how much of a lump sum will it take to guarantee $150k income in 6.5 years? I'm looking at Equitrust and Allianz, any other ideas? Thanks in advance.

 

[Josh]

Period certain? For life? Forever?

At 5% to keep it running indefinitely (paying out only the interested earned) you're looking at around $3,000,000. Using that same baseline you'd probably need to stick around $260k-$270k or more to hit that.

Those are really rough numbers because there are a lot of variables, but that's at least an idea of the answer to your question.

 

[BNTRS]

Based on FIA income riders? Probably about $2.65 million.

That's assuming single income rider.

6.5 years from now (and I'm going to violate sig figs and round down) means this person will still be <60 so 4% of balance is a decent rough average. So $150,000/.04 would give us $3,750,000 then we need to solve for present value in a Time Value of Money equation given our future value of $3.75 mill at an assumed interest rate of 6% (which again is a good rough average). Comes out to at little under $2.65 mill on th TI-83 Plus that keeps telling me I need to change the batteries every time I turn it on--if only that were the least of its problems.

 

[DennisTheMennis]

Re: $150k Target Income at age 60

Thanks for the replies. Sorry it should be to age 60, not 6.5 years..long day.

BNTRS - true if just using assumptions, the variable is the bonus that some of these companies are giving as well as the withdrawl rate%, deferring payments...

I am looking at Equitrust, it is around $1.8 million. They are giving a 6% bonus year one and a 4.5% withdraw rate (using $1million to keep it east) $1mil gets $81k income guaranteed at age 60.

Equitrust isn't highly rated, and with a large policy I can understand and looking for alternatives.

I'm checking into Allianz and others tomorrow. Thanks again.

Cheers

 

[nathan.lee]

Based on FIA income riders? Probably about $2.65 million.

That's assuming single income rider.

6.5 years from now (and I'm going to violate sig figs and round down) means this person will still be <60 so 4% of balance is a decent rough average. So $150,000/.04 would give us $3,750,000 then we need to solve for present value in a Time Value of Money equation given our future value of $3.75 mill at an assumed interest rate of 6% (which again is a good rough average). Comes out to at little under $2.65 mill on th TI-83 Plus that keeps telling me I need to change the batteries every time I turn it on--if only that were the least of its problems.

Still rocking the TI-83? I miss mine but I set it free in calculator heaven a few years back.

Great American's Income Sustainer Plus rider attached to the Safe Return FIA or their Income Secure rider attached to the Valor 10 woud give the client approx. $156,672 at age 58 and $169,932 at age 59 using $2MM in initial premium.
This assumes the client wants level income for life and you could get large case approval by the carrier's home office. And probably a few other assumptions too.

Just some food for thought Dennis.

 

[DennisTheMennis]

Wow that is more income. How do they do it? They want a guarantee though, how does that work with the FIUL? 4%?

Great American? I will research, but A ratings? A Good Co.? Thank you.
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Ok they have A ratings...What is their AUM?

 

[nathan.lee]

Wow that is more income. How do they do it? They want a guarantee though, how does that work with the FIUL? 4%?

Great American? I will research, but A ratings? A Good Co.? Thank you.
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Ok they have A ratings...What is their AUM?

Dennis,

Here is Great American's financial strength brochure from their site.

 

[Anew8tee]

The premium amt would need to be $1,633,986 to get $150K per year at age 60 with Great American.

 

[xrac]

Does anyone use laddered annuities to accomplish this?

 

[iceco1d]

How about the Pacific Life Index Choice product. The 8 and 10 year contracts both give a 2% bonus, and the income rider gives an 8% roll up for up to 10 years. Income is 5% for life, starting at age 59.5.


$1,807,500 would be your initial deposit. You get a 2% premium credit, and then 8% simple for 8 years on the income base, and start 5% income (which would be $150K/year) for life at age 60.

Current rider charge is 75 bps (max charge is 1.50%). Contract offers fixed bucket (2.0% or 2.1% depending on term), 1 year p2p, 2 year p2p, and a "performance triggered" bucket.