A compelling retirement concept

A Compelling Retirement Concept!
It's all about INCOME during retirement.

I have a friend who owns a duplex.  He paid $400,000 for this apartment when he was 55 (8 years ago). He's had good tenants and bad.  He's paid legal fee's to have the bad removed, replaced the roof, repaired walls and carpets.  

He nets about $15,000 annually depending on the year, and this is going to supplement his social security payments.

He's not looking forward to being a landlord the rest of his life but he believes he'll need the income.

Had he placed this $400,000 with a strong insurance company, American Equity for this example, he and his wife at age 65 would be guaranteed $33,667 annually for both of their lives, with no tenant head aches.  The math is the same for deposits of $5,000 to $1,000,000

If they lived until age 90 their payments would exceed $841,675.  $33,667 divided by $400,000 = 8.42% annual yield.  And payments continue until the 2nd death.

Are there downsides to this insurance product?  Yes, to insure the annual payment of $33,667 at age 65 they'd have to not access the cash, but if he wanted cash he could access 10% per year without penalty.

What if they both die early?  All remaining principal and interest would be returned to their beneficiaries.

What if the Stock Market Crashes Again?  There will be no loss of principal since these funds are not invested in Wall Street but placed an insurance company.

What if they wanted to retire at age 60?  They'd receive $22,511 annually guaranteed for both lives (5.63% yield).

I moved $100,000 of my savings to American Equity last year and will receive nearly $10,000 annually when I retire, this is for the rest of our lives jointly.  I'm too young to access my 401K money (under 59 1/2) but next year I'll quickly move some of that money to add another layer above my Social Security payments.

Had I left my money in the bank, my same spend down of $10,000 annually would exhaust my savings in 10 1/4 years.  

I don't like the Wall Street "gamble" as I call it, so I don't play there.  

I've always wanted safe "rental income" during retirement.  I've now created my own pension (rental income). And you can too.

I appreciate any and all comments.

Cory Payne

Beehive Insurance Retirement Planning

cpayne@beehiveinsurance.com

801-685-6860