Tax Free Income For Life @ 70 and Beyond

1. Delay Social Security: Wait until 70 to start receiving Social Security benefits, resulting in a higher monthly payment. During the waiting period, the case study couple can secure replacement income by investing $362,000 of their 401k into a five-year payout annuity, which pays them $6,600 per month after taxes.

2. Smart Investment Allocation: To optimize their savings, we suggest allocating funds into multi-year guaranteed annuities (MYGAs) with a fixed interest rate of 5.1%. This strategy offers growth potential while maintaining liquidity for any future needs.

3. Income Annuities: To ensure a stable income for life, we propose placing $500,000 of their 401K into income annuities. The longer they wait to start the income, the higher their monthly payment. Additionally, we explore the option of converting a portion of their traditional IRA into a tax-free Roth IRA for future income.

H E Scheil & Associates doing business as Cardinal Advisors holds an insurance license in all 50 states and DC. Listed below is the license # in each individual state. Alabama 675461, Alaska 100118081, Arizona 1800012348, Arkansas 100104794, California 0K32569, Colorado 464622, Connecticut 2463129, Delaware 1119857, DC 2887040, Florida L087124, Georgia 159539, Hawaii 445296, Idaho 507076, Illinois 100333675, Indiana 721739, Iowa. 1002056691, Kansas. 272705345, Kentucky 738674, Louisiana 614407, Maine AGN249408, Maryland 100048542, Massachusetts 2006645, Michigan 0104206, Minnesota 40411912, Mississippi 15016382, Missouri 8325733, Montana 100126008, Nebraska 100224332, Nevada 1007341, New Hampshire 2315847, New Jersey 1557889, New Mexico 1800010640, New York 1382342, North Carolina 1000092550, North Dakota 2000136230, Ohio 1028975, Oklahoma 100190853, Oregon 100237062, Pennsylvania 589318, Rhode Island 2309277, South Carolina 1907911784, South Dakota 10017719, Tennessee 2252224, Texas 1963111, Utah 513447, Vermont 1038574, Virginia 129027, Washington 864498, West Virginia 100107166, Wisconsin 100192273, Wyoming 275179

[uansam]

Suggestion….first 5 years…collect SS and buy a fixed indexed annuity with income rider with 362k…then at 71 year old collect both SS and lifetime annuity from FIA. Use today amount it would be 5.1k/m from SS + 3.2k/m from FIA…then they’ll get about 8.3k/m at 71 instead of 6.6k/m.

[dakotaiv]

I love watching these videos. Hans and Tom are very clear in their explanations. The 5-year Roth conversions to the Annuities look like a great way to convert the IRA month and generate the income for life. Thanks for sharing this information.

[davidjohn]

I really like the annuity strategy... I have a similar savings, but still working at 66 ..

[jamesburrell]

Liked Tom’s comment regarding one spouse having more investment knowledge than the other and the issue this creates upon the death of the knowledgeable spouse.

[davidfolts]

Thanks, Cardinal, excellent whiteboard work!

[charleschappell]

Thanks to Cardinal Advisors for detailing out this annuity strategy. While I would have reservations adopting it myself, I can see why it would be compelling to those who would like to turn over market decisions to annuity providers and kind of put things on autopilot.

However, unless I missed something, there is one thing that really jumps out to me in this strategy that didn't seem to be adequately addressed in the video: where are the additional taxes are going to come from while conducting those 100k Roth conversions from age 65-69?

An additional 100k/year of income over those years is going to put this couple well into the 22% Federal bracket. I would think their Federal taxes would be more like 30k/year, not the 18k on conversions + 5.6k on income from the 401k/IRA outlined in the plan. That's a lot of taxes on the income of only 79k that is coming in from the 5-year annuity in the 401k/IRA.

[arvsom]

Hello, Thank you very much for putting these ideas in having a lifetime income with minimal tax rates. Can you please explain further about the 5 year certain annuities? about the tax it will imply. Thank you

[eliechidiac]

Tom’s comment at 22:12 is extremely important

[derkong]

What happens if several annuities goes belly up? If the market is faced with multiple failures at one time?

[keith]

Tom says delaying past FRA is a guaranteed 8% return, where can you get that? But you're foregoing 3-4 years of benefit along the way (quarter million $ or so), where was that factored in? 6:45

[scottb]

Please comment on annuity guidelines not to exceed 50% of one’s retirement portfolio.

[Retire-mu]

What happens if insurance company folds or bankrupts? I read annuities are not FDIC insured. Thank you !

[davevarga]

One detail. If he waits till 70 to pull SS, he gets 1400 more a month. Got it. Now if she waits to 65, her reward is only an extra 100 a month? That CANNOT be accurate. Yes her SS at 85 is half that of his. But she is going to make 8% more a year for 5 years thats 40%. Gotta be around 600 a month more for her if she waits to age 70.

[peterhoffman]

I do wonder if IRMAA would come into affect with all this income coming to a person or couple in their older years...especially if/when one spouse dies..

[tomtrotto]

Wouldn’t Sue’s SS at 70 = $2400 rather than $1800 (1/2 of Joe’s)?

[charliehargrave]

Retire at 70 and die at 65 like my wife did. There is no guarantee we will be alive tomorrow.

[Laborkei]

Enjoy your video's, but I hate Annuities...