You can put part of your retirement nest egg in layaway

Happy Holidays.  If you are like many Americans, you’re wondering when to take retirement income… and how much.  Well, for those of you old enough to remember layaway, this might just work for you. The “layaway” concept is also referred to as “laddering” by many.  In other words, let some of the money continue to grow for a while, tap another part of the nest egg for a period of time and then release the balance in a retirement income  flow. Let me give you a couple of examples.

Now, remember, each situation is different and you will want to confer with your financial professional. Here we go…

Let’s say we have a male ready to retire at age 66.  He can take Social Security now, as he needs the money, but wants to maximize the value of his Social Security retirement income. Let’s also say that his Social Security retirement income is $2500 per month at age 66.  He could leave that Social Security alone until he reaches age 70.  That $2500 is guaranteed to grow at 8% per year with no current taxation. Very tough to beat today. But, remember, he needs $2500 per month now. What to do?

He could get a 4 or 5 year single premium immediate annuity for the period until he is 70 years old. Then, when that money is finished, he then takes Social Security which is much more than the $2500 at age 66.  But, he has other moneys and will need more at age 75.  So, he could purchase a fixed index annuity with a lifetime income rider to get the additional income he desires and take retirement income off of this account at age 75.  Sound confusing?  Let me help.

With this concept, your financial professional will only need to ask you two questions.

“How much do you need?” And, “when do you need it?”

He can give you the exact amount of money you need to put in “layaway” to achieve your retirement income needs. So, let’s empty that worry bucket. Holidays are approaching, and this is one worry we can eliminate.

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This article was written by... 
Raymond J. Ohlson CLU, CRC, CEO & President of The Ohlson Group, Inc. and SMP International, LLC     
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Mr. Ohlson entered the insurance business while completing his Bachelor of Science Degree at Ball State University.  He quickly qualified for the Million Dollar Round Table (MDRT) of which he is a Life Member.  He also received his Chartered Life Underwriter (CLU) designation from the American College in Bryn Mawr, Pennsylvania.
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Mr. Ohlson, a former life insurance company president, currently sits on college and hospital boards and is a published author. ​