Annuity Bucketing Plan – Where Guaranteed is Key

You know the #1 concern of Baby Boomers is running out of money in retirement. Many of the advisors I consult – including nearly every top producer – had turned to annuity laddering (typically using a four bucket approach) as their primary solution to this concern. Traditional laddering would include a 5 year certain SPIA in the first bucket, followed by a second bucket deferring for 5 years before being annuitized for the second 5-year period. The final two buckets would grow for 10 years and 15 years respectively and then also payout for 5 years each, giving clients a 20 year income plan for retirement.

This approach generally works very well, except when it comes to truly guaranteeing the payouts a client can expect in the deferred buckets of the strategy.  Unless you are using the extremely low minimum growth rates (currently hovering around 1% in an indexed or traditional fixed annuity), there really aren’t many other options to truly show a guaranteed payout. The old way of bucketing/laddering isn’t good enough anymore…

Below an illustration link from the Advisors Excel Case Design team on a new bucketing strategy many advisors have started implementing recently. You’ll see an illustration displaying the true worst case scenario (truly guaranteed) income plan for clients who desperately need these guarantees and a competitive rate of return. The combination of products used in our newest sample would not only cover a guaranteed stream of income for life – but better than that – even kick out a guaranteed 6% income stream, while allowing for a 1.5% Cost of Living Adjustment!

Here’s How To Do It:

  • Bucket #1:  Cash Account for first year of income
  • Bucket #2: Fixed Annuity paying a one-year guaranteed rate and then being annuitized for 5 years (after the first year…1×5)
  • Bucket #3: 6-year Multi-Year Guaranteed Annuity growing at a guaranteed 4.0% (rate only available until June 15th…6×5)
  • Bucket #4:  Security Benefit’s Secure Income Annuity (FIA) with an optional income rider featuring a Benefit Base that grows at 8.2% compounded annually (11 year deferral, then lifetime income). This proprietary product is exclusively available to you through Advisors Excel.

CLICK HERE for a sample illustration!

Remember, my firm’s case design professionals are here to complete these illustrations for you! Over 100 of these designs leave our office everyday! If you’re not taking advantage of this incredible valued-added service I’m providing – do your practice a favor and try it.
Don’t hesitate to call with your next case and run a similar illustration for that next client needing guaranteed income!

Implement, thrive and be sure to let me know if you need anything additional this week!



One thought on “Annuity Bucketing Plan – Where Guaranteed is Key

  1. Thanks for all of your work on this blog. I am looking forward to reading more of your posts in the future.

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