Malleo Financial Services

Michael A. Malleo 

Phone: 201-321-7041

mike@malleofinancialservices.com

 

Terms of Notarial Acts:

Acknowledgement – Certifying that a signer personally appeared before the Notary, was identified by the Notary, and acknowledged freely signing a document.

 

Malleo Financial Services is a proud member of ALTA (American Land Title Association), the American Society of Notaries, and the National Notary Association (NNA). We're also a Fidelity National approved closer. 

 

FIDELITY APPROVED CLOSER
FIDELITY APPROVED CLOSER

 

*The opinions expressed on this website are strictly those of Malleo Financial Services, LLC and not those of ASH Brokerage Corp.., or any of our affiliates.

 

*Malleo Financial Services LLC cannot and

will not give any tax or legal advice.

 

Six Ways a Single Premium Immediate Annuity Can Be Useful in Retirement Income Planning

Annuities—while not for everyone—can be a viable option for certain  circumstances. Single Premium Immediate Annuities (SPIA), paying out over a specified number of years (“period certain”), can be a valuable retirement planning tool. Listed below are seven strategies where you can use a SPIA to help you achieve your financial goals:

 

1) Pre-Age-62 Retirement

If you retire before your 62nd birthday, a period certain Single Premium Immediate Annuity (SPIA) can help fill the income gap between early retirement and the start of Social Security. Although you can start collecting Social Security at age 62 (if born in 1960 and later), every year you delay—up to age 70—locks in a larger monthly income benefit. A period certain SPIA can help bridge the income gap between early retirement and your target Social Security start date.

 

2) Help Cover Debt

If you are seeking peace of mind, a period certain SPIA can lock in guaranteed income to help cover temporary debt or other short-term financial obligations, such as the remaining payments on a mortgage.

 

3) Income Ladder

A period certain Single Premium Immediate Annuity (SPIA) can offer a guaranteed income alternative or income supplement to bond ladders.

 

4) Legacy Planning

Life insurance is an increasingly popular wealth transfer tool, often allowing people to convert legacy assets into a larger, income-tax-free death benefit for their beneficiaries. Income annuities such as a SPIA can be set up to automatically pay the life insurance premiums.

 

5) Pay for a Long-Term Care Policy

The cost of care, whether it be in a long-term care facility or having in-home nursing care is ever increasing. A long-term care insurance policy (LTC policy) can help you pay for that potential future expense.  One strategy to help with your budget in retirement, is to use the after-tax payments of a SPIA to automatically pay for the premiums of an LTC insurance policy.

 

6) IRA Maximization Strategy

For individuals that have significant assets and have an IRA that they won’t be tapping into during retirement, an estate tax issue may be of concern.  A solution to that tax issue would be purchasing a Single Premium Immediate Annuity in the IRA using the current IRA money, and then using the after-tax SPIA payments to fund gifts to a type of irrevocable life insurance trust (ILIT) called a “Wealth Replacement Trust”.  These payments will then pay for a life insurance policy held in the trust that’s equal to the original value of the IRA. Upon your death the remaining SPIA assets will go to the annuity company, and the trust held life insurance death benefit will provide your heirs with a tax-free inheritance that would be several times larger than they otherwise would of received had the IRA been taxed.  Also, you will no longer have to worry about correctly calculating and taking your RMDs each year after turning age 70½, as the SPIA will be making immediate payments.

 

 

For a free consultation, please contact us for an appointment.

 *This blog is strictly the opinion of Michael A. Malleo and not those of

ASH Brokerage Corp., nor any of our affiliates.

 

Malleo Financial Services LLC cannot and will not give any specific tax or legal advice.

Please consult your tax professional or legal professional for such advice.