Case Study - Using an Annuity to Navigate Retirement

Using an Annuity to Navigate Retirement

Using an Annuity to Navigate Retirement

It's never too late to achieve your financial goals

At age 60, Beth is scared to death about retiring. She has no real plan in place and fears she may not have enough money for retirement. Beth knows she's at risk for outliving her wealth but doesn't know how to begin to fix her situation. When it comes to retirement savings, has she already missed the boat?

  • Female
  • 60 years old
  • Nurse

"A key component to any financial strategy is understanding how it works. You need to know why you have it and what you hope to accomplish with it." -Bryan McCloskey, Wealth Strategist

The Challenge

Beth always knew she needed to prioritize funds for retirement. She contributed to a 401(k) through her employer, worked hard to save money, and even opened a whole life insurance policy in her mid-50s. In spite of all her efforts, she still felt it wasn't enough. Beth wondered if she should have contributed more to her qualified plan, saved more, or gotten started earlier. Now, just five to seven years from retiring, Beth is faced with the reality that she may have to work longer than she thought to guarantee she'll have income for life.

Money was only one part of Beth's challenge, however. She had never created a formal retirement plan. Without understanding the best way to utilize the wealth she had accumulated, she wasn't sure when she should start taking Social Security, what would happen in the event of another market downturn, or how much she should withdraw from her retirement fund vs. her whole life insurance policy. Beth knew why she had saved money, but didn't understand how to use her wealth to make it last.

Solution

After meeting with Wealth Strategist Nicholas Welch to discuss her current whole life insurance policy, Beth was referred to Wealth Strategist Bryan McCloskey, an annuity expert who could help her build up her retirement fund and get her goals back on track. Adding annuities to her portfolio would increase Beth's income in retirement, guarantee she wouldn't run out of money, and help protect her savings in spite of market downturns.

Bryan set up three annuities for Beth: A Direct Income Annuity for a stated amount of income over a certain period of years, and two Fixed Indexed Annuities—one for lifetime income and the other for protected growth. Together, these life insurance products from Allianz Life Insurance Company of North America gave Beth the peace of mind she was looking for. She now had a clearly defined retirement plan, including a timeline, and could see just how much income she would have each month. Further, she had a dedicated Wealth Strategist to meet with on a regular basis to answer any questions and make policy adjustments as needed.

Results

The main product Beth will use for income in retirement is her Allianz 222 Annuity, a fixed indexed annuity which she paid a one-time net premium of $150,000 for. This annuity guarantees her an annual payout of $9,422/year, starting at age 70—a $39,760 return on her $150,000 investment (more if she takes payouts past age 90).

Once non-guaranteed rates are factored in, based on historical data, Beth could see upwards of a $412,312 return on her $150,000 investment, with her first annual payout an estimated $15,971 at age 70. These payouts have the potential to increase annually, with historical data showing a $44,409 payout at age 90.

As Beth faces retirement, she feels confident in her plan, knowing that market downturns won't affect her annuity payment. She'll earn an increase in income every year her premium payment earns interest, but never see a decrease in income during a down year. As her other sources of retirement savings diminish, her growing annuity will continue to replace her income and supplement rising costs due to inflation, health care, and taxes.


Explore The Numbers
Using an Annuity to Navigate Retirement