6% INCOME

You can often get up to 6% income guaranteed, with tax benefits in a non-retirement account...

Many Americans plan to take distributions from their portfolios during their retirement years. And one of the biggest questions is how much can you withdraw without jeapordizing your principal.

If you read the mainstream press, you will often find the number to be around 4%. Insurance companies have created several investment programs that guarantee lifetime income. But the problem with most of these programs is that they do not guarantee that you will have any money left over when you die.

So how do you get around that? How do you both guarantee lifetime income AND your principal for those you leave behind?

The answer is found in "laddering".

Most people are familiar with the concept of laddering with CD's or bonds. The idea is that you have a portfolio of CD's (or bonds) maturing at different times. For example, you might create a CD ladder with maturities of 1 year, 2 years, 3 years, 4 years, and 5 years.

As the 1 year CD comes due, you replace it with a new 5 year CD. And then each year, you repeat.

Before long, you end up with 5 CDs with 5 year maturities, and 1 will mature each year. The benefit is that you increase the interest that you earn on these instruments.

Now how does that apply to guaranteeing your income and these new insurance programs?

Well, these insurance programs not only guarantee lifetime income, but they also provide a mechanism to increase your income each year that you don't take money out. And some of them will even pay out this increase as a death benefit if you don't use the money.

If you ladder these programs properly, just like you might ladder CDs or bonds, you can often end up with a result that guarantees you an immediate income stream of 5% - 6%, guaranteed for life, AND a death benefit of your principal (or greater) for your beneficiaries.

Plus, if you utilize this approach for non-retirement plan dollars, you can often create that income stream and end up only owing tax on 10% of that income or less! (Remember, income from retirement plans is 100% taxable.)

The bottom line - guaranteed lifetime income of 5% - 6% while also guaranteeing your principal to your heirs, and all with great tax benefits for non-retirement plan accounts. What a great outcome from using a little imagination!