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Split Annuity Retirement
Solution Case Study performed July 2, 2004: Bellsouth Retiree age 56 Employee with 30 years service had: q Pension Band Benefit of $240,000.00 q 401(k) Benefit of $100,00.00 q Cash Balance Benefit (SIP) of $45,000.00 Total Retirement Sources $385,000.00 Retire today using a Split Annuity Retirement Solution The
Split Annuity Retirement Solution calls for using both an immediate and deferred
annuity. The immediate annuity provides a guaranteed monthly income that will
begin upon retirement. The deferred annuity will grow on a tax-deferred basis
and will be used after the immediate income annuity has been exhausted. Immediate
Income annuity Invest $220,000.00 in an immediate income annuity providing a guaranteed monthly income of $2,000.00 per month for the next ten years. Deferred Annuity Invest the remaining $165,00.00 in an equity index annuity with long term growth linked to either the: S&P 500, NASDAQ100, DJIA or Russell2000. a) An initial investment of $165,00.00 at 6% over a ten-year term results in $300,200.00. This would produce a monthly income of $2,830.00 per month for the next ten years. b) An initial investment of $165,00.00 at 8% over a ten-year period results in $366,240.00. This would produce a monthly income of $3,448.00 per month for the next ten years. In addition to the monthly income provided above the retiree will enjoy an increase in monthly income provided by social security at age 65.
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