Immediate annuities provide extra income

Posted: Monday, May 31, 2010

There is only one thing worse than a pouting child and that is a pouting adult. Yes, we know the economy is in the tank. Our debt load is at historic levels and growing and the country is strongly divided along philosophical lines. One side firmly believes government can solve most of our problems by providing cradle to grave security systems. The other firmly believes we should have a bare minimum of safety nets with maximum liberties in order to allow the American peoples’ great creativity and entrepreneurial spirit to grow us out of our problems, creating more wealth for all. These debates are important, but not as important as your own personal financial situation and what you choose to do about it. This brings us to the question of the month:


“Dear Dan and John: I am a 57-year-old widower. My wife died about two years ago and I am having a hard time making ends meet. You see, I retired early because my wife had a good job, but, since she passed, I have been living on our savings. Since interest rates are so low on my

CD portfolio, I am spending down those holdings rather quickly.

I am running about $1,000 a month short, but I really don’t want to go back to work. Do you have any suggestions?

    Signed, Disgruntled”


Sir, first, we are truly sorry for your loss. Secondly, we do have a few thoughts on how to make up your income shortfall:


If you have not done so already, you should have your portfolio reviewed by a Certified Financial Planner (CFP®) who specializes in retirement income strategies. This person can suggest investment alternatives that may increase your portfolio rates of return, thus possibly making your money last longer.

You could also have this CFP® look into an immediate annuity for part of your portfolio. With this type of contract you give a lump sum to an insurance company in trade for a promise of a lifetime payout. Because you are giving up your right to your principal, these payments may be larger than you are currently receiving.


Finally, we feel you should strongly consider getting a job. Because A) you are young, B) getting out of the house is important, and C) you need money. Before you dismiss this “work” idea, consider that many companies look for “seasoned” workers because of their experience, stability, and good attitudes.


Furthermore, according to Alicia Munnell of the Brookings Institute, “Spending a few additional years in the labor force can make a big difference. By continuing to work until their mid-60s or beyond, most individuals should be able to secure a reasonably comfortable retirement.”  Sir, you, like many others, can expect a long happy life.


In fact, The National Vital Statistics Report says a 57-year-old man will on average live an additional 21.5 years. Many people live much longer and you do not want to spend those last years broke. So buck up, get out, and find a job – any job. You may find, as Frank Sinatra once said when coming out of one of his many retirements, “I’m not sure why but new money spends better than old money.”

The guarantees of an annuity contract, including fixed returns, payouts, and death benefit guarantees are contingent on the claims-paying ability of the issuing insurance company.


Dan Searles and John Stohlman, owners of Medallion Financial Group, are CFP®’s, financial planners and Registered Representatives with over 25 years of experience in the financial services industry, offering securities and advisory services through National Planning Corporation (NPC), member FINRA/SIPC, a Registered Investment Adviser. Medallion Financial Group and NPC are separate and unrelated companies. They manage over $250 million of client assets. For further info, questions or comments regarding this article, Dan and John can be reached at 301-990-9704 or 1-800-878-9704 or

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