To supplement monthly Social Sec Income.
Hello Ms Savage
Requesting your advise if its wish to withdraw a portion from our IRA to establish a monthly fixed guarantee income annuity account to supplement our monthly Social Security Income. Your comments or recommendations will be greatly appreciated. Thank you, Take Care & God Bless
Terry Says
Well, I don’t know your entire situation, but I assume you are talking about an IMMEDIATE ANNUITY, designed to last for BOTH of your lifetimes. The goal being to never run out of money.
BUT, have you taken a look at what monthly income you could get for the money you withdraw? (And don’t forget that when you make a withdrawal, you’ll pay ordinary income taxes and can only invest what you have left after taxes.) And that withdrawal, if enough money, could impact the taxes you pay on your Social Security income and your Medicare Part B premiums.
Go to www.immediateannuities.com and put in your ages, state of residence, and the amount you have to put into this annuity. That will tell you the monthly dollar amount you could receive.
BUT WAIT — THERE’S MORE!!! As they say in the commercials. Let’s suppose you get a calculation of $500/month, when you do the above process. At only 3% inflation, the buying power of that check will be cut in HALF in about 20 years. At 7% inflation, the buying power will be cut in half in 10 years! Remember, it is a fixed check — unlike Social Security, which gets a cost-of-living increase every year.
Now, it’s up to you to figure it out. You can always ask for a regular $500 withdrawal from your IRA to be deposited into your checking account every month. It will count toward your RMD when you reach age 72 and MUST withdraw.
In the meantime, you can invest the balance conservatively and have the liquidity for a larger withdrawal in an emergency. I think that’s the course I would recommend, not knowing anything else about your situation.
