How to Build Predictable Income Using Annuities and Bond Ladders

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Welcome back to the One of a Kind Financial Show Daily with your host, Mike Milligan. It is December 2nd. Time keeps ticking into the future. You might live to 95, maybe even 100, but will your income plan make it there with you? Recently on the One of a Kind Financial Show, Gary and I dove into smart ways to potentially create retirement income that may help support you in your golden years with after taxes, which are the largest expense you'll ever have in your life. The thing that people fear in retirement most is running out of money. See, retirement income will help you. A retirement income that's guaranteed will help relieve that fear. Listen to that segment next. And as always, I hope you are having an amazing start to the month because you are one of a kind.

Here's the real retirement fear no one wants to admit: running out of money before you run out of life. And now it's not about yachts or luxury travel. It's about, you know, the basic needs will be covered year after year, even if you're the last one standing at your 90th birthday party, because living longer should be a blessing, not a budget crisis. So what does guaranteed income really mean and who still offers it, Mike?

Well, with pensions nearly gone, the only true guaranteed income sources left for most retirees are Social Security and annuities. According to ssa.gov, Social Security is helpful, but usually only covers about 30 to 40% of what retirees actually need. So where does the rest come from? It is time, folks, to start treating annuities as the new pension instead of a punchline. Because many people will say something like, I hate annuities, but companies that say, I hate annuities, will charge you an annual fee for the rest of your life to manage your money. And, uh, so annuities may be wrong for you, but if they're charging you the same fee every year to get business income, it's like an annuity for their business. So is it really, is it really wrong if they're using it as a business model? Guys, annuities can provide something powerful to you in retirement.

Yeah.

So why are they misunderstood and who should be actually considering them, Mike? What do you think?

The word annuity sends some people running, and it's because there's— quite honest, Gary, they've been oversold out in the marketplace.

Yes, they have.

I hear other people locally on this radio talking about, come see me because I have a 50% bonus on an annuity product. Right?

Right.

And the reality is they get that 50% bonus on the product and then they get locked into a 1% to 2% growth rate every year. They're just trash.

Right?

There's nothing ever you get in your life for free. But right, the problem with it is annuities are often presented the wrong way, right? Not all annuities have high cost or are complicated. Income annuities, especially single premium immediate annuities, that's the type that pay higher income payments. They're guaranteed for life. They could be joint life. They provide predictable monthly checks, right? And so if you're getting a predictable monthly check from part of your money, a higher rate of return than what you would get on CDs and bonds, it allows the rest of your money to grow to keep pace with inflation.

Mm-hmm. And you mentioned bonds. Can a bond ladder create predictable income without locking into it?

Ladder bonds, especially short to intermediate-term Treasuries or municipal bonds, create a rolling income stream that protects against interest rate risk and provides liquidity. As financial advisors and fixed income strategies note, bond laddering is very much in favor again, especially for conservative ladders. WisdomTree, for instance, recently launched municipal bond ETFs built on disciplined laddering structures to manage rate risk while locking in income. This is an overlooked tool, right? That when you combine it with a single premium annuity, Right, in a laddered municipal bond or a laddered bond strategy. And then it allows the rest of your money to grow without fear or anxiety of ever running out— running out of that money.

Sounds like a good deal. The show is the One of a Kind Financial Show with Mike Milligan. I'm Gary Nolan, your consumer advocate. I want to get you on Mike's calendar, get you all set up with that comprehensive plan, or maybe have a question or two about today's show. Mike and the team happy to talk to you about that as well. 800-748-1838. 800-748-1838. Or text the word ideas to 600-700. Do it right now. The folks at One Oak Financial standing by this weekend, Thanksgiving weekend. Get on the calendar, get you all set up with that comprehensive plan, that one-of-a-kind financial plan. No cost, no obligation. 800-748-1838. Or text the word ideas to 600-700. Dividend-paying stocks, income with upside. But what's the trade-off, Mike?

Well, dividend stocks offer the potential for income and growth, which is appealing in a long retirement, but they also carry market risk and companies can cut dividends without warning. So if you think about in highly stressful times in the market, think about when the internet bubble burst in 2000, think about the financial crisis in 2008, think about COVID Companies that paid high dividends and maybe they're marginally profitable, Had to cut those. And so your retirement plan should not be solely focused on dividend stocks if you need that income and you don't ever want it to go down. So this is just another avenue where if you don't want to go full-on risk into growth stocks, you can have some growth. But the income pain from the dividends that come from these dividend stocks should be looked on as more of like the income you want, not the income you need.

I see.

Create a foundation of income that's not based on market returns.

Right. All right. I see what you mean. Exactly. I want to ask you about the bucket strategy. Is that still the golden standard for retirement income?

Well, there's so many strategies that have been perpetuated because many people have microphones now, Gary, and I'm one of those people that have a microphone to talk. But there's new things that have come out about guardrail strategies. And it's something that Bill Bengen, who was the founder of the 4% safe withdrawal rule, has come out and has started saying that that has higher probability of not running out. So to say that the bucket strategy is the gold standard is like saying gold is the best investment for today.

I see.

Right?

There's a lot of different strategies, whether it's the bucket strategy, the guardrail strategy, the guaranteed income approach with annuities, with growth on the outside. There's the 4% safe withdrawal rule. There's so many strategies that are out there that you can divide your money into that we just got to find the strategy that's right for you. Mike Milligan and One Oak Financial doesn't believe there's one strategy, like a one-size-fits-all strategy for everybody that comes in. We believe that you are one of a kind and your income strategy should also be one of a kind.

Yeah, we're up against the clock, Mike. Tell us about the one-of-a-kind financial plan.

So it's comprehensive in nature, Gary, because when you piecemeal your retirement together, you always You could end up with disappointment. So if you don't have a strategy that is taxes, retirement income, investments, long-term care, and legacy, you end up with more risk, more sleepless nights, and more fear and anxiety. The One of a Kind Financial Plan is something that I literally wrote the book on and have used with thousands of clients over the years to bring less anxiety, less fear. a stable approach so that they can go and live a one-of-a-kind life. It's something we do at One Oak Financial with everybody comes in, and at the end of it, you have a written plan that knows that, that you know what you could do in retirement.

Get the one-of-a-kind financial plan, folks. There's no cost, no obligation to get a better handle on your financial situation. Starts by picking up the phone and dial this number. The folks at One Oak Financial standing by This weekend, Thanksgiving weekend, for your phone call, 800-748-1838, 800-748-1838, or text the word ideas to 600-700.

Thank you again for listening to the One of a Kind Financial Show Daily.

I've been your host, Mike Milligan. If you enjoyed the segment that you just listened to, I invite you to connect with us on Amazon. Google The One of a Kind Financial Plan. It's a bestselling book in the personal tax category, and I invite you to do that. Number 2, if you feel like you need more education when it comes to your own personal financial planning, we have a course that's offered through Old Dominion University in Norfolk, Virginia. It's offered virtually, and it's a self-paced course called Personal Financial Planning that I helped develop and I teach. It is 6 sessions, 90 minutes each, and full of recordings for you that you can start and stop based on what you need. It goes through the psychology and philosophy of money, the cash management, budgeting, and debt management. We talk about insurance, Whether it's property and casualty, like your homeowners, autos, renters, to the type of insurances you work on at, or you need to replace the biggest asset you have, which is your income. Then we move over and talk about, do a real big investment dive into the difference between mutual funds and ETFs. We go all the way from crypto down to individual stocks and bonds from an academic standpoint.

Then we look at retirement planning, tax planning, long-term care, and legacy.

Ultimately, with the idea that you can build a one-of-a-kind financial plan for yourself. Ultimately though, what it does is it equips you with knowledge that if you're ever in a conversation with a financial advisor or a financial planner, you know the questions to ask. So I invite you to reach out to us. You can go to mikemilligan.com under the Educate tab and see how to register for that. We also put some resources behind that on school.com in our private closed group where you can ask questions and learn more. As always, just remember that I am an investment advisory rep, not only with One Oak Financial but also Advisory Alpha LLC. Ideas by Mike doing business as One Oak Financial, Mike Milligan LLC, and And Advisory Alpha LLC are unaffiliated entities, and thus all opinions expressed by me and Gary on the One of a Kind Financial Show and me on the One of a Kind Financial Show Daily are purely my opinions and does not reflect investment advice. Please consult with a licensed financial professional before making any decisions. Till next time, this has been Mike Milligan.

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