Case Design - Couple wants to retire but won't be able to maintain lifestyle

Case Design – Couple wants to retire but won’t be able to maintain lifestyle.

Clients ages 63 & 64 would like to retire next year but are fearful they don’t have enough in pension and social security to maintain their current lifestyle. They need to supplement their income by $2000.00 per month to achieve this goal.

Problem: Accounts are loosing value so fast they are unsure their assets will last through retirement. They are both in generally good health and can work easily until age 70 but would love to spend more time with grandchildren.

Situation: Current home is worth $500,000 which they owe $150,000 currently with a mortgage at 6.625% and are paying $1457.00 per month.

457 plan =$200,000
IRA = $46,000
Money Market = $43,000
Variable Annuity = $218,000

Liabilities are all paid of monthly.

My plan will;
Incorporate the annuities, the 457, and the IRA into 3 segments while refinancing the home into a 55% LTV 30 year Conventional Fixed Rate Mortgage while extracting $275,000 cash from the home. The new mortgage payment will be $1476.26 (almost exactly the same as before) while increasing tax savings as the first $100,000 of the new mortgage is also tax deductible.

I will leave the Money Market out of the equation.

Segment one will take care of years 1-5 of retirement;
$125,000 from qualified accounts will be used to purchase a SPIA (single premium immediate annuity) and will generate $2132.00 of monthly income.

Segment two will take care of years 6-10 of retirement:
$120,000 from qualified accounts will be used to purchase a 5 year Guaranteed Annuity which will yield an account value at maturity of $153,153 which will then be used to purchase a new SPIA resulting in guaranteed income monthly income of $2.614.00

Segment three will utilize the money extracted from the house which was systematically used to maximum fund equity indexed universal life insurance policy which will lead to a “Tax Free” income for life of $3525 per month AND yields a death benefit of $733,000 “Tax Free” to the children.
Not only did this plan allow these clients to meet their goals of “on time retirement” but the income was adjusted for inflation. We leave the ROTH (previously unmentioned) and the Money Market alone and for emergencies. The inevitable death benefit leaves the children better off than had the couple left the house to them as they had originally planned on doing. Now the kids enjoy $733,000 Tax Free in the form of the policy death benefit, will receive their parents home (which may be close to being paid off), but most importantly it allowed the clients to spend quality time with their children and grandchildren during their golden years without giving up any choice or control of their lifestyle.