A pre-retiree, a rollover, and an annuity pitch

The situation

Mr. K. (hypothetical) is 61; his wife is 59. He plans to retire from a corporate executive role at 64. Household investable assets are about $2.6 million: roughly $1.9 million in his 401(k) and rollover IRA, $500,000 in a taxable brokerage account, and $200,000 in a Roth. There is no pension. Combined Social Security would be approximately $68,000 a year if he claims at his full retirement age, or closer to $84,000 if he delays to 70.

Household spending runs about $135,000 a year. Of that, roughly $85,000 is essential and non-discretionary — housing, food, insurance, healthcare — and about $50,000 is discretionary: travel, gifts, the things that flex.

Mr. K. came to us with a specific worry and a specific pitch. He is afraid of a market crash just before or after he retires, and he wants income he "can't outlive." An agent had proposed rolling the entire $1.9 million IRA into a fixed indexed annuity with a guaranteed lifetime withdrawal rider, presented as "7 percent guaranteed growth and income for life." He wanted to know whether it was a good idea.

The honest answer required reframing the question.

Finding one: the "7 percent guaranteed" isn't growth on his money. It's a withdrawal formula.

The headline number in the pitch was the roll-up on the rider's income base — a bookkeeping figure used to size a future lifetime withdrawal. It is not a return on the account, not cash he can withdraw, and not a balance his heirs can inherit. His actual account value — what he can walk away with or leave behind — grows on the indexed crediting, illustratively closer to 4 percent in a moderate scenario. Over time the two numbers diverge sharply, and only the smaller one is real money.

Finding two: size the guarantee to the income-floor gap, not the whole portfolio.

The right question isn't "what income can $1.9 million produce." It's "how much guaranteed income does this household need to cover the expenses it cannot cut?" Essential spending is about $85,000 a year. Delaying Social Security to full retirement age provides roughly $68,000 of inflation-adjusted, government-backed lifetime income. The genuine gap between guaranteed income and essential expenses is therefore about $17,000 a year — not the entire budget, and nowhere near the output of the whole IRA.

Finding three: the cost of "all of it" is liquidity, legacy, and flexibility.

Putting the entire $1.9 million into the annuity does more than over-buy income. It locks the household's largest asset behind a surrender schedule, converts everything to ordinary-income treatment with no step-up for heirs, concentrates the family's core capital with a single insurer, and pays a rider fee on money that never needed the guarantee. The design that fills the floor and invests the rest costs a fraction of the fee drag and keeps the majority of the portfolio liquid, growing, and inheritable.

Our review stress-tested the proposal the same way we would any product illustration:

That is the difference between a pitch and an analysis. A pitch has one product and one number. An analysis asks what the guarantee is actually for, sizes it to that job, and leaves the rest of the portfolio doing the work it is better suited to. To be fair to the pitch: a larger annuity would produce more guaranteed income — but income beyond what covers the essentials is income the household was never at risk of needing, bought with liquidity and legacy it would rather keep.

What we deliberately deferred

Two items went into the plan as scheduled decisions rather than immediate ones. The Social Security claiming age is its own analysis — delaying to 70 is one of the most efficient sources of guaranteed, inflation-adjusted income available and would further reduce the private-annuity need; it is decided closer to the date against the health and cash-flow picture that exists then. And the low-income window between retirement at 64 and the start of required minimum distributions is prime Roth-conversion runway — sequencing that is the CPA's work, coordinated with, not replaced by, the insurance analysis.

What the client receives

Every engagement produces a written analysis memo: the assumptions, the arithmetic above, carrier-agnostic design specifications for any guaranteed-income layer, and — explicitly — what we recommended against and why. Carrier and product selection happen afterward, compared on the merits. The memo is the deliverable; the products are its implementation.

Why we publish worked examples instead of testimonials

You can't evaluate an advisor by adjectives. You can evaluate one by reasoning. This page shows the reasoning — the same process, applied to your facts, is what an engagement looks like.

This scenario is hypothetical and for educational purposes only. All figures, rates, and roll-up assumptions are illustrative and will differ based on individual circumstances, product selection, and carrier terms. Annuity guarantees are subject to the claims-paying ability of the issuing insurer. Withdrawals of gain from a non-qualified annuity are taxed as ordinary income and may be subject to a 10% penalty before age 59½. Tax discussion is general in nature; coordinate decisions with your CPA and attorney. LogicPoint Advisors does not provide investment, tax, or legal advice. Cosmin Mandachescu · FL 2-15 License #G335891.