How do the ultra-wealthy create $100,000 a month or more in retirement income without managing real estate, worrying about dividends, or constantly watching the market?
For some wealthy families, the answer is surprisingly simple.
They take a portion of their assets and use annuities to build contractual lifetime income.
This isn’t the only way to create income. You can use dividend stocks, municipal bonds, businesses, or real estate.
But some people reach a point where they simply want to set aside a portion of their wealth and say, “I never want to worry about this income again.”
That’s where a private pension strategy can make sense.
Need help choosing the best annuity for your unique situation? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)
Tip: See how much an annuity could pay you using my annuity calculator
Why the Ultra-Wealthy Use Annuities for Income
A lot of wealthy investors don’t necessarily need an annuity.
They may already own businesses, real estate, stocks, private investments, and plenty of cash.
But those assets can require management.
Real estate has tenants and property management. Dividends can change. Markets move up and down.
Some people don’t want every dollar they own working that way.
They want to take a portion of their assets and create income that’s contractual and designed to last for life.
It’s a set-it-and-forget-it strategy.
👉 Want to compare lifetime income options? Schedule a call with me and I’ll show you what’s currently available.
How Much Income Can $1 Million Produce?
Let’s start with $1 million.
In one illustration I reviewed, $1 million used for immediate income produced approximately $72,000 per year for a single life.
For a married couple of the same age using joint lifetime income, the payout was approximately $67,000 per year.
That’s around $5,500 per month.
The income is lower for joint life because the contract is designed to cover two lives instead of one.
But what if you want $100,000 per month?
The same concept can be scaled.
How Do You Create $100,000 a Month?
In one illustration I reviewed, $10 million deferred for several years eventually produced approximately $105,000 per month in joint lifetime income.
That’s more than $1.2 million per year.
The income was designed to continue for the rest of both spouses’ lives under the terms of the contract.
If you want the income immediately, you’ll generally need to put in more money.
In the immediate-income example, approximately $18 million was needed to produce around $100,000 per month.
This type of strategy may make the most sense for someone with $60 million to $100 million or more in total assets.
They may take 20% or another portion of their wealth and use it specifically for income.
The rest can remain in businesses, real estate, stocks, private investments, or cash.
💡 Pro Tip: The longer you can defer income, the less premium you may need to produce the same income goal. That’s why the income start date is so important when comparing annuities.
Why Use Multiple Annuity Contracts?
If you’re putting $10 million or $18 million into annuities, you may not be able to put everything into one contract.
Insurance companies have large-case approval requirements and certain thresholds for how much they’re willing to accept.
Because of that, the money may need to be spread across multiple carriers or contracts.
You might put $1 million or $2 million into several different contracts.
In one illustration I reviewed, North American had the highest payout, followed closely by Midland. Other carriers also had very similar income options.
The goal is to compare what’s available and find the strongest contractual advantages.
I don’t believe in choosing a carrier simply because it’s the company someone always recommends.
I want to see the actual numbers.
👉 If you’d like me to compare current annuity payouts for you, schedule a call with me.
This Is a Pension Strategy, Not a Growth Strategy
This is the most important thing to understand.
I’m not showing you a growth strategy.
I’m showing you how to build a private pension.
In the deferred example, the annuity was producing approximately $1.268 million per year in joint lifetime income.
The account value could eventually reach zero depending on index interest credited and withdrawals.
If both spouses died while money remained in the account, the beneficiaries would receive the remaining death benefit according to the contract terms.
But the primary goal isn’t to maximize the account value.
The goal is lifetime income.
In one illustration, approximately $36 million had been withdrawn by age 95.
In another immediate-income example, total withdrawals were approximately $43 million by age 95.
Could your other investments potentially produce more growth?
Absolutely.
That’s why the annuity doesn’t necessarily replace your other investments.
Your businesses, real estate, and investments can be used for growth.
The annuity has one job: produce income you can’t outlive under the terms of the contract.
You Don’t Need $100 Million to Use This Strategy
Most people I work with aren’t putting $18 million into annuities.
Some are, but most people simply don’t need $100,000 per month.
The strategy is scalable.
Go back to the $1 million example.
Immediate joint lifetime income was approximately $5,500 per month.
Waiting one year increased the illustrated income to around $6,100 per month.
That could produce approximately $73,000 to $74,000 per year depending on the carrier in the illustration.
Now add Social Security or another pension.
You could potentially create $100,000 or more in annual lifetime income.
For someone with a $2 million or $3 million portfolio, that may mean using one portion for guaranteed lifetime income and leaving the remaining assets positioned for growth.
Some people will even repeat this strategy every seven to 10 years.
They’ll take another portion of their assets and buy additional lifetime income.
In my opinion, stacking income like this can be a very effective retirement strategy.
Why Simplicity Matters in Retirement
The biggest advantage of this strategy is simplicity.
You’re not dealing with tenants.
You’re not managing properties.
You’re not constantly moving money from one investment to another.
You’re buying a pension.
If you’re married and choose joint lifetime income, the income can continue for your spouse under the terms of the contract.
That’s important because the last thing I want a surviving spouse doing after a death is trying to figure out how to recreate the income the other spouse was managing.
With contractual lifetime income, the monthly payment continues.
That’s why some wealthy families use annuities even when they don’t necessarily need them.
They want a portion of their wealth to be simple.
Conclusion
So, how do the ultra-wealthy build a $100,000 a month private pension?
They can take a portion of their assets and use annuity contracts to create contractual lifetime income.
The rest of their assets can remain invested for growth.
And you don’t need $100 million to use the same basic strategy.
Whether you want $5,000 per month, $10,000 per month, or $100,000 per month, the concept is the same.
Take a portion of your assets and give that money one job: produce lifetime income.
Need help with finding the best annuity for your retirement?
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On the call, I can help you:
- Determine what type of annuity is best for you
- Find the highest paying annuities for your unique situation
- Answer any other questions you may have