Meet Mike & Molly

At age 59, Mike and Molly were ready to retire immediately. Here’s what their financial picture looked like:

• $2M in IRAs and 401(k)s
• $2.7M in after-tax investments
• $300k in Roth IRAs
• A $600k deferred compensation payout coming to Molly this year
• Social Security starting at 62
• Mike: $2,500/month
• Molly: $2,800/month

Like many high-net-worth retirees, they had plenty of assets.

But they also had a tax problem.

The Challenge: Too Much in Tax-Deferred Accounts

Mike and Molly’s $2M of IRA and 401(k) balances would eventually be subject to:

• Required Minimum Distributions (RMDs)
• Ordinary income tax on withdrawals
• Income tax for their kids if inherited

So the question became:

How do we enjoy this money now… and avoid leaving behind a tax bomb later?

The Move: Turn $2M Into Guaranteed Income

Mike and Molly used $2M from their IRAs and 401(k)s to purchase a fixed income annuity — immediately.

But they didn’t start the income right away.

They gave it a 3-year deferral, lining up perfectly with their Social Security benefits at age 62.

The Result?

🔒 $167,000/year of guaranteed lifetime income starting in just 3 years
🔒 Add ~$33,000/year from Social Security
🔒 = $200,000/year of reliable income for the rest of their lives

All without touching a dime of their after-tax or Roth investments.

The Tax Strategy: Spend the Worst Money First

By drawing down their IRA and 401(k) balances first (via the annuity), Mike and Molly:

✅ Met their core retirement income needs
✅ Avoided RMD headaches later in life
✅ Emptied their tax-deferred accounts by age 77
✅ Pulled ~$4.5M in lifetime income from the insurance company
✅ Protected their tax-free and low-tax assets for long-term growth

The Outcome: A $50 Million Tax-Efficient Estate

While the annuity funded their lifestyle…

Their Roth IRAs and after-tax brokerage accounts were left untouched.

Instead, those accounts stayed invested with a long-term horizon — and projected growth to $50 million by age 98.

But here’s the kicker:

• No required distributions
• No income taxes on inherited Roths or brokerage assets
• Full control over when and how money is passed on

A $50M estate built on taxable IRAs?

👉 Would shrink to ~$35M after taxes (or less).

But by using this strategy, Mike and Molly’s legacy is truly $50M.

Why This Works

Let’s recap the key elements:

🔹 They used IRAs to fund a guaranteed income annuity
🔹 They covered their lifestyle without touching long-term investments
🔹 They intentionally spent down tax-deferred accounts first
🔹 They let Roth and after-tax assets grow tax-free or tax-efficiently
🔹 They eliminated future RMDs and income tax for their heirs

It’s a textbook example of how smart retirement income planning can simultaneously protect your lifestyle and amplify your legacy.

Final Thoughts

Legacy planning isn’t just about how much money you leave.

It’s about how much of it your family actually gets to keep.

Mike and Molly didn’t just retire with peace of mind…

They turned their retirement income strategy into a multi-generational wealth strategy.

And with smart planning, you can too.

If you want to explore how a safety-first income plan can protect your future — and your legacy — let’s chat.