Preferred Income Plan
A Preferred Income Plan can be a useful tool for those who want to secure a predictable and guaranteed income stream during their retirement years.
A Preferred Income Plan (PIP) is a type of retirement income strategy that involves the use of an annuity contract to generate guaranteed income payments during retirement. It is designed to provide a stable and predictable income stream for retirees while also offering some flexibility and control over their assets.
Here's how a Preferred Income Plan works:
An individual purchases an annuity contract. The annuity can be either immediate or deferred, depending on when the individual wants to start receiving income payments.
The individual designates a portion of their planned retirement savings to fund the annuity. The amount of money they allocate to the annuity will determine the size of their future income payments.
Ocean Bay Tax Strategies calculates the income payments based on the individual's age, gender, and the amount of money they've allocated to the annuity.
The individual begins receiving guaranteed income payments from the annuity for a set period of time, such as 10, 20, or 30 years, or for the rest of their life.
The individual may also have the option to add riders to the annuity contract, such as inflation protection or a death benefit for their beneficiaries.
The benefits of a Preferred Income Plan include:
Guaranteed Income
The annuity contract provides a guaranteed income stream that is not affected by market fluctuations or interest rate changes.
Flexibility
The individual can choose when to start receiving income payments and can also choose the length of the payout period.
Predictability
The income payments are predictable and can help the individual plan their retirement expenses.
Potential Tax Benefits
Depending on the type of annuity and the individual's tax situation, they may be able to enjoy tax-deferred growth or tax-free income payments.