What is a 

"Split-Annuity"

strategy?

In times when the market is so unpredictable it's easy to become confused as to which 

way to invest, especially if you're about to retire or forced into needing an income early. 

If you need income NOW and also want to Guarantee an INCOME LATER. Then this 

article and it's ideas may have the answer for you. It's worth taking a couple minutes to 

read, I promise! 

What is your money for anyway. Income right? That's true for most people anyway. 

We either need an income NOW or an income LATER. So what is an easy way to 

guarantee§ such an income both NOW and LATER? 

This strategy is called a "SPLIT ANNUITY" concept. Follow with me if you will. 

Let's say you are about 55 years old, you've just been laid off from your lifelong 

profession and are now forced to retire early. You have about $200,000 in your 401k 

and are scared it won't last your lifetime. This "SPLIT ANNUITY" strategy can 

GUARANTEE§ it will last your lifetime. With NO RISK§! 

First, let me provide you with a couple of facts. If a person had invested their 

$200,000 in the S&P 500 on January 1st, 1972 it would have grown to $9 Million 

by the end of 2001. That's an annual return of 13.56% over the last 30 years. 

Sounds great, right? Don't be mislead. 

If they had invested the same $200,000 on the same day and started taking 

$20,000 a year income payments from it, they would have run out of money 

in just 13 years. Timing is EVERYTHING! Right? 

They simply weren't invested in the right 13 year time-frame out of that 30 year 

period. Since no-one knows for sure what the NEXT 13 to 30 years will hold 

for us the "SPLIT ANNUITY" concept/strategy can allow you to sleep easy 

at night. Here's how it works. 

Using our 55 year old that needs to retire (example above), and also calculating 

that he would want an income stream of about 6% or $12,000 a year to live on, 

(using a 72(t) to eliminate IRS's 10% early withdrawal penalty). Normally this 

would require that we use all $200,000 to produce that amount of income at 6%. 

But using this "SPLIT ANNUITY" strategy we SPLIT the $200,000 into (2) 

investments. 

We first deposit $96,000 into a Single Premium Immediate Annuity, better 

known as an SPIA. This special annuity will provide a GUARANTEED§  

income of $12,000 a year for 10 years, ending with a ZERO balance at the 

end of the 10 years. 

The remaining amount of $104,000 we might invest into the SECOND annuity 

and add a GUARANTEED§ Income Benefit rider to this contract, which 

GUARANTEES that at the end of 10 years (when the 1st contract ends at 

ZERO) this 2nd annuity will have grown back to an income value of $200,000 

or a GUARANTEED§ $14,000 a year income (7%) FOR LIFE! (this strategy even 

covers you for a bit of inflation down the road.) 

In other words, we set it up to COMPLETELY SPEND the 1st contract 

over the first 10 years, relying on the remaining money of $104,000 to grow 

(tax-deferred) over the same 10 year time-frame to a point of totally replacing 

our original amount invested (back to $200,000). With NO RISK§! It's kinda 

like having your cake and eating it too, as the old saying goes. This strategy 

Guarantees§ that you can never run out of money during your entire lifetime.

What does this mean in terms of gains or returns? Using Einstein's rule of 72 

(see complete explanation at the bottom of this page). Meaning that if 

money grows at 7.2% a year, it will double in 10 years. That's what we CAN 

ACHIEVE with this strategy.

So what are the odds of earning 7% a year over any given 5 to 10 year 

time-frame? Let's take a look. Looking at LARGE GROWTH stocks from 

1926-2000, here's how they performed 

.............................1 yr. period......5 yr. period.....10 yr..period 

Over 7% return.........60%.................74.65%..........75.76% 

0-6.99% return.........12%.................15.49%..........21.21% 

Negative return.........28%...................9.86%............3.03% 

(Source: provided by ING Golden Select Insurance Company)

So as you can see from past gains. It is very likely to achieve a 7% or better 

gain per year over any given 10 year period of time. But timing is everything! 

It all depends on WHEN and WHAT time-frame period you are trying to 

achieve that 7% or better return. 

The bottom line is, we have at least a 74.65% chance of a 7% or better return 

over almost any given 5 year time-frame or longer. BUT are you willing to take 

that risk? Maybe not. Especially if this is all the money you have! Using this 

strategy can eliminate such risks.

What about the UPSIDE potential of the market, you might ask? YES, this 

strategy even offers the potential for HIGHER gains and growth IF the market 

cooperates. Because with this strategy the second investment (the remaining 

$104,000) can be FULLY invested in a wide variety of securities (mutual fund 

type sub-accounts) to take full advantage of any upside potential growth. With 

NO RISK of losing it, because you are GUARANTEED§ the $14,000 a year 

income in 10 years no matter what the account balance might be at that time.

Giving us total freedom to invest anyway we might want desire, without 

the RISK of total loss. If we are lucky and the account has grown BEYOND 

the $200,000 level, then of course you can always take that value and do with 

it whatever you want. 

So YES, there is plenty of upside potential with this strategy. BUT, just in case, 

if the account had dropped to $50,000 for example, you can't loose either. You 

still get the $14,000 a year GUARANTEED§! This Guarantee§ is based on the 

Income Benefit rider being added to this contract.

INCOME NOW and INCOME LATER. That's what it all about anyway, 

RIGHT? 

As an alternative, the remaining $104,000 in the above example, can be invested 

in a number of programs: (which, if desired,  I will "actively manage" for you), or 

we might chose to use a safe and secure FIXED rate annuity or even a Indexed 

annuity. It's your choice. I offer a wide variety of investing options.

YES, the "SPLIT ANNUITY" concept works with ANY kind of money; 401k, 

IRA, 457, TSA, 403(b) or even non-qualified, plain old hard cash. And YES, 

it will also work if using a 72t to eliminate IRS's added 10% penalty if withdrawing 

funds prior to age 59 1/2. 

If the "SPLIT ANNUITY" strategy appeals to you, if you have questions, or if 

you would like more information, just let me know. I am here to help guide you. 

Got a Question?

§ NOTE: All Guarantees are based on the financial strength and claims 

paying abilities of the company chosen for your annuity. Feel free to 

contact me for complete details and the name of the company referred 

to in this article. The above explanation is just a brief summary. I'd be 

pleased to send you a complete company brochure on this or any other 

product mentioned on my web site. This annuity or some of the additional 

options may NOT be available in ALL states.