Case Study: How a 70-Year-Old Retiree Saved $70,000 While Keeping the Same Income

By Dorota A. Wysocki, CAS

Retirement isn't just about how much money you have; it’s about making that money last against risks you can't control. For many, the "safe" retirement vehicles of the past—like Variable Annuities (VA)—are now riddled with high fees and market exposure that threaten long-term security.

This case study follows a 70-year-old client who felt stuck in a high-fee plan and how a strategic "stress test" changed her financial future.

The Challenge: High Fees and "Stuck" Capital

Our client had an old Variable Annuity valued at $218,000. To generate $12,000 in annual income, she was forced to keep her entire balance in a product with:

●High Internal Costs: Fees totaled approximately 4% annually, eating away at her growth.

●Market Exposure: Her principal remained at risk during market downturns.

●Lack of Liquidity: She had no dedicated "emergency fund," leaving her vulnerable to unexpected life events.

●Fixed Potential: While she had an income rider, her "safe" money wasn't working hard enough to combat rising costs.

The Strategy: Efficiency Through Analysis

We performed a retirement reality check to see if her plan could withstand real-world stress. By switching to a modern Fixed Indexed Annuity (FIA), we optimized her assets:

1.Income Efficiency: We found we only needed $148,000 in the new FIA to produce the exact same $12,000 annual income.

2.The "Safety Buffer": This move freed up $70,000 in cash that was previously "trapped" by high fees.

Growth Potential: We allocated that $70,000 into an emergency and inflation buffer account. If that account grows at an average of 6% over the next 15 years, it could potentially regrow to the original $218,000—creating a significant legacy for her children

Solving the 5 Hidden Risks

By restructuring her portfolio, we checked the box on all five major retirement risks6:

●Market Downside Risk: Her income is now protected from market crashes.

●Sequence of Returns Risk: She no longer has to worry about a "bad timing" market drop in early retirement.
●Inflation Risk: The $70,000 buffer provides a growing source of funds to combat rising prices.

●Interest Rate Risk: She is no longer reliant on low-yielding CDs or bonds that fail to protect purchasing power.

●Longevity Risk: With a more efficient plan, her assets are designed to outlive her, rather than the other way around.

From Survival to Confidence

The result? The client maintained her lifestyle, eliminated 4% in annual fees, and created a $70,000 safety net. As studies show, retirees with a guaranteed income stream report 35% higher life satisfaction. She now has control over her income and, more importantly, peace of mind.

Is your retirement plan built to stand strong against these 5 risks?

Would you like me to run a similar analysis on your current annuity or retirement accounts to see if we can find your "hidden" emergency fund?

Disclosures & Risk InformationThis case study is for illustrative purposes only and does not represent the actual experience of any specific client. Individual results will vary. The strategies discussed may not be suitable for all investors.

Variable Annuity Risks: Variable annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. They are subject to market risk, including the potential loss of principal. Earnings are taxable as ordinary income when distributed and may be subject to a 10% federal tax penalty if withdrawn before age 59½.

Guarantees: Any guarantees, including death benefits or income riders, are backed solely by the financial strength and claims-paying ability of the issuing insurance company. They do not apply to the performance of the underlying investment options.

Fees & Charges: Variable annuities have fees and charges including mortality and expense risk charges, administrative fees, and investment management fees. Optional riders may be available for an additional cost. Surrender charges may apply to withdrawals taken during the early years of the contract.

Not Investment Advice: This content is provided for educational purposes only and does not constitute a recommendation or fiduciary advice. Before investing, you should carefully consider the investment objectives, risks, charges, and expenses of the annuity. This and other information is contained in the product prospectus; please read it carefully before investing.