Idea One: Fixed Index Annuities (FIAs) often have optional “income riders” which can increase the number of dollars paid out over the life of the annuity, in some situations. Annuities by their basic structure are designed to provide lots of options for structuring a specific stream of income over time. But with income riders, additional factors come into play to make sure that minimum income levels can be supported, irrespective of the amount of actual income credits during the holding period. Used in combination with other portfolio components, annuities can often be made to “fit the shape” of any income shortfalls occurring elsewhere across the group of holdings; and when an annuity also has an income rider it can increase the chances that sufficient pay-out amounts will be available to cover a wider range of scenarios.
Idea Two: You don’t have to earn an actual monthly income to generate a monthly cash flow for paying bills. There are plenty of ways to structure a “synthetic income” from virtually any configuration of assets. But having investments which pay a monthly payment is certainly the most straight forward way to do it. Rental houses are prized because of the regularity of payments, over time. Despite occasional breaks during periods of vacancy between leases, a well-run rental house (or pool of houses) delivers a steady payment more months than not. When investment inflows are matching up to budgetary outflows it creates a situation that’s similar to what most people were used to during their working years: those rent payments start feeling an awful lot like a regular paycheck. So even if there’s wealth being created elsewhere in the portfolio, it’s sometimes nice to not have to do anything other than go to the mailbox to get the next round of bill money squared away.