Real-World reddi
Offer a steady stream of predictable income to clients with unique goals, financial needs, and timelines.
reddi is designed to empower you to meet your clients’ unique income needs with surety and confidence. Here are a few examples of reddi in action.
Deferring Income for Increased Longevity Protection
Patience and Anthony
Patience’s mother Antoinette lived to age 96. Her mother’s Aunt Rose lived to age 104. Longevity runs in the family. To manage the risk that Patience outlives her retirement savings, her financial advisor has recommended she purchase a life annuity.
He presents the choice of an immediate annuity or deferred income annuity (DIA). Of the two options proposed, Patience and Anthony like the idea of waiting to receive a higher payout. Due to the DIA’s longer deferral period, the insurance company has more time to invest the premium and generate returns which results in higher payout percentages than immediate annuities.
The only problem is…what to do until they begin taking income from the DIA at age 75? Using reddi, their advisor explains how he is able to design a durable stream of income by investing a portion of their savings in defined maturity and constant maturity ETFs. This income-driven portfolio (IDP) will provide pension-like steady income equal to the DIA payout, over the 10-year period between when they retire (65), and when income from the DIA kicks in (75). For this 10-year period the investment remains liquid and in their control in case an unexpected expense pops up.
Information
Current Age:
63
Target Retirement Age:
65
Need:
Longevity Risk Protection
Strategy:
Liquid Lifetime Income (10-year uniform IDP)
Income Target:
$50,000/year
Start Income:
IDP 2 years from now -DIA 12 years from now
Cost
$651,601 ($371,786 – IDP | $279,815 – DIA)
Total (Cumulative) Income:
$500,000 - IDP
Surplus:
$2,648
IDP Projected Yield:
4.75%
Information
Current Age:
61
Target Retirement Age:
62
Need:
Maximize Social Security Benefit
Strategy:
Income Bridge from age 62 to age 70 (9-year uniform IDP)
Income Target:
$2,600/month (max SS benefit at 70)
Start Income:
Now
Cost
$230,927
Total (Cumulative) Income:
$280,800
Surplus:
$1,256
IDP Projected Yield:
4.56%
Maximizing Social Security Benefits
Maxine and Stephanie
Maxine will be 62 next year and will be eligible to receive her hard-earned Social Security benefits. She knows that if she begins immediately, she’ll receive only 70% of her full benefit. Her financial advisor illustrates the difference like this: Maxine’s full benefit at age 67 is $2,000. If she began taking social security next year, at 62, she would only receive $1,400 monthly. If she waits until age 70, her monthly social security paycheck rises to $2,600.
Maxine wants to get the maximum benefit, but wants to retire now so she and her wife Stephanie can pursue their rare book collection hobby full-time. Her advisor recommends bridging this time period with reddi, an innovative tool that helps the advisor design a pension-like income stream generated from low-risk defined maturity and constant maturity ETFs. She explains that they can reliably fund this income stream directly from their brokerage account for the next 8 years, when she’ll be eligible for her maximum social security benefit.
The added bonus for their financial advisor? As opposed to an income annuity, she’ll retain
those assets under her management and the investment remains liquid.
Income NOW for College Expenses
Fred and Collette
Fred and Collette saved religiously in their daughter Katie’s 529 plan to fund her college education. Even still, their IAR, Angel, identified a projected shortfall in their plan that may not allow them to cover additional living expenses when she ships off to college next fall. Angel estimates the gap to be roughly $1,000 a month, or $9,000 per school year.
To cover this unexpected shortfall, Angel designs a steady cash flow option with reddi. Using a balance sheet approach to portfolio management, she invests in defined maturity ETFs of varying durations to build a spending plan they can confidently depend on to get their daughter through undergrad and into med school.
Information
Need:
Cover Additional College Expenses
Strategy:
Liquid Income for 4 years (4-Year IDP)
Income Target:
$9,000/year
Start Income:
1 year from now
Cost:
$32,335
Total (Cumulative) Income
$36,000
Surplus
$111
IDP Projected Yield:
4.27%
Information
Need:
Income for Real Estate Purchase
Strategy:
Park Assets Until Needed
Future Planned Payouts
$600,000 in 2 years,
and $1,400,000 in 3 years.
Investment:
$1,788,981
Surplus:
$6,408
IDP Projected Yield:
4.31%
Income to fund real estate investments
William
William recently sold one of his small businesses and needs to park the proceeds safely for a couple of planned real estate purchases: one in 2 years, and the other in 3. Based on projections from his CPA/financial planner, William will need to grow his investment for the first project to $600k, and the second to $1.4m.
To compound and protect these investments, his planner leverages an innovative tool, reddi, to design a portfolio strategy that is liquid, flexible, and includes a buffer to self-insure against the risk that he’ll be unable to meet his future spending goals. reddi leverages institutional-quality income-driven investing models from NISA, a leader in liability-driven investment management.
reddi’s balance sheet approach to portfolio management empowers his planner to generate two distinct future payouts that he can confidently rely on to support his real estate ambitions.