Lump Sum payments are one of the best ways to use DCF Income Payments to escape volatility and create a significant guaranteed future asset base. They’re perfect for investors who are not excited about the low rates offered on lifetime income contracts currently, and for younger savers as well.
Example Lump Sum DCF Payments
Age is not really the determining factor with lump sums as they may be applicable in a wide range of situations. Here are a few ideas how prior clients have used them:
Other Uses of Lump Sum DCF Payments
Some other uses for Lump Sum DCF Payments include inheritance planning, index and variable annuity alternative investments without locked in annuitization clauses, and general safe investment.
An innovative way to use lump sums for retirees is, instead of locking in a lifetime income stream with a hybrid annuity or a variable annuity with GLWB rider, is to use a lump sum contract to pay out at the time you want lifetime income to start, and use that lump sum to purchase an immediate annuity in the future. Immediate annuity rates get better with age, and markets may be better in the future as well, so this is a great way to retain flexibility while ensuring safety.
Finally, one of the most intriguing options is for a parent or grandparent to purchase a deferred lump sum in the name of a trust or LLC, then gift the shares of the ownership entity over time to a child.
When the payment comes in it’s paid to the Trust or LLC, and distributed per that private agreement. Consult your own tax attorney for gift tax rules.
Lump sum DCF Payments are a great way to eliminate volatility and create a solid foundation of assets for future use.