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Q: How does an advisor or broker-dealer acquire The Income for Life Model?

A: Broker-dealers may acquire an enterprise license based upon a per-advisor monthly or quarterly licensing fee. The price per-advisor is based either on the total number of advisors registered with the broker-dealer, or, on a specific number of individual advisor licenses purchased. Significant discounts are available depending upon the volume of licenses invloved. Click here to receive detailed pricing information.

Q: May an individual financial advisor or small advisor practice acquire the program?

A: Yes. Both individual advisors and multi-advisor practices may acquire the program based upon the payment of either an annual or monthly licensing fee. Click here to receive detailed pricing information.

Q: Has the program been reviewed?

A: Yes. Comment letters are available for review.

Q: What is the procedure to have my broker-dealer's compliance department review The Income for Life Model®?

A: Wealth2k has created a compliance review kit for broker-dealers. You may request one by completing
this form.

Q: Is there training available on The Income for Life Model®?

A: Yes. Phil Lubinski, CFP®, one of the tope retirement income planning experts in the U.S., leads the training programs that support IFLM. Training is available in various formats including a two day "training institute" as well as web meetings and conference calls.

Q: How do I sign-up for The Income for Life Model®?

A: Individuals may sign-up online by clicking here.

Q: Does Wealth2k offer other retirement income programs?

A: Wealth2k will develop customized retirement income solutions for organizations to deploy under their own brand. These programs can be designed to accommodate a variety of asset allocation approaches and funding strategies. Such programs may be hosted and managed by Wealth2k, or at the sponsoring company.

From Retirement Income Authority Philip G. Lubinski, CFP®: Questions that Clients Often Ask their Advisors about The Income for Life Model®

Q: If I don't need the income, what should I do with it?

A: Hopefully, when you receive the income you will find something enjoyable to spend it on like travel, home improvements or other major purchases. You may also want to consider using it to purchase Long Term Care Insurance, Life Insurance, gift to a 529 Plan for other family members or gift it to your favorite charity. The purpose the income from The Income for Life Model® (the Model) is to provide you with more income to allow you to do things that you either need to do or have wanted to do.

Q: Since we are using qualified money to fund the Model, what changes need to take place when I turn 70½?

A: Fortunately, The Income for Life Model provides you with more income than the IRS will require when you reach the age of 70½ and must begin taking your minimum distribution requirements.

Q: Will the Model work if I only have qualified money and I have not yet turned 59½?

A: The Model will probably have to be modified based on whatever the current IRS Section 72(t) interest assumptions are. Since these assumptions change from year to year, your advisor would have to test the Model. Also, the first phase of the Model would have to be for five years or until you turn 59½, whichever is longer. There is also a special form that needs to be attached to your Tax Return (Form 5329) if you use an immediate annuity for the first segment.

Q: What if I don't think I have 25 years to live?

A: My first response would be to ask you "Why do you feel this way?" Is it due to current health, current age, or longevity trends in your family, etc? If, in fact, we both agree that you have less than 25 years to live, then we would adjust the Model accordingly. Currently, The Income for Life Model offers 15-year, 20-year and 25-year illustrations. What you need to be aware of is that in the shorter duration illustrations, the balance at the end of the 15-year or 20-year period would not have the objective of growing back to the original investment amount as it does in the 25-year illustration.

Q: What if my needs change along the way from what was projected in the Model?

A: The beauty of The Income for Life Model® is that at the beginning of each 5-year segment you have the option to use the money however you want. If your needs change from needing monthly income to needing a lump sum of money instead, the balance of your account in most cases is available to you.

Q: Should someone 65 years old be putting money into aggressive growth accounts?

A: Please keep in mind that the average life expectancy of a healthy 65-year old is 90 years. Also, it is important to understand The Income for Life Model® recommends 26% of the money in the stock market, and only 13% of the money would be in an aggressive asset class. Overall, a 74%/26% mix in favor of fixed verse equity investments would be considered a rather conservative portfolio at most ages.

Q: How do I know whether to put my money into mutual funds, wraps or annuities?

A: This decision is really a function of your risk tolerance. If you intellectually agree that the long-term money should have an equity orientation, then you decide if you want to assume both the principal and market risk. If you are comfortable assuming both the principal and market risk, then mutual funds or wraps would be appropriate. If you would prefer some guarantees and want to shift the principal risk to an insurer, either Indexed Annuities or Variable Annuities with Living Benefit riders and Death Benefit riders may be appropriate. There is obviously a cost for these riders that could reduce the assumed yield.

Q: Speaking of the long-term segments, isn't 12% a high rate of return to assume for segment 6?

A: Firstly, understand that The Income for Life Model® v.2.0 offers flexible rates-of-return models based upon an investor’s time horizon, needs and risk tolerance. The 12% objective is reflective of only one of the available models and relates to investments held for 25+ years. That said, it is interesting how this question is asked based on what current market conditions may be at any given time. In the mid-90's when we saw a raging bull market, people may have thought that 12% was too low. Today, when market losses and volatility are evident, people may feel that 12% is too high.

Q: Why doesn't the income increase every year?

A: If you were using typical immediate annuities to fund the retirement income there would not be an annual increase. At the beginning of each segment the Model retroactively compounds a 3% increase for the next 5-year period. Also, during my 27 years of working with retirees, I have never had anyone ask me on an annual basis for their increase. It's usually after several years into retirement that they notice that their cash flow has become a little tight. At that point we adjust the income. Every five years seems to be frequent enough and consistent with what typical clients need.

Questions that Advisors Often Ask

Q: If I have a mix of both qualified and non-qualified money, how do I know which to use first?

A: This is probably one of the most frequently asked questions. Depending on how long you have until your client must take the required minimum distributions, it is always best, from a tax standpoint, to use the non-qualified money first, since the exclusion ratios on immediate annuities and the tax-deferral status of variable or indexed annuities allows the client to have significant tax-free income in the early years of the Model.

It is important however, to try to anticipate how large the qualified balance will grow by the time the client turns 70½, and make sure that we are not deferring them to a higher tax bracket than what might be available to them, today. It is also a function of their goals relative to their heirs. It would obviously be better to leave a non-qualified asset to an heir then it would to leave qualified money, since the non-qualified money would receive a step-up in basis (excluding non-qualified annuities). There may be occasions when the segments should be funded with a mix of qualified and non-qualified money. Each case may be unique and benefit from reviewing with either the client's tax advisor or an expert within your firm's tax department. Unfortunately, there is no absolute answer; it truly is determined on a case-by-case basis.

Q: If I use annuities to fund The Income for Life Model®, isn't my client subject to the aggregate rules when drawing their income?

A: Remember, the aggregate rules only apply when taking systematic withdrawals from annuities when you have multiple annuities with the same insurance company written in the same calendar year. Since we typically use different insurers for the annuities, the aggregate rules would not be a problem. More importantly, when you annuitize, that income is not subject to the aggregate rules. The rules only apply to systematic withdrawals.

Q: I have a 65-year-old client who is concerned that if they put their money in The Income for Life Model®, they will not have as much liquidity as they would be comfortable with.

A: Firstly, remember that at the beginning of each segment the money in that segment is available to do things other than provide income for the next five years. Secondly, depending on the types of products that you use to fund the Model, there may be substantial liquidity. If on the other hand you funded the entire Model with products that had surrender schedules, then there certainly wouldn't be a high degree of liquidity.

Typically, I find that retirees do not put 100% of their money into the Model. Remember, as we all were taught in designing investment portfolios, the first account we need to create for a client is their liquidity position. So, find out from your client how much cash they would feel comfortable having available at all times that is not at investment risk and that has no costs associated costs. Then, you can put the appropriate amount of their money into the Model and not be concerned about maintaining enough liquidity.

Q: My client is concerned that he will lose control of his ability to move money into different types of investments along the way as market conditions change and present new opportunities.

A: You must assess your client's main priority. Is it to achieve the highest reliability of income, or the highest potential return on investment? When someone says they want the ability to take advantage of market conditions and capitalize on opportunities, they are obviously still focused on the "return" on their investment. If, in fact, reliability of income is what your client is seeking, then chasing returns during the course of the Model could potentially put that reliability of income in great jeopardy.

Once again, the client needs to decide how much of their money they want to focus on reliability of income. With the balance of the money not used to fund the Model, they can take advantage of whatever market opportunities they perceive happening along the way. Our job is to try to make sure that they have an income they won't outlive, and an asset base that won't go away due to poor investment decisions.

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