If your $500k is to seed a legacy, I wonder if investing in annuities is the way to do it. When you invest in annuities, your beneficiaries do not get the benefit of step-up basis.We are new to MYGAs and would appreciate your expert advice.
We’re a couple (ages 59 and 54) planning to retire in 2029 (ages 63 and 58). We plan to start Social Security in 2032 (ages 67 and 62). We currently have a $2M retirement portfolio, which includes 500K joint CD that matures in Nov-2025. Empty nesters with fully paid off home.
We’re considering setting up a 4-year MYGA ladder (all non-qualified). I am planning to use 2-3 insurance company split the risk and also keep it under the 250K state guarantee limit.
•4-year MYGA: $140K, maturing Nov-2029 (my name)
•5-year MYGA: $130K, maturing Nov-2030 (my name)
•6-year MYGA: $120K, maturing Nov-2031 (DW)
•7-year MYGA: $110K, maturing Nov-2032 (DW)
We think the annuity interest income, along with savings from 2026 to 2029 will cover us until social Security kicks in 2032. If needed, partial withdrawals from our $1.5M+ pre-tax retirement accounts can also start in 2029. Our monthly expense estimate is 7K. We want the original $500K annuity principal to serve as a legacy for our children and grandchildren.
Does this approach make sense for our situation? Are there alternatives we should consider?
For example, say your investment grows from $500k to $900k on passing.
a) With annuities, the gain of $400k is taxable as ordinary income.
b) If invested outside of annuities, e.g. in equities, the gain of $400k is "stepped-up" and no tax is due.
For b) you do have to pay yearly taxes on ongoing dividends but you can minimize that by using ETFs with lower yields or even have a portion in BRK-B.
Statistics: Posted by indexfundfan — Mon Oct 13, 2025 7:15 pm — Replies 3843 — Views 654146