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Buying Income for Seven Years
Old 01-18-2020, 12:41 PM   #1
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Buying Income for Seven Years

I'd like to bump up our income for 5 years in the amount of ~3k a month. I have about two years to fund this before I want the cash flow.

So that is (3k per month)x(12months)x(5years) or 180K total if I just sat it aside.

Ideas I've come up with are:

5yr ladder of zero coupon bonds or cds
delayed onset short term annuity

I'd probably buy it in a tax deferred account.

I'd also probably like to keep it separate from stock index volatility unless it was selling covered calls or something like that..
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Old 01-18-2020, 04:20 PM   #2
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What you describe is a 3 year deferred 5-year payout annuity of $3,000/month. immediateannuities.com suggests that it would cost $165,500.

I think you can do as well and have more control and less risk by building an CD ladder. The rung that starts in 3 years would be $36,000/(1+i)^3 where i is the interest rate on the 3 year CD.... and ditto for years 4-7. Then have the proceeds from the maturing CDs go into an online savings account or MM fund that is setup for $3k/month automatic transfers to the bank of your choice.
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Old 01-18-2020, 08:16 PM   #3
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Not enough information. Maybe you can do this from your current portfolio?

Money is fungible, I suspect you are conflating "cash flow" with your total amount of resources?

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Old 01-19-2020, 07:39 AM   #4
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Money market and CDs.
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Old 01-19-2020, 05:31 PM   #5
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Quote:
Originally Posted by ERD50 View Post
Not enough information. Maybe you can do this from your current portfolio?

Money is fungible, I suspect you are conflating "cash flow" with your total amount of resources?

-ERD50

Basically living on part of one earned income for another 2 years. One SS, annuities payouts, dividends, capital gains where not reinvested and new IRA, 401k type contributions would be available so sort of new money not currently accounted for in my spreadsheet.

I might sell say a dividend paying stock that ceased paying dividends or even cds/bonds/zeros that matured during next 2 years. But not selling say 20 yr cds to get a quicker larger payback.

Depending how I did it I might have part in various accounts or sell a lot of something in one account and buy back pieces of it in other accounts over the two years.
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