From 24/7 Wall St. · Jake FitzGerald · · 1m 40s
66-Year-Old Couple Builds Monthly Paycheck from $1.2M 401(k)
Retired couple uses Treasury ladder and delayed Social Security to create $4,000 monthly income without annuity.
In brief
Retired couple uses Treasury ladder and delayed Social Security to create $4,000 monthly income without annuity. A 66-year-old couple converted $1.2 million 401(k) rollover into $4,000 monthly income through Treasury ladder and delayed Social Security without annuity. Originally reported by 24/7 Wall St..
Rollover Mistakes That Cost Money
The rollover method affects tax withholding: 20% withheld when check goes to account owner versus no tax when paid directly to IRA trustee.
Layer One: Treasury Ladder
They use two years of withdrawals from Treasury bills and notes maturing on staggered schedules to create $4,000 monthly income.
Layer Two: Portfolio Withdrawals
Remaining $1.104 million invested in stocks and bonds with systematic withdrawals to refill the ladder during market downturns.
Layer Three: Delayed Social Security
Higher earner delays Social Security claims until 70 to grow benefits with cost-of-living adjustments and become surviving spouse's income.
Taxes and Medicare Costs
Standard 2026 Part B premium is $202.90 monthly with income-related surcharges applying to joint filers over $218,000.
Skipping Annuity Risks
Without annuity, couple bears risks of outliving money and poor markets early while avoiding insurer's claims-paying ability risks.
Conditions to Check
Check if Social Security covers essentials, can delay claiming, withstand 25% portfolio decline, and manage withdrawals if needed.
What Skipping Annuity Gives Up
Skipping annuity means bearing two risks: outliving money and poor markets early, while annuity is irrevocable with built-in costs.
The Plan Works
The couple's three-layer plan creates reliable monthly income without annuity, though it carries sequence-of-returns risk and inflation pressure.
“sequence-of-returns risk”
What it means
A 66-year-old couple converted $1.2 million 401(k) rollover into $4,000 monthly income through Treasury ladder and delayed Social Security without annuity.
