Barry and Pat are both approaching retirement. Full retirement age for each of them is age 66. Barry plans to file for Social Security benefits at 70 at which time Pat, who also will be 66 next year, will begin collecting a spousal benefit. In addition to Social Security Barry and Pat are currently receiving income from retirement pensions which began last year. Their current income sources are providing 50% of the couple’s basic retirement income needs. With the addition of Social Security at 70 current income should meet 75% of their income needs. Other retirement assets, held in 401(k) plan accounts and IRA’s, totals $873,000. Which of the following options to cover the balance of their retirement income needs would be appropriate for Barry and Pat to consider? Choose all that apply.

  1. A four-year immediate annuity beginning at age 66
  2. Annuitizing retirement accounts to provide lifetime income
  3. Commencing a Systematic Withdrawal Plan (SWP) from retirement assets
  4. Drawing down retirement assets until age 72 to lower RMD’s and possibly avoid taxation of Social Security benefits
  5. Purchasing sufficient bonds with their retirement assets to provide income between age 66 and 70, then switching to a SWP for the balance of retirement

A. 3 and 5

B. 1, 2 and 3

C. 3, 4 and 5

D. 1, 3, 4 and 5