Our first step would be to sit down with the couple to gain a better understanding of their needs. They would hypothetically need about $150,000 of annual income to maintain their lifestyle in retirement. While $50,000 would likely be coming from Social Security each year, we would likely propose establishing a $2 million investment account with the sole purpose of providing $100,000 of annual income without touching the original principal invested in a tax efficient manner.
Given the minimum income required would be generated from the initial account, we would likely recommend additional options for maximizing the use of their other assets. The remaining $4 million could be invested in four equal portions. The first portion could be placed in a fixed index annuity with no fees to deliver downside security from the stock market, while keeping a proportion of the upside potential. For the second portion of their money, we could create a private equity allocation with lower volatility and correlation than the stock market. The third could then be used to create a general investment account and generate balanced growth as a supplement to their income portfolio (and for excessive annual cash needs). We would recommend that the the last portion would be used to fund a life insurance policy that would likely result in a sizeable tax-free benefit to their children.
The final step in the process would be to work with an Estate Attorney to ensure Federal and State estate taxes were avoided when possible. This would potentially leave a maximum inheritance to their family.