So I was pondering an investment strategy... what do you think?

A 50 yo early retiree has $800,000 after tax, a pension at 65, plans SS at 70.

Our hero needs to get to 65 when his reinforcements take over.

Annual spending is at approx $32,000

The Plan:

Take 33.3% of the $800,000 and buy a period certain 15 year annuity.

$266,666 15 year period certain currently pays 3.18% investment return, or 8.39% payment per year.

$22,376 per year, of which 20.5% is interest and 79.5% is return of capital.

$533,333 is invested in VTI with a 2% dividend rate.

Annual income is $10,666 dividends, $22,376 is the annuity payment, total $33,042.

Taxes are low, $10,666 QDI will be at 0%, the exclusion ratio of 79.5 % means the annuity will have zero taxes on $4587 per year.

Income for ACA purposes will be $10,666 + $4,583 = $15,249, the max subsidy possible.

Advantages:

The annuity income will enable a more aggressive investing position, with zero taxes, and max ACA subsides.

Period certain annuities continue payment to the estate even if the person dies, so no risk of loosing principal because of death.

Stability of income means less worry.

Disadvantages:

The $266,666 will be totally returned in 15 years, no principal payment at the end.

Hopefully the $533,333 VTI investment can grow in 15 years to make up the $266,666 being spent.

Annuities are not liquid and this strategy will be locked in once started.

Thoughts:

A person could sell off shares/bonds as needed for a do it yourself annuity, this plan makes things much more simple.