In the study, the 4% rule carried a growing risk of depletion, while a full annuity sacrificed liquidity and any remaining balance.
Putting 50% of savings into an annuity earned the highest score, pairing strong income with money left for emergencies or heirs.
The study used a simple immediate annuity, not one of the more complex products commonly marketed to retirees.
For decades, one widely used retirement guideline has suggested withdrawing a set percentage in year one, typically 4%, then increasing that dollar amount annually to keep pace with inflation. But a new study found that neither this approach nor putting an entire portfolio into an annuity, produced the strongest overall result. The highest-scoring strategy used some of both.
Retirement income does not have to be an either-or choice between portfolio withdrawals and an annuity. This study suggests that combining the two may provide income security while preserving money for unexpected expenses or heirs.
#annuity
Putting 50% of savings into an annuity earned the highest score, pairing strong income with money left for emergencies or heirs.
The study used a simple immediate annuity, not one of the more complex products commonly marketed to retirees.
For decades, one widely used retirement guideline has suggested withdrawing a set percentage in year one, typically 4%, then increasing that dollar amount annually to keep pace with inflation. But a new study found that neither this approach nor putting an entire portfolio into an annuity, produced the strongest overall result. The highest-scoring strategy used some of both.
Retirement income does not have to be an either-or choice between portfolio withdrawals and an annuity. This study suggests that combining the two may provide income security while preserving money for unexpected expenses or heirs.
#annuity
5 days ago
