Annuities: Much Misunderstood And Vastly Under-Utilized

March 11, 2020 by Jack Guttentag

The retiree I discuss in this article is 62 and has accumulated $2 million of assets which must last him for the remainder of his life. As he approached retirement, as a cautionary move, he gradually shifted out of equities into fixed-income securities. He is not a homeowner.

The question he now faces is determining how much he can draw each month without fear of running out. The question is complicated by the need to have the monthly draw amount rise over time to keep pace with consumer prices. The only guidance that the industry now offers is the so-called “4% rule,” which says that drawing 4% of the asset value every year is probably safe.

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Originally Posted at Forbes on March 9, 2020 by Jack Guttentag.