The Motley Fool Discussion Boards	Previous Page
Investing/Strategies / Retirement Investing
URL: http://boards.fool.com/secondly-several-articles-that-i-have-recently-25287877.aspx
Subject: Re: Annuities vs Investments?	Date: 3/15/2007 9:05 AM
Author: clifp	Number: 56279 of 76611
Secondly, several articles that I have recently read say that if you want to outlive your money in retirement and leave a little for the kids you should only withdraw about 4% from your retirment savings each year. An important thing to remember when comparing annuities to SWR (safe withdrawal rates) is that the 4% SWR assume you are increasing the withdrawal amount by the inflation rate, while a 7% annuity is fixed if inflation takes off you are stuck with 7% For example assume $1,000,000 in saving. You withdraw 4% or $40,000 the next year inflation is 2.5%, your withdraw can increase to $41,000 the next year if inflation is 5% the second year you can safely withdraw 5% beyond the 41,000 or $43,050. If inflation just increases slightly to 3.6%/year the 4% safe withdrawal rate adjust for inflation will end up increasing to more than $70,000 an annuity allow in just 15 years.
Copyright 1996-2015 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us