No. of Recommendations: 1

The 4% guideline is a planning number that is designed to cover all people in most all circumstances. It does fail at certain points. It is based on a conservative portfolio mix.

The internal expenses, while important, are not what you would look at. The payout level, payment guarantee age and the reliability of the payer are what you are investing in. You aren't looking for residual value.

Some of these also offer a tax advantage, where payments are fully or partially tax exempt. Depending on your situation, that could be a good deal.

Another thing to consider is who will you foot the bill? Is this money in a taxable account that will need to be sold to do the purchase?

On the 4% vs 4.25%, If this is coming from an IRA or something, that may be an issue. This depends on the size of the IRA and your income level when RMD's kick in.

Nothing says the excess must be spent. It can be invested into stock in your brokerage account. You can buy stock that pays no or small dividends and have a "tax advantaged" holding. If the payments are tax-free, no problem.

All holdings and some stats on my profile page
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