UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: Re: Vanguard Guaranteed Life Withdrawal Benefit Date: 10/30/2011 3:41 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
culcha asks,

I don't know much about annuities ... but isn't it the case that even though the person has a guaranteed dollar amount of income, that dollar amount is fixed, and the forward march of inflation will mean that the purchasing power of that income will grow smaller and smaller?

This seems to compare most unfavorably with something like the 4% Safe Withdrawal Rate, which then adjusts the annual dollar amount withdrawn in order to keep up with inflation.

</snip>


There are annuities available that increase your payment each year for inflation, but they cost about 40% more.

http://www.principal.com/retirement/incomeannuity/elm/income...

An inflation-adjusted annuity should be safer than taking a 4% withdrawal from a stock portfolio if you believe the insurer can survive the next financial market meltdown. But it comes at great cost -- up to 30% of the purchase price of an annuity is lost to the insurance company's various fees, costs and expenses.

http://retireearlyhomepage.com/annuity_costs.html

intercst
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement