[Note: I had a hard time believing some of these S&P500 final values. Didn't think they could be that high -- didn't pass the smell test.So I cross-checked against VFINX, the Vanguard S&P500 index fund, with identical dates (1987-2013).My spreadsheet figures came out very close to the VFINX figures, so I think the spreadsheet is indeed correct. Gain of 8.268 for VFINX vs. 8.377 for the spreadsheet].Allianz Life Pro+ Fixed Index Universal Life Insurance 2% floor, 11% cap.Ah, but with footnotes:1) Cap ... will never be less than 2.50% 2) Annual floor ... will never be less than 1%. Index is complex and includes bonds, so it will surely grow less than the S&P500. But ... whatever.~ Monthly withdrawal of $5,000* from both from February 2013 (age 68) to December 2033 (age 88)My crystal ball is in the shop. I'll have to stop at 1/1/2013[*] as a side loan account accruing interest at 5.3%[*] Constant $5000, no increase for inflation.Allianz: 5% load on all money put in.Plus Monthly insurance cost charge.Plus Monthly expense charge.Plus Monthly policy charge of $7.50.What, exactly, are the insurance costs and monthly expense charge??Arrgggghhhhh!5% load is easy, just reduce the contribution (for the IUL only, not the S&P) by 5%, to $9500 initial and $950/mo.The other expenses, who knows??? I'll just go with 1.5%.S&P500 B&H has 0.09% E/R and pays 15% dividend tax.===================================Starting 1/1/1965, accumulate until 1/1/2013. Can't backtest deccumulation starting on 1/2/2013 because see above re: crystal ball / shop. But see later.Initial $10,000 and add $1000/mo. IUL has load & fees as above.On 1/1/2013:S&P final balance: $12,003,000IUL final balance: $2,789,000One of these is not like the other. </deadpan>===============================Deccumulation...Can't model the market performance from 2013 to 2033 (20 years), because, like, it's in the future.But we can reasonably assume that the future will be similar to the past. So let's say that the 2013-2033 market will perform like the 1970-1990 market.S&P B&H start $5000/mo withdrawal on 1/1/1970 with a starting balance of $12,003,000.Final value 20 years later, 1/1/1990: $95,615,000 (not a typo).Wow. Just wow. But we're talking about a withdrawal of $60,000/yr from a $12 million account. That's a withdrawal ratio of 0.5%, so it's almost negligible.IUL, same parameters as before, starting balance of $2,789,000.Final value: $5,627,000 (investment account) -$2,310,000 (loan account) = $3,317,000 Total withdrawals: $1,200,000 either way.Three point three million is a big number.Ninety five point who-cares million is a bigger number.Oh, yeah, right. Taxes. If you get whacked by 50% tax (50% LTCG tax?? as if!), that's still $47 million left. ===========================If you are wondering about how the S&P500 with SMA timing does:Accumulation is $11,008,000 vs. B&H of $12,003,000.So you get slightly lower growth but with much lower volatility. ====================Now, 20 years of inflation is going to have a big effect on the buying power of that $5000/mo. Let's increase the withdrawal by 2.5% a year to compensate for inflation. The withdrawal in the last year is $14,100 per month.Total withdrawn: $1,533,000S&P B&H final value: $94,571,000IUL, same parameters as before, starting balance of $2,789,000Final value: $5,151,000 (investment account) - $2,811,000 (loan account) = $2,340,000
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