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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Re: Strategy comparison S&P500 vs. IUL [rev 1] Date: 4/10/2013 5:16 PM
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One of the major benefits of an IUL is the annual floor on the index return, so that you are guaranteed protected from any stock market loss.
It is known that the worst thing for a new retiree's portfolio is for them to retire just before a bull market hits, so that they are taking withdrawals from a declining portfolio. A portfolio which has not had a chance to grow since the time of retirement.

I wanted to see what happens to the portfolio values in this scenario, for 4 different bear markets. The figures below show the portfolio value (final value and lowest value) 10 and 20 years later, and the largest drop in the first 24 months.

Starting with $120,000
taking $500/mo withdrawals (5% Starting Withdrawal Ratio).
Beginning at or near the peak before the crash.
Total withdrawal: $60,000 in 10 years, $120,000 in 20 years.

Parameters
S&P E/R = 0.09%
No taxes
IUL Floor: 0%
IUL Cap: 12%
Ann Fee: 0.75%
Loan rate: 6.0%

=============================
Start Date 1/1/1973
Greatest drop (loss) from starting value in the next 24 months: -36%
Summary		Value		Date (EOM)	Low
B&H w/div $116,258 Dec 1982 $61,446
10mSMA $147,105 Dec 1982 $98,705
IUL (loan) $98,031 Dec 1982 $96,493
IUL (withdraw) $105,059 Dec 1982 $103,056

B&H w/div $381,111 Dec 1992 $61,446
10mSMA $391,772 Dec 1992 $98,705
IUL (loan) $146,485 Dec 1992 $96,493
IUL (withdraw) $135,184 Dec 1992 $103,056


=============================
Start Date 7/1/1980
Greatest drop (loss) from starting value in the next 24 months: -12%
Summary		Value		Date (EOM)	Low
B&H w/div $415,086 Jun 1990 $113,743
10mSMA $335,129 Jun 1990 $120,000
IUL (loan) $162,164 Jun 1990 $118,992
IUL (withdraw) $158,149 Jun 1990 $119,899

B&H w/div $1,933,521 Jun 2000 $113,743
10mSMA $1,134,276 Jun 2000 $120,000
IUL (loan) $310,572 Jun 2000 $118,992
IUL (withdraw) $258,265 Jun 2000 $119,899


=============================
Start Date 7/1/1987
Greatest drop (loss) from starting value in the next 24 months: -29%
Summary		Value		Date (EOM)	Low
B&H w/div $307,577 Jun 1997 $90,041
10mSMA $222,793 Jun 1997 $90,695
IUL (loan) $159,234 Jun 1997 $115,174
IUL (withdraw) $154,422 Jun 1997 $115,453

B&H w/div $519,340 Jun 2007 $90,041
10mSMA $413,167 Jun 2007 $90,695
IUL (loan) $222,074 Jun 2007 $115,174
IUL (withdraw) $210,447 Jun 2007 $115,453


=============================
Start Date 1/1/2000
Greatest drop (loss) from starting value in the next 24 months: -27%
Summary		Value		Date (EOM)	Low
B&H w/div $44,078 Dec 2009 $32,218
10mSMA $108,630 Dec 2009 $85,245
IUL (loan) $101,997 Dec 2009 $100,571
IUL (withdraw) $109,985 Dec 2009 $105,010

*** 13 years, ending 1/1/2013
B&H w/div $38,584 Dec 2012 $32,218
10mSMA $97,510 Dec 2012 $85,245
IUL (loan) $113,375 Dec 2012 $100,571
IUL (withdraw) $118,915 Dec 2012 $105,010
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