No. of Recommendations: 27
FLARAM writes,

I respectfully disagree. The recommendations were for an 80 year old woman. If we assume she was
single she could purchase an annuity through a low cost broker like vanguard or fidelity which at
today's rates would give her a lifetime income of 8.8% with no inflation coverage or 7% with a 3%
inflation adjustment every year. This is significantly better than what you would receive using the 4% rule.


Don't forget that the 4% rule is for a 30-year pay out period. For an 80-year-old, you could safely withdraw an amount equal to the Required Minimum Distribution for an IRA, something around 5.5% plus an inflation adjustment.

I often hear annuities recommended for retirees who don't feel any particular need to leave a legacy to any heirs or a charity, since the insurance company guarantees that you'll die with zero. However, when you look at the likelihood that a portfolio undergoing systematic RMD-like withdrawals will have a significant balance at death, I'd argue that most people can find a more deserving beneficiary for that largess than an insurance company.

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