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I've followed the 5th income style over the past 27 years. Minimize or eliminate fees, commissions and trading costs, avoid dividends and interest income when possible, focus on funding living expenses with capital gains and tax-paid returns of capital. Pay attention to taxes. And when the Gov't offers you a windfall like "free Obamacare" or a half-price inflation-adjusted life annuity if you wait until age 70 to start Social Security, take advantage of the offer.

Equities Vs. Annuities: Wade Pfau Outlines Four Retirement Income Styles

In the first chapter, he takes a deep dive into the four retirement income styles available to most Americans: 1) The total return approach favored by many RIAs, in which retirees essentially live off the capital appreciation and income generated by their portfolios; 2) a safety-first time segmentation using laddered bond portfolios; 3) a safety-first approach using annuities as an income floor; and 4) a hybrid risk wrap approach. The last style combines certain guaranteed income with what Pfau calls a “preference for technical liquidity and for back-loading retirement income” in the later years. This method resembles—and uses—a variable or indexed annuity.


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