When would my savings run out if I tried to match the annuity on my own?
If you try to match the annuity by investing in risk free bonds earning 3.00% after taxes, you will run out of savings by age
By trying to match the income on your own, you have to consider the types of investments, the risks, the taxes and the need for a regular check for life. While the above analysis assumes a conservative investment strategy, you may want to consider other investment strategies.
Click here to Learn Even More.
While there are many types of plans and schemes that offer streams of retirement
income, you have to make any comparison by answering the following questions for the
alternative: Is the income guaranteed? If so, what is the credit rating of the financial institution?
If not, what parameters affect the outcome, such as market returns, interest rates, etc? Is the
income payable for life? If not, what do you do if that account runs out? Is a portion of the
income treated as a tax-free recovery of cost basis?
By trying to match the income on your own, you have to consider the types of investments, the risks, the taxes and the need for a regular check for life. While the above analysis assumes a conservative investment strategy, you may want to consider other investment strategies.
