The article suggests that the current high long-bond yields could offer a significant opportunity for investors, despite the economic uncertainty. It highlights the current yields on the 30-year Treasury bond at their highest since 2007, compared to their 2020 low. Similarly, the improved yields could benefit retirees, boosting their approved withdrawal rate. The article, however, underscores that this scenario is contingent upon the validity of a 2.3% inflation estimate and investors’ ability to capitalize on the higher yields.
The article talks about the fear and insecurity accompanying job loss or forced retirement, especially due to economic downturns. It suggests traditional investing strategies may not suffice, and introduces the ‘Income Method’ as a practical solution. This investment strategy advocates for owning shares in companies that pay steady dividends. The article also mentions the ‘Rule of 42’ for diversification, and the ‘Rule of 25’ for reinvesting dividends, to ensure a growing income stream, making it an apt strategy amidst economic instability.
So, coming out of a 2022, for example, if you’re going for a strategy like this, the trade-off would be that in 2023, you would not be able to take an inflation adjustment based on what happened in the market last year. You can see that
Dispelling these myths can help your clients decide if investing in an annuity will help their retirement income planning and financial strategy. Some common myths about annuities are that they’re too expensive, that certain
It’s also worth pointing out that a retiree doesn’t have to spend cash flows from an annuity: One retiree I know uses his annuity income for lifetime gifting to his loved ones. For people who find comfort in data, David Blanchett’s
Another factor is that retirees, because they’re withdrawing a portion of their portfolios to pay for their ongoing living expenses, don’t have the luxury that working folks have of getting those cost-of-living adjustments automatically in their paychecks