Judging by the lack of comments, I gather that retirement withdrawal strategies are not the most exciting thing to blog about. But, that shouldn’t take away from the importance of thinking about it. I posted a Simple Example of the Grangaard Strategy earlier today. In that example I assumed that the income ladder was invested in bonds with a 5% yield.
Tonight I went on the Vanguard website and put together a hypothetical for a fixed immediate annuity with a 10-year fixed period certain. What “10-year fixed period certain” means is that the payments are guaranteed for 10 years whether or not the annuitant lives the entire period. This is a nice feature for married retirees because it adds a bit of stability to the retirement plan.
After plugging in some numbers on the Vanguard Instant Quote page, I got the following quote:
For this quote, I used the following inputs:
State of Residence: Texas
Joint Annuitant’s DOB: 01/01/1942
Joint Annuitant’s Gender: F
Monthly income payment you want to receive: $4,167
Fixed income payment with a 3% graded payment option
Guaranteed period only 10 years
Date you want your payments to begin: 07/01/2007
This works out to about a 5.47% yield on the invested amount, which isn’t too shabby and actually better than the 5% yield I used in the last example. This means that not as much capital is required at the beginning of retirement: