Issue link: https://resources.envestnet.com/i/1532497
IMPORTANT: The projections or other information generated by MoneyGuide software regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results are are not guarantees of future results. Assumes a $1 million dollar portfolio with $500,000 inside an annuity and $500,000 outside, taking 5% outside the annuity and what the number is in addition to offset the clients needed income of $40,000 plus adjusted 2.5% for inflation. Note: This is in a test environment and subject to change. This is plan-dependent. Many scenarios result in a lower probability of success score. Guaranteed Minimum Withdrawal Benet (GMWB) In this example, a client with a $1 million portfolio might expect to take 4%, or $40,000, from that portfolio and adjust that figure up for inflation every year. Let's assume the annuity has a 5% payout, creating $25,000 a year in guaranteed income that the client can't outlive. To get $40,000 in income the first year, the client needs only take a $15,000 withdrawal from the regular investment portfolio - 3% which is a number that is very sustainable. This takes the pressure off the overall portfolio to have a smaller percentage of the assets withdrawn in the first year of retirement when the risk was substantially higher. There's also a benefit to this from a client behavior standpoint, because the mental accounting of taking the majority of the income from source that provides for guaranteed withdrawals is helpful. Note, even though all of the inflation protection is borne out by the regular investment portfolio, it's still under 4%, relative to the initial investment, after five years of withdrawals. Year Guaranteed Income from Annuity Withdrawals from Other Investments Total Income Withdrawal % from Other Investments (relative to initial amount) 1 $25,000 $15,000 $40,000 3.00% 2 $25,000 $16,000 $41,000 3.20% 3 $25,000 $17,025 $42,025 3.41% 4 $25,000 $18,076 $43,076 3.62% 5 $25,000 $19,153 $44,153 3.83% Scenario $1 million total portfolio — $500,000 in annuity with 5% guaranteed income — $500,000 in other investments $40,000/year desired in total real income — 2.5% assumed inflation 8