New Research: Fixed Indexed Annuity Outperforms Bonds, VAs, SPIA for Income

  • Originally published September 26, 2013 , last updated May 8, 2018
  • Annexus
New Research: Fixed Indexed Annuity Outperforms Bonds, VAs, SPIA for Income

Since the early 1990s, financial planners looking to build income streams for their clients have relied upon “the 4-percent rule,” which asserts that retirees can safely withdraw 4 percent from a balanced stock and bond portfolio for 30 years, annually increasing the withdrawal to adjust for inflation.

Dr. Wade Pfau and Rex Voegtlin conclude in their new white paper, “Mitigating the Four Major Risks of Sustainable Inflation-Adjusted Retirement Income,” that a balanced portfolio of stocks and bonds (using the 4-percent rule) has a high probability of failure in today’s environment. They found that replacing the bond portion of the portfolio with an FIA with a 30-year inflation income rider actually projects a high probability of success.

The key question is "which FIA?" Voegtlin and Pfau put the Annexus BalancedChoice Annuity (BCA) up against bonds, a VA and a SPIA. Download the white paper to find out how the BCA stacked up against these other asset allocations.

An interesting side note about this research is that Dr. Pfau originally only modeled bonds, VAs and SPIAs and chose to ignore FIAs. But he had never seen the BCA before. This research, done by a respected academic, just reinforces that the Annexus BCA is a truly unique product that can help your clients protect themselves from inflation and build a sustainable income stream for life.