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1 Fill in the numbers within the red boxes … on the Annuity sheet.

2 Each time you press F9 you get a random selection of 40 annual Returns.
These 40 returns are applied to your portolio, with and without an annuity (so you can compare).
3 If, after 40 years, your portfolio is greater WITH an annuity, then devoting a portion of your portfolio
to an annuity would have been a good idea, eh?
4 If, after 40 years, your portfolio is greater WITHOUT an annuity, then devoting a portion of your portfolio
to an annuity would have been a bad idea, eh?
5 Sometimes (depending upon the selection of random returns) BOTH portfolios die before 40 years.
Too bad :^)
(But it may happen that one or t'other lasts longer, eh?)
ou can compare).
tion of your portfolio

a portion of your portfolio

die before 40 years.


Money Available = $1,000,000 Return Req'd Income Annuity

Starting Income Req'd = $40,000 0 25.84% $40,000 $20,000

Inflation = 3.00% 1 -0.94% $41,200 $20,000

Mean Return = 8.00% 2 6.86% $42,436


Growth of $1,000 $20,000
in "The Market"
Volatility = 20.00% 3 $50,000
31.11% $43,709 $20,000

Percentage Devoted to an Annuity = 25.00% 4 $45,000


14.72% $45,020 $20,000

Annuity Rate = 8.00% 5


$40,000
-0.28% $46,371 $20,000
$35,000
6 -16.96% $47,762 $20,000
$30,000
Amount of Annuity = $250,000 7 5.75% $49,195 $20,000
$25,000
Amount of Portfolio = $750,000 8 17.08% $50,671 $20,000
$20,000
It's Best to Buy an Annuity! 9 32.29% $52,191 $20,000
$15,000
Final Portfolio (with annuity) = $9,439,716 10 3.25% $53,757 $20,000
$10,000
Final Portfolio (without annuity) = $8,815,123 11 -10.86% $55,369 $20,000
$5,000
Annuity Rate should Exceed 8.61% 12 19.14% $57,030 $20,000
$0
Actual Mean of 40 Returns = 10.8% 13 -1.17% $58,741 $20,000

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Actual Volatility of 40 Returns = 15.0% 14 -7.12% $60,504 $20,000

15 -7.28% $62,319 $20,000


Portfolio(with annuity) Portfolio(without
16 annuity)
43.79% $64,188 Withdrawal
$20,000 Rate(with annuity) Withdr
$10,000,000 7.00%
17 29.75% $66,114 $20,000
$9,000,000
18 20.73% 6.00%
$68,097 $20,000

$8,000,000 19 12.35% $70,140 $20,000

20 32.80% 5.00%
$72,244 $20,000
$7,000,000
21 13.27% $74,412 $20,000
$6,000,000 4.00%
22 -9.87% $76,644 $20,000

23 -15.98% $78,943 $20,000


$5,000,000 3.00%
24 -3.00% $81,312 $20,000
$4,000,000
25 23.54% $83,751 $20,000
2.00%
$3,000,000 26 6.03% $86,264 $20,000

27 3.83% $88,852
1.00% $20,000
$2,000,000
28 16.51% $91,517 $20,000
$1,000,000 29 19.82% 0.00%
$94,263 $20,000

30 -10.59% $97,090
0 1 2 3 4 5 6 7 8 9 1 11 1 1 1 1 1 1 1 1 2 2 2 2
$20,000
$0 0 2 3 4 5 6 7 8 9 0 1 2 3
31 2.22%
0 1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940 $100,003 $20,000

32 14.09% $103,003 $20,000

33 -1.77% $106,093 $20,000

34 31.87% $109,276 $20,000

35 8.94% $112,554 $20,000

36 35.88% $115,931 $20,000

37 12.47% $119,409 $20,000

38 11.61% $122,991 $20,000

39 13.80% $126,681 $20,000

40 18.40% $130,482 $20,000


Withdrawal Portfolio(with annuiWithdrawal Rate(wi Growth of $1,000 i Portfolio(without a Withdrawal Rate(wi G SUM(1/G) 1/SUM(1/G)

$20,000 $730,000 2.67% $1,258 $960,000 4.00% 1.258 1.795 55.72%

$21,200 $701,943 2.93% $1,247 $909,782 4.33% 1.247 2.597 38.51%

1,000 in "The Market" $22,436 $727,654 2.99% $1,332


Req'd Income $929,750 4.37% 1.332 3.348 29.87%

$23,709 $140,000
$930,309 2.49% $1,746 $1,175,274 3.59% 1.746 3.920 25.51%

$25,020 $1,042,192
$120,000 2.34% $2,003 $1,303,206 3.34% 2.003 4.419 22.63%

$26,371 $1,012,857 2.54% $1,998 $1,253,129 3.57% 1.998 4.920 20.33%


$100,000
$27,762 $813,300 3.30% $1,659 $992,818 4.59% 1.659 5.523 18.11%

$29,195 $80,000
$830,891 3.39% $1,754 $1,000,736 4.69% 1.754 6.093 16.41%

$30,671 $942,123 3.15% $2,054 $1,120,975 4.32% 2.054 6.579 15.20%


$60,000
$32,191 $1,214,153 2.58% $2,717 $1,430,757 3.52% 2.717 6.947 14.39%
$40,000
$33,757 $1,219,838 2.69% $2,806 $1,423,479 3.64% 2.806 7.304 13.69%

$35,369 $20,000
$1,052,052 3.25% $2,501 $1,213,587 4.36% 2.501 7.704 12.98%

$37,030 $1,216,389 2.95% $2,980 $1,388,843 3.94% 2.980 8.039 12.44%


$0
$38,741 $1,163,409 3.22% $2,945 $1,313,844 4.28% 2.945 8.379 11.93%
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$40,504 $1,040,101 3.75% $2,735 $1,159,829 4.96% 2.735 8.745 11.44%

$42,319 $922,042 4.39% $2,536 $1,013,052 5.80% 2.536 9.139 10.94%


Withdrawal Rate(with annuity)
$44,188 Withdrawal
$1,281,616 Rate(without
3.33% annuity)
$3,647 $1,392,478 4.41% 3.647 9.413 10.62%

$46,114 $1,616,786 2.77% $4,731 $1,740,630 3.66% 4.731 9.624 10.39%

$48,097 $1,903,843 2.46% $5,712 $2,033,359 3.24% 5.712 9.800 10.20%

$50,140 $2,088,781 2.34% $6,418 $2,214,290 3.07% 6.418 9.955 10.04%

$52,244 $2,721,634 1.88% $8,522 $2,868,309 2.46% 8.522 10.073 9.93%

$54,412 $3,028,286 1.77% $9,653 $3,174,419 2.29% 9.653 10.176 9.83%

$56,644 $2,672,842 2.08% $8,701 $2,784,556 2.68% 8.701 10.291 9.72%

$58,943 $2,186,835 2.62% $7,310 $2,260,700 3.37% 7.310 10.428 9.59%

$61,312 $2,059,900 2.89% $7,091 $2,111,548 3.71% 7.091 10.569 9.46%

$63,751 $2,481,074 2.51% $8,760 $2,524,881 3.21% 8.760 10.683 9.36%

$66,264 $2,564,327 2.52% $9,288 $2,590,773 3.22% 9.288 10.791 9.27%

$68,852 $2,593,748 2.59% $9,644 $2,601,208 3.30% 9.644 10.895 9.18%

$71,517 $2,950,547 2.37% $11,237 $2,939,239 3.02% 11.237 10.984 9.10%

$74,263 $3,460,940 2.10% $13,463 $3,427,391 2.68% 13.463 11.058 9.04%


2 3 4 5 6 7 8 9 1 11 1 1 1 1 1 1 1
$77,090
1 2 2 2 2 2 2 2 2.49%
$3,017,320
2 2 2 3 3 3 3 3$12,038
3 3 3 3 3 4 $2,967,324 3.17% 12.038 11.141 8.98%
0 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
$80,003 $3,004,217 2.59% $12,304 $2,933,113 3.30% 12.304 11.222 8.91%

$83,003 $3,344,604 2.42% $14,039 $3,243,479 3.08% 14.039 11.293 8.85%

$86,093 $3,199,245 2.62% $13,790 $3,079,912 3.33% 13.790 11.366 8.80%

$89,276 $4,129,605 2.12% $18,185 $3,952,239 2.69% 18.185 11.421 8.76%

$92,554 $4,406,387 2.06% $19,811 $4,193,158 2.61% 19.811 11.471 8.72%

$95,931 $5,891,405 1.60% $26,919 $5,581,672 2.03% 26.919 11.509 8.69%

$99,409 $6,526,433 1.50% $30,275 $6,158,089 1.90% 30.275 11.542 8.66%

$102,991 $7,181,289 1.41% $33,790 $6,750,172 1.79% 33.790 11.571 8.64%

$106,681 $8,065,947 1.31% $38,455 $7,555,318 1.65% 38.455 11.597 8.62%

$110,482 $9,439,716 1.16% $45,531 $8,815,123 1.46% 45.531 11.619 8.61%