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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.
(But it may happen that one or t'other lasts longer, eh?)
ou can compare).

## die before 40 years.

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

## 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

## 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)

## 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%

## \$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%