Nobel Prize winning economist Bill Sharpe has been simulating various income paths through a variety of strategies, including fixed withdrawal rates and annuity approaches. He tells Investment Advisor  magazine that fixed withdrawal approaches, like the 4% rule, are inefficient because you either spend too much and go bust or spend too little and leave more to heirs than you planned. Sharpe thinks annuities increase efficiency, by letting you spend more. Noting that a period-certain annuity is like a bond ladder, he suggests that retirees can see which is cheaper, net of fees, buy that and tack a deferred annuity at the end.
Learn more about your ad choices. Visit megaphone.fm/adchoices