AimPoint Pension
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Regional Vice President of Sales The Retirement Plan Company
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Defined Benefit Combo Cash Balance Compliance Consultant Loren D. Stark Company (LDSCO)
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Bates & Company, Inc.
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Loan & Distribution Specialist AimPoint Pension
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Compass
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Comparing Strategies for Retirement Wealth Management: Mutual Funds and Annuities
Social Science Research Network Jan. 4, 2009
Excerpt: We compare several strategies for individual wealth management in retirement, focusing on investment performance and trade-offs between wealth creation and income security. Systematic withdrawals from mutual funds generally give opportunities for greater wealth creation but this strategy also entails large probabilities of investment losses and volatile income flows. Variable immediate annuities likely distribute higher incomes than the systematic withdrawals but lack the income security featured in fixed payout life annuities. Fixed life annuities and variable annuities with guaranteed minimum withdrawal benefit (VA GMWB) offer considerable income stability. A mix of mutual funds and fixed-payout life annuities may serve both wealth growth and certain degree of income protection, similar but not identical to a VA GMWB strategy. Wealth and income in the various strategies also differ significantly owing to differing levels of fees.
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