Click here for a comparison of a retiree’s income profile, when all of the retiree’s assets are invested in a mutual fund versus when a Guaranteed Income Wrap/Contingent Deferred Annuity (CDA) is added to 30% of the retiree’s mutual fund portfolio. Two market scenarios will be analyzed: a hypothetical down market scenario and a historical up market scenario.
The analysis provided focuses on how the inclusion of a Guaranteed Income Wrap/CDA impacts a typical retiree’s income profile. An efficient frontier methodology was used to determine where allocations between a mutual fund with a systematic withdrawal program and a portfolio with a Guaranteed Income Wrap would lie on the efficient frontier and hence create an optimal allocation. In this analysis, mortality was modeled on a stochastic basis, with 87% of the Annuity 2000 table as the base assumption and included a stochastic improvement factor.