A Pseudo-Life Annuity: Is There a Downside?
Last year, I wrote an article that shared ideas on how not to outlive, with virtual certainty, one’s money (“A Pseudo-Life Annuity: Guaranteed Annual Income for 35 Years,” AAII Journal, June 2012).
Specifically, I demonstrated how an individual investor with a $1 million portfolio on March 19, 2012, could have invested the money to have virtually a 100% probability of both not outliving his or her money and leaving a legacy for heirs at death.
Though the data showed that income for the investor would be assured throughout retirement, a question that was left unanswered is, “Is there a downside to the beneficiaries when the individual dies and the remaining bonds must be sold prior to maturity?” That is, will there be a loss of original principal? In this article, I will answer that question.
...To continue reading this article you must be registered with AAII.
Already registered with AAII? Login to read the rest of this article.
to read this article and receive access to future AAII.com articles.