2nd stage of assessing and comparing usefulness of retirement allocation calculators. Shows huge potential of inflation-indexed annuity, and impact of costs of GMWB plans (a hybrid of segregated funds and annuities). Illustrates how and why Otar Retirement Calculator (ORC) is a better software tool than Product Allocation Tool from a Canadian insurance company.

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71. For more, visit http://personalifnanicalplanning.ca Alternatively, instead of optimization by software (resulting in her spending of $270,105 on annuity), we can calculate how much would buy exactly $12,000 per year, i.e. $1,000 per month. $100,000 buys $350/month, … so she would need to spend $285,714 on the inflation-indexed annuity for full income (but not more) coming from annuity, leaving $14,286 completely to grow. Going into such details is unnecessary, even misleading.

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75. For more, visit http://personalifnanicalplanning.ca 45/55 (within 25%) 100% non-indexed annuity 45/55 (of $41,426) 75% non-indexed annuity Inflation-indexed annuity for $258,374 15% equity/85% fixed inc. 45% equity/55% fixed inc. 45/55 (within 20%) (optimal w/o guaranteed 10% non-indexed annuity product/s) 70% GMWB –> PAT reco. 70% equity/30% fixed inc. 30% equity/70% fixed inc. 85% equity/15% fixed inc. (‘current’) Chance of having various levels of planned income at various ages $13,000/yr targeted Male, 60, retiring now Strictly from retirement income point of view. (Cash/liquidity & estate aspects disregarded) Same security for female can be achieved at somewhat lower income only