Guaranteed Income For Life
Make it last
Guaranteed Income for Life
“Too good to be true?”
Peace of Mind. For the Years That Matter Most.
When it comes to retirement, the goal isn’t just to stop working — it’s to live fully, with confidence that your income will last as long as you do. Imagine maintaining your lifestyle, enjoying well-deserved vacations, and experiencing a retirement built on both freedom and financial security.
At Evergreen Wealth & Co, we help you turn that vision into reality. Because the truth is, nearly half of Baby Boomers worry about outliving their savings — but with the right plan in place, you don’t have to.
The 4% Rule – Is It Still Safe?
For decades, traditional retirement planning has relied on the “4% rule”—the idea that retirees can safely withdraw 4% of their portfolio each year, adjusting slightly for inflation. While this guideline may have worked in the past, recent research shows it may no longer be sufficient for many retirees.
Studies from Morningstar, PGIM DC Solutions, and other experts now suggest a more conservative starting withdrawal rate closer to 3.7%, reflecting today’s lower bond yields, higher market valuations, and longer life expectancies. Even with this adjustment, money in traditional accounts remains exposed to market volatility, meaning principal can still decline and income could run out if markets underperform or unexpected expenses arise.
In short, while the 4% rule provides a simple benchmark, it does not guarantee a secure retirement, and relying solely on it may leave retirees underprepared for the realities of today’s financial landscape.
Let’s take a closer look—
Approach 1:
Updated 4% Rule
Required Principal:
Under the traditional method, one might expect to need $1,000,000 in retirement assets to generate $40,000/year (assuming a 4 % withdrawal rate).
What the Research Says:
New research from Morningstar, Inc. indicates that for new retirees the safe starting withdrawal rate is now approximately 3.7%, down from the 4% rule. Morningstar+2ASPPA+2
Another study by PGIM DC Solutions calls the 4% rule into question and offers “guided spending rates” based on today’s market conditions. pgim.com+1
What this means: If you assume a 3.7% withdrawal instead of 4%, you’d need about $1,081,000 (instead of $1,000,000) to generate $40,000/year, based on Morningstar’s example. Morningstar
The Comparison:
John’s money in a traditional managed‑investment account might be very liquid and have high upside potential, but under current assumptions:
He may still run out of income, because research suggests the safe withdrawal rate is lower than 4%.
He is still exposed to market risk, meaning his principal could decline, which reduces the safety‑net.
Approach 2:
Fixed Indexed Annuity
Required Principal:
With this strategy, John would need only $570,000 (rather than $1,000,000) to generate the same $40,000/year — assuming he waits five years before beginning withdrawals.
The Comparison:
A fixed indexed annuity offers:
Protection of principal from market loss (Charles Schwab, Nationwide)
Guaranteed lifetime income (in this example, a 7% withdrawal rate from the annuity) (Athene)
Less liquidity and capped upside compared to a standard investment account (Annuity.org)
With today’s lowering of safe withdrawal rates, the value of this guaranteed income solution may become even stronger, because managed withdrawals may require more capital and still carry risk of shortfall.
Key Takeaway:
Given the updated research indicating a safe withdrawal rate closer to ~3.7% (versus the traditional 4%), the gap between what a managed investment account must achieve and what an annuity can deliver becomes more meaningful. For those seeking stability and longevity of income, a fixed indexed annuity may present a compelling, efficient option.