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Down Market

By Steve Gaito

McDowell Countysteve gaito Mcdowell county retirement resource management


I recently wrote a Case Study on the Impact on income of purchasing an annuity after the market decline. I thought I would share it as it is very timely right now.
This is a common concern, and many people think that purchasing an annuity when the market drops is not a wise decision. I specialize in income planning and want to see what impact it would have so I created this case to look at the impact of adding a more secure income to supplement a portfolio that has declined. The results surprised even me.

The client is a 70-year-old with $1,500,000 in retirement assets and withdraws 4% each year to provide $60,000 of income each year. There is a correction in the market and her portfolio is down 25%. She is considering purchasing an annuity and wants to know the impact it has on her income.
Let’s look at the numbers.

While the portfolio is still down 25% the income is only down 6.25% instead of 25% if she continues to rely on the portfolio for income. In a perfect world she should have addressed the income part earlier, but as you can see making changes even after the market correction can have a significant impact on her income. Each person is different, but most have the same need for consistent income in retirement.


In this case, the client has $11,250 more income and it will take less time to recover when the market recovers as it only needs to make up the $3,750 in income instead of the $15,000 in income. It also provides stability of income going forward and creates less reliance on the market for the needed income. With fixed index annuities there is also the opportunity to see growth and account for inflation as well as possible long-term care benefits. For this example, purchasing the annuity even after the market has declined makes sense.
If you want to see the impact consistent income can have on your retirement give my office a call and schedule your free no-obligation consultation. Call or email Morgan at or (828) 559-0299


Steve is the owner of Faith-Based Health Care and Retirement Resource Management. He is a National Speaker on the topic of Social Security optimization, quoted in national publications like Money Magazine, US News and World Reports, and Fox Business. Steve loves to educate and teach on financial topics like taxation of retirement accounts, long term care, healthcare, and efficient savings plans for small businesses. He has provided financial planning for missionaries through the International Mission Board. You can find Steve at 68 South Main St. in Marion, NC by calling 828-559-0299, email or visit his website at

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