Before settling on an income strategy for retirement, it’s important to weigh your options carefully. For instance, a five-fund portfolio of $665,000 earning around 4.5% could produce about $2,500 a month—comparable to, or even better than, many immediate annuity quotes—while keeping your principal working for you. As someone who’s spent over 30 years guiding clients through annuity and income decisions, I know firsthand how critical it is to balance certainty and flexibility. Annuities provide steady lifetime checks, but with a single-life contract and no refund provision, there may be nothing left for heirs. And with inflation averaging around 3%, a fixed $2,500 monthly payment will only have the buying power of about $1,900 after ten years. On the other hand, dividend growth funds might start lower—about $1,900 per month—but can grow over time, helping to keep pace with living costs, while higher-yield options can start closer to $3,300, though growth may be slower. A sensible approach is to compare immediate annuity quotes, both with and without cash refunds. You might find it makes sense to use an annuity to cover essential bills and invest the rest for flexibility and potential growth.
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