QUESTION:
I have two variable annuities which will notionally grow until retirement and then allow a 5% draw forever on the notional amount. I could model those instead as pensions, I suppose. Should I? The advantage of modeling them as Cash Infusions is that they appear as discreet line items instead of getting lumped into those Pension or Defined Benefit Annual Amounts with three or four other items.
Mark M. - Financial Advisor
ANSWER:
You have 2 options:
1). If you have growing variable annuities or indexed annuities, and they are in QUALIFIED. Then remove the premium from the investments entirely with a Special Expense, and then model the lifetime income with a Cash Infusion.
2). If you they are NON-QUALIFIED then use the non-qualified tab to enter the values and cost basis. In this case set Max Withdrawal Rate to 5% and program will be estimating the value of the annuities and paying out 5%. You will see an interesting thing in the plan that usually this is a declining payment that never depletes the account.