Annuity Planning · Tool 14 of 12
Sequence-of-Returns Hedge
What does an annuity actually buy you when the worst-case sequence shows up? Run the household's withdrawals through 1929, 1966, 2000, and 2008 using real historical returns — with and without the annuity income layer.
1929 — Great Depression
With annuity run-out
Year 21
Without annuity run-out
Year 14
Annuity benefit
7 extra years
192919441958
With annuity
Without annuity
Portfolio balance year by year. Solid = with annuity income layer, dashed = without.
1966 — Stagflation
With annuity run-out
Outlasts horizon
Without annuity run-out
Year 29
Annuity benefit
1 extra years
196619811995
With annuity
Without annuity
Portfolio balance year by year. Solid = with annuity income layer, dashed = without.
2000 — Dot-com unwind
With annuity run-out
Year 28
Without annuity run-out
Year 17
Annuity benefit
11 extra years
200020152029
With annuity
Without annuity
Portfolio balance year by year. Solid = with annuity income layer, dashed = without.
2008 — Global financial crisis
With annuity run-out
Outlasts horizon
Without annuity run-out
Year 26
Annuity benefit
4 extra years
200820232037
With annuity
Without annuity
Portfolio balance year by year. Solid = with annuity income layer, dashed = without.