Variable Annuity vs. 60/40 Portfolio: Which Won Wade Pfau’s Retirement Income Face-Off?
June 6, 2025 by Allison Bell
Some people pit toy soldiers against one another.
Others program computers to play chess with themselves.
Wade Pfau — a professor of practice at the American College of Financial Services and the holder of a doctorate in economics from Princeton — sends annuities into the Monte Carlo investment scenario arena against various other types of retirement portfolios, such as portfolios consisting of 60% of stock and 40% of bonds.
Wink’s Moore on the Market: My friend Wade Pfau “found that putting 30% of assets in a variable annuity worked best for a woman who retired between ages 60 and 70 and began taking income immediately [as opposed to a 60/40 portfolio] and for a woman who waited 10 years to begin taking income from her annuity and retired between age 60 and 75.
What it means: The variable annuity-enriched portfolio outperformed the traditional bare portfolio in a large percentage of the 2,000 Monte Carlo simulations performed.”
Now, I am not a fan of communicating “probability” to people, when it comes to retirement. That said, this article may appeal to you, more than me. -sjm
