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November 23, 2011, Cover Stories, Advisors/Planners/Reps

Three Steps to Annuity-Free Income

By Kerry Pechter   Wed, Nov 02, 2011

For retirees who say, 'Don't sell me a product!', Thornburg Investment Management recommends a retirement income strategy built on 'endowment' spending, three buckets and its own dividend fund.

“The rich,” F. Scott Fitzgerald famously wrote, “are different from you and me.”

For Fitzgerald’s tycoons, that meant wearing excellent shirts and driving recklessly. For today’s millionaires, it means having enough money not to worry about running short of it in retirement.  And, it might be added, without needing an annuity. Consequently, many so-called high net worth investors avoid annuities.

“Don’t sell me a product!” they say, according to Jack Gardner of Thornburg Investment Management. As Gardner put it in a 2010 essay, certain clients are “loath to accept the loss of control and expense” of insurance products.

For the annuity-averse, Gardner has a solution. He recommends a three-point plan for generating a predictable retirement income without an annuity. As he explained recently at the Center for Due Diligence conference in Chicago, it entails dividend stocks, “endowment-style” spending curbs, and three common-sense asset buckets.

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