03-08-2014, 08:05 AM
Here is the main problem as I see it. For current workers over the age of 45 or so, your assumptions are nearly meaningless. Three fourths of U.S. Households have less than $300k in retirement savings. Less than half of the other quartile have as much as $600k. For these limited amounts of savings, the average yield on a typical DG type of portfolio will simply be inadequate to cover cash flow needs. IMO most families nearing retirement will have no choice except to chase yield and/or dip into principal. For those fortunate enough to have a pension or who have over $500k in savings, the DG type of portfolio could represent an attractive option. Once again, this represents a small and shrinking part of the population.
Alex