Path A
Fixed Annuity
Capital surrendered at purchase. The insurer credits growth during the deferral period and the payout rate applies to that grown balance when income begins.
All distributions taxed as ordinary income. At death, capital value is $0.
Guaranteed income for life — certainty and longevity protection regardless of market conditions.
Path B
Two-Engine Strategy
Capital splits between a fixed income ladder and an equity growth engine.
Select the instrument type — tax treatment fills in automatically based on federal and Oregon rules.
Muni income reinvested during accumulation. At the transition, equity converts to fixed income and distributions begin.
The drawdown rate controls how aggressively you spend into principal — more income now, shorter runway.
Shared Assumptions
Starting Capital$300,000
$100k$2M
Federal Tax Bracket24%
10%37%
Oregon State Tax9.9%
0% (WA/AK)9.9% (OR top)
Equity Growth Rate8.0%
3%15%
Inflation Rate2.5%
0%7%
Time Horizon35 years
10 yrs45 yrs
Path A — Annuity Assumptions
Payout Rate8.0%
4%12%
Deferral Period15 years
1 yr25 yrs
Crediting Rate5.0%
2%10%
Path B — Fixed Income Instrument
Instrument Type
Fed Exempt
OR Exempt
TEY —
Gross Yield3.5%
1%12%
Credit Spread0.0%
0%+5%
Unlocks on IG Corp or High Yield
Fixed Income / Equity Split25% / 75%
10% fixed income90% fixed income
Accumulation Phase15 years
3 yrs25 yrs
Annual Drawdown3.0%
0% (yield only)15% aggressive
Credit spread is active. The additional yield shown reflects compensation for default and liquidity risk — not a free lunch.
Investment grade spreads historically average 1–2% over Treasuries; high yield 3–5%. A spread assumption above current market levels implies
either elevated risk tolerance or a favorable entry point. Model this as a range, not a certainty.
Income Display
Nominal
Real (inflation-adjusted)
Annual Spendable Income
After-tax dollars available to spend each year
REAL $
Capital Balance
Path B capital position · Path A surrendered at purchase
REAL $
Ann. Annual Income
—
after-tax · fixed for life
Ann. Cumulative
—
total after-tax income
Path B Annual Income
—
yield + drawdown · Phase 2
Path B Cumulative
—
total spendable income
Capital at Horizon
—
Path B remaining
Capital Depletion
—
Path B runway
Research Frame
Where Path A Has a Genuine Edge
- Income is guaranteed for life regardless of how long you live. If you make it to 95 the insurer keeps paying — a longevity floor that cannot be replicated without careful capital sizing.
- Zero management required. No rebalancing, no yield curve watching, no ladder decisions. Set it and forget it.
- Sequence-of-returns risk doesn't apply. The payout is contractually fixed regardless of what markets do.
- The after-tax gap narrows at lower brackets. If income drops in retirement, run the tax sliders down and see how the comparison shifts.
The Instrument & Drawdown Question — Path B
- Oregon munis are double tax-exempt — the after-tax yield is highest for OR residents at top bracket. But the gross yield is lower. The tax-equivalent yield badge tells you the apples-to-apples number.
- Treasuries are state-exempt but federally taxable — useful if you're in a high state bracket but want credit safety. Lower yield, no default risk.
- Investment grade and high yield corporates are fully taxable, but the spread over munis can more than compensate at certain brackets. The credit warning is real — model the spread conservatively.
- At 0% drawdown, income is yield only. Increase drawdown to boost spendable income — the depletion clock starts. Find the rate where Path B annual income exceeds the annuity while the runway outlasts your horizon.
- Inflation is the hidden tax on fixed income. A 5% nominal income losing 3% annually in real terms is worth half what it appears to be by year 24.
Model Notes
- Tax treatment auto-fills by instrument. Oregon munis: fed + state exempt. National munis: fed exempt, OR taxable. Treasuries: fed taxable, state exempt. All others: fully taxable.
- Credit spread adds to gross yield — but carries default and liquidity risk not modeled here. Use conservatively.
- Real income toggle deflates all income values by the inflation rate over time. Capital is also shown in real terms when toggled on.
- Drawdown modeled as a fixed annual percentage of remaining capital — income declines gradually as principal depletes.
- Equity-to-fixed-income conversion does not account for capital gains taxes — a real cost that modestly reduces the Phase 2 base.
- All rates static across the full horizon. Use for directional comparison, not precise projection.