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In 1986, being square was cool; but in 2021 it's not cool to be HIPP

Updated: Aug 21, 2021

You know the song; it was finally ok to join the establishment. That was also the same year I turned twenty-two and graduated from Colby College in Waterville, Maine.


Fast forward 35 years and I have no clue if I was ever hip or square or both or neither, nor do I dare ask mid teenage kids for their take. But I am certainly HIPP: High Income, Pre-Retired, and Pension-less, and that’s not cool. And millions more look just like me.


That twenty-two-year-old kid from Connecticut who graduated penniless from college in Maine thirty-five years ago, is now a HIPP 57-year-old Texan. And that is not cool, because like so many in the financial services industry, I have the burden of knowledge in knowing how much of a challenge the conversion of assets to income can be, particularly for those sticking with traditional methods like the 4% rule. More to the point, the variability of future income results predicated on the application of a traditional "safe" 4% withdrawal rate (or similar) is vast simply because the variability of returns is also vast. And that means the variability on how much needs to be allocated today to achieve a given cash flow in the future is also vast, if traditional methods are employed.


To help put that variability into stark relief, Rafferty Annuity Framing has created a simple at-a-glance tool called the RAF 5/50/5 Price of Future Income Index. In a nutshell, its purpose is to put a dollar value on the variability of the price of future income today.


The implications for a better future cash flow planning process are strong. Efficiency and precision, thy name is annuity. Look for more information on this an other framing tools under the RAF Indexes tab on the Rafferty Annuity Framing website.








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