1 Calculated using smartasset.com Inflation Calculator, November 2021
2 Bank of America Chief Investment Office; calculations based on Society of Actuaries individual mortality tables
3 “How Much Care Will You Need?,” LongTermCare.gov, U.S. Department of Health and Human Services
*Assumes a $250,000 investment that at year-end 1972 was allocated half to U.S. stocks (proxied by the S&P 500 Index) and half to U.S. bonds (1976–2021: ICE BofA U.S. Broad Market Index; 1973–1975: Ibbotson U.S. Intermediate Government Bond Index) and rebalanced annually. It is not possible to invest directly in these unmanaged indexes. Returns are net of annual fees of 1.3%. Annual spending as a percentage of the portfolio for the first year is as indicated in the figure and rises in subsequent years with inflation (CPI-U). Withdrawals are taken at the end of each year. These hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle. Investment return and principal value will fluctuate and, when redeemed, the investments may be worth more or less than their original cost. Past performance is no guarantee of future results. Source: Calculations by the Chief Investment Office.
**Assumes that a 65-year-old female spends 3% of her wealth the first year of retirement and increases this spending in line with inflation in subsequent years. These withdrawals are taken at the end of each year, at which time the portfolio is rebalanced. These hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle. Investment return and principal value will fluctuate, and, when redeemed, the investments may be worth more or less than their original cost. Source: Analysis by the Chief Investment Office, April 5, 2022.
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).
Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Bonds are subject to interest rate, inflation and credit risks. Treasury bills are less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government. Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates, and risk related to renting properties, such as rental defaults. There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors.
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