The inflation-indexing feature of some annuities needs to be carefully evaluated. For a 65-year old man an inflation-indexing feature may cut his initial payment by nearly 3% (7% to 4%, for example) and would not surpass the conventional (non-indexed to inflation rate) for 12 years if inflation averaged 4%. Therefore, your income need and longevity play important parts.
The same goes for other inflation-indexed products (for example, long-term care). And, in addition, if the inflation index used is the CPI and health care costs are increasing at double the rate of inflation, then paying for this additional feature may still find you with a large disparity when and if you need the coverage.
And remember, unless you select a certain paid-up period plan feature, then you will be paying premiums until needed. Be sure you understand the inflation index used.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.