Fig. Percent Changes in Inflation Source US Bureau of Labor Statistics All Urban Consumers All Items, Seasonally Adjusted = .A reader asked A salesman wants to sell me an immediate fixed annuity which will start paying me $, for the rest of my life. I’m turning years old in April and that sounds nice, but I’ve always thought that annuities are not the best option..The nominal solution requires that you invest $,. each and every year. Again, though, after adjusting for inflation you end up with the same amount of money after years..Imagine a stream of indexed payments. Compute either the present value, or the interest or size of the payments or the number of terms or the inflation..
An inflation adjusted annuity yielding the same amount would cost a year old $, to $,, according to Vanguard. That’s without benefits to survivors or disability benefits, which Social Security also provides..Inflation protection does come at a price, however. According to James and Vittas, the price one has to pay for that insurance protection through IPAs varies from country to country depending on the supply of IPS. The present value of annuity payments from IPAs tends to be less than the present value from regular immediate annuities..