Date: Fri, 11 Feb 2005 12:46:39 CST
From: beliavsky@aol.com
Newsgroups: misc.invest.financial-plan
Subject: Re: Annuitization
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BMS wrote:
> Recently I have been reading the number of annuity contracts that
will
> actually get annuitized will rise sharply.
>
> Currently only about 3% of contracts get annuitized, most current
retirees
> have a defined benefit plan, most of the upcoming retirees won't have

> anything like that to fall back on.
>
> Given one of a retiree's main fear is running out of money, does
anybody see
> a significant rise in annuitization and in turn a rise in the number
of
> annuity contracts that will over features such as principal
protection,
> contract high water marks and simply the promise of not out living
your
> savings?

I think annuities ought to be used more. Most fixed immediate annuities
pay a constant nomimal amount of money per year and thus guarantee a
lower real income over time, because of inflation. Inflation-indexed
annuities, or annuities that increase payments at a 2-3% annual rate,
make more sense to me, although the initial dollar payment would be
lower than for a non-indexed annuity. I wonder how widely available
inflation-indexed and "increasing" (what's the technical term?)
annuities are.