Date: Wed, 25 May 2005 09:36:24 CST
From: beliavsky@aol.com
Newsgroups: misc.invest.financial-plan
Subject: WSJ article on inflation-indexed immediate annuities
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The article is on page D1 of the 5/25/2005 issue of the Wall Street
Journal. The rates for a 70-year old man putting $100,000 in a Vanguard
Lifetime Income annuity are as follows:

	          monthly  annual  "yield"
fixed	          757	   9084	   9.08%
2% increase	  644	   7728	   7.73%
3% increase	  591	   7088	   7.09%
4% increase	  540	   6475	   6.47%
inflation indexed 569	   6825	   6.83%

I think the annuity with payments increasing at a 3% annual rate or at
the rate of inflation makes sense for a retiree concerned with
maintaining a certain standard of living. I have seen withdrawal rates
of 4% suggested for retirees. The advantage of an immediate annuity is
the higher yield, achieved at the cost of giving up the principal.