UnThreaded | Threaded | Whole Thread (27) | Ignore Thread Prev | Next
Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 17951  
Subject: Re: Constant Average Interest Rate Date: 2/22/2001 9:08 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
greygreen writes,

The answer depends on the risk aversion of the couple in question. If they want to be sure of their income, indexed for inflation and provide the income to children even after death, they can probably purchase a guaranteed annuity for sixty years for somewhere around 2.5 Mill. That would be paying out over $44,000/month at age 100 with guaranteed payments for 60 years considering 3% annual inflation and a 6% return on funds.

When you say "indexed for inflation" does that mean indexed to the CPI? Or does it mean a 3% per annum cost of living adjustment whether the CPI is 2% or 4%? In other words, does the annuitant bear the risk of inflation in excess of 3% per annum?

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (27) | Ignore Thread Prev | Next


Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Saul's Investing Discussions

Why Did I Buy a Bunch of PFIE Today?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.