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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?

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