The inflation rate used to calculate the annuity may not match their personal inflation rate since there biggest expenses will probably be things like healthcare, utilities, and property taxes, which may increase at a higher rate. good point, I did not think about it this way,on the other hand, are there any better options, to protect against inflation in YOUR costs?TIPS would work the same way, regular CDs are not linked directly to inflation, and if their rate usually moves up with inflation, again, this would be the standard inflation rate, not how YOUR costs went up...Stocks will probably return on average more than any type of inflation, but they are too risky in this case...
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