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Subject:  Re: Current value of an annuity Date:  9/27/2000  2:51 AM
Author:  intercst Number:  5161 of 20791

jpkilgan wrote,

What if the annual payouts are not uniform? Some pensions and Social Security fall into this category. If so, you are in trouble. The formula is much more complex. An approximation, I am told, is to add the annual percentage growth to your present worth value. For example, if the Present Worth of an constant annuity or a pension is $300,000 but the annuity increases by 3.5% each year for inflation, multiply 300,000 by 1.035 to get an adjusted Present Worth of $310,500. I really don't know how accurate this approximation is.

The link below from Nobel Laureate William F. Sharpe's web site has an annuity calculator that handles inflation-adjusted pay outs.

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