The Role of Inflation-Indexed Annuities

by Paula Hogan

The decline of defined-benefit pension plans means that the average citizen is now responsible for building a personal portfolio, managing that portfolio, and then, in retirement, deftly withdrawing from that portfolio just the right amount of cash each year for living expenses.

Adding salt to the wound, increasing longevity means we can potentially expect to live several decades after leaving the workforce. These two facts put a lot of pressure on individual investment performance, turning retirement planning into a high-stakes game.

But none of us are born knowing how much cash can safely be withdrawn from a portfolio, and few of us know how to effectively manage investments over the long term.

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Paula Hogan , CFP, CFA, is a fee-only adviser based in Milwaukee, Wisconsin, and a frequent speaker and author in the financial planning field. She maintains a website at


James from New York posted over 3 years ago:

it was well worth reading

Harry from Pennsylvania posted over 3 years ago:

I have never heard a annuity presentation that didn't scare me away.
Key word: inflexible.
Explains why so few (1 or 2%?) of deferred annuities are ever annuitized.
With that said, this article makes the excellent point about spreading risk.
You can't do that on your own.
Same reason home insurance makes sense.
It's also the same argument for holding off on inflation adjusted SS as long as possible.
(Perhaps to be limited to those 55 and over).

Len from Nebraska posted over 2 years ago:

I do think the article lays out the considerations in buying an annuity, but it does not address the tradeoffs in buying an "inflation indexed" annuity. I'd be interested in that analysis.
I'd also mention charitable annuities for people who need an annuity but just couldn't stand to see an 'insurance company' get your hard earned money if you died soon after purchase.

Harvey from Pennsylvania posted over 2 years ago:

If I withdrew money from a traditional IRA to buy an annuity do I have to pay taxes on the money withdrawn before buying the annuity????

Samuel from Louisiana posted over 2 years ago:

Following up on Harvey's question - can you roll over an IRA to an annuity plan?

Charles from Illinois posted over 2 years ago:

The IRS states: "Your traditional IRA can be an individual retirement account or annuity." IRS Pub 590 has details about the requirements an IRA annuity much meet and can be read at -Charles Rotblut

Anush Ge from Texas posted about 1 year ago:

Is there such thing as guaranteed income Annuity with capital perseverance?

G Rodriguez from New Jersey posted about 1 year ago:

Would it be better to purchase an immediate annuity from a Rollover IRA account or a Roth IRA account?

Hugh Giblin from North Carolina posted 9 months ago:

And what are the fees for an inflation-indexed
annuity over and above a regular one?

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