GarySpicuzza
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ChemEng, inflation is a fact of life.
A dollar today is worth more than a dollar 5 years from now and a dollar 5 years ago is worth more than that same dollar today.
Here's your argument: {CORRECT ME IF I'M WRONG}
If a person put $100,000 into a guaranteed 3% traditional FIXED annuity at the end of year one (1) they would have $103,000.
But your point is BECAUSE of a 4% rate of inflation the $100,000 just left alone by itself in the cookie jar is only worth $96,000 at the end of year one (1) because of the 4% inflation hence 3% growth on the $96,000 is really only worth $2,675 because 3% on $96,000 is $2,880 but with a 4% rate of inflation in terms of real dollars the value of the interest earned is only really worth $2,675.
So at the end of one year the person really doesn't have $103,000 in actual purchasing power they only have $98,675.
That's your point. Right?
So they have lost $1,325 by saving $100,000 @ 3%. Right?
That is an absurd argument.
For the 4% rate of inflation to TOTALY effect your pocketbook by 4% one would have to purchase EACH and EVERY item that went into the inflation calculation and they would have to do THAT each and every year.....year after year.
Now, let me asked another rhetorical question:
Do people buy each and every item that goes into the Consumer Price Index, i.e., houses, cars, durable goods, services, consumer appliances, clothing, etc., EACH AND EVERY YEAR?
See THIS link.
Moving on to....Immediate Annuities.
NOBODY BUYS THEM.
Period.
End of story.
UNLESS there is a compelling reason to do so, such as, to provide lifetime income for a disabled child or spouse or to SLOW DOWN MediCAID spend down for nursing home benefits or to fund a Qualified Income or Special Needs Trust for MediCAID qualifications.
When you buy an Immediate Annuity you are IRREVOCABLY trading your cash asset for the agreed upon INCOME STREAM and once that has occurred it CANNOT be undone.
That is the reason why NOBODY BUYS THEM, UNLESS there is a compelling reason to do so.
It is also the reason 99% of ALL deferred annuities and NEVER annuitized.
I didn't say people don't take a Lifetime Income Stream from deferred annuities.
I said they are almost always NEVER annuitized.
Which is why the Annuity Date provision reads:
A dollar today is worth more than a dollar 5 years from now and a dollar 5 years ago is worth more than that same dollar today.
Here's your argument: {CORRECT ME IF I'M WRONG}
If a person put $100,000 into a guaranteed 3% traditional FIXED annuity at the end of year one (1) they would have $103,000.
But your point is BECAUSE of a 4% rate of inflation the $100,000 just left alone by itself in the cookie jar is only worth $96,000 at the end of year one (1) because of the 4% inflation hence 3% growth on the $96,000 is really only worth $2,675 because 3% on $96,000 is $2,880 but with a 4% rate of inflation in terms of real dollars the value of the interest earned is only really worth $2,675.
So at the end of one year the person really doesn't have $103,000 in actual purchasing power they only have $98,675.
That's your point. Right?
So they have lost $1,325 by saving $100,000 @ 3%. Right?
That is an absurd argument.
For the 4% rate of inflation to TOTALY effect your pocketbook by 4% one would have to purchase EACH and EVERY item that went into the inflation calculation and they would have to do THAT each and every year.....year after year.
Now, let me asked another rhetorical question:
Do people buy each and every item that goes into the Consumer Price Index, i.e., houses, cars, durable goods, services, consumer appliances, clothing, etc., EACH AND EVERY YEAR?
See THIS link.
Moving on to....Immediate Annuities.
NOBODY BUYS THEM.
Period.
End of story.
UNLESS there is a compelling reason to do so, such as, to provide lifetime income for a disabled child or spouse or to SLOW DOWN MediCAID spend down for nursing home benefits or to fund a Qualified Income or Special Needs Trust for MediCAID qualifications.
When you buy an Immediate Annuity you are IRREVOCABLY trading your cash asset for the agreed upon INCOME STREAM and once that has occurred it CANNOT be undone.
That is the reason why NOBODY BUYS THEM, UNLESS there is a compelling reason to do so.
It is also the reason 99% of ALL deferred annuities and NEVER annuitized.
I didn't say people don't take a Lifetime Income Stream from deferred annuities.
I said they are almost always NEVER annuitized.
Which is why the Annuity Date provision reads:
