Annuities That Help With Inflation

Shawn Plummer

CEO, The Annuity Expert

Inflation is a massive problem for retirees. It can erode the value of their savings and make it difficult to live on a fixed income. One way to protect yourself from inflation is to invest in an annuity that hedges against it. This guide will discuss which annuities offer protection against inflation and how you can choose the right one.

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How Do Annuities Keep Up With Inflation?

One of the main benefits of owning an annuity is that it can provide you with a steady income. This is especially important in retirement, when your other sources of income may be limited.

Another benefit of annuities is that they offer some protection against inflation. Inflation can eat away at the purchasing power of your savings, but an annuity can help you keep up with the rising cost of living.

Whether an annuity owner collects their retirement income through annuitization or a lifetime income rider, they generally will have a choice of either receiving a “level” income amount (which doesn’t increase or decrease) or an “increasing” income option that will increase at a rate tied to an index, such as the Consumer Price Index (CPI).

The level income option will provide you with a set monthly payment for life, but it won’t keep up with inflation. This means that your purchasing power will decrease over time. On the other hand, the increasing income option will increase your payments each year to help offset the effects of inflation and, in some cases, exceed the inflation rate.

Do Fixed Annuities Protect Against Inflation

Which Annuity Hedges Against Inflation?

Fixed index annuities and variable annuities with lifetime income riders are two types of annuities that offer protection against inflation.

Inflation Protected Annuity

Fixed Index Annuity

A fixed index annuity allows you to earn a higher rate of return than a traditional fixed annuity without the risk of losing your principal investment. Your earnings are based on the performance of an underlying index, such as the S&P 500. You can choose to receive your income payments immediately or defer them to a later date.

Variable Annuity

A variable annuity with a lifetime income rider provides you with the potential to grow your investment while also receiving a guaranteed income for life. Your income payments are based on the performance of the underlying investments in your annuity. You can choose from various investment options, including stocks, bonds, and mutual funds.

These annuities offer protection against inflation, but each has different features and benefits. Be sure to consult us to see which annuity is right for you.

Annuity With Inflation Protection

Next Steps

The bottom line is that annuities can help protect you from the effects of inflation. If you’re looking for an annuity that will offer some protection against rising prices, be sure to ask about fixed index annuities and variable annuities with lifetime income riders. We can help you choose the right annuity for your needs. So give us a call today!

Inflation Adjusted Annuity

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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