Are Annuities Indexed For Inflation

Shawn Plummer

CEO, The Annuity Expert

Are Annuities Indexed For Inflation

Yes, some annuities are indexed for inflation. These annuities adjust their payments based on the Consumer Price Index (CPI). When the CPI rises, the annuity payments increase accordingly, ensuring that the purchasing power of the annuity income doesn’t diminish over time due to inflation. Once increased, the payments do not decrease, even if the CPI goes down in subsequent years.

Examples of Inflation-Indexed Annuities

  1. Cost of Living Adjustment (COLA) Annuities: Payments increase yearly by a fixed percentage, often linked to the CPI.
  2. CPI-Linked Annuities: Directly tie annual payment increases to the CPI percentage increase.

Benefits of Inflation-Indexed Annuities

  • Protection Against Inflation: Helps maintain the purchasing power of retirement income.
  • Predictability: Provides a predictable income stream that adjusts with the cost of living.
  • Long-Term Security: This is especially beneficial for individuals with a longer retirement period.
Inflation Indexed Annuity

Considerations

  • Initial Lower Payments: These annuities might start with lower payments than non-indexed annuities.
  • Complexity: Understanding the terms and conditions can be more complex.
  • Cost: They can be more expensive due to the inflation-protection feature.

Conclusion

Inflation-indexed annuities offer a way to secure a retirement income that keeps pace with the cost of living. They provide peace of mind in knowing that the value of your annuity payments won’t be eroded by inflation. Considering both the benefits and limitations is crucial in deciding if an inflation-indexed annuity is right for your financial situation. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

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

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