chinaco
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Feb 14, 2007
- Messages
- 5,072
I am beginning some analysis of SPIA payouts.
Given a specific age:
There is the obvious longevity risk component. If a spouse dies early, after 30 years, the survivor's annuity payment is cut in half.
However, after 30 years, inflation will most likely reduce the value. IOW 30 years later at a long-term inflation average of 3.5%... Example: $10k/yr has the purchasing power of about $3.6k/yr... close to 1/3.
There are several trade-offs. Longevity versus more dollars earlier. The benefit of more dollars earlier would seem to help since a larger early income stream would take a little more pressure off of the portfolio (in earlier years).
However, If the annuity is for a relatively small amount of payout... marginal increases may not be of any practical benefit.
Anyone done this form of analysis or know of whitepapers published on strategies for selecting annuity payouts?
Given a specific age:
- Male Single Life seems to have a higher payout than Female Single Life (because of life expectancy no doubt)
- Joint Life seems to be less than either the Male or Female Single Life payouts.
There is the obvious longevity risk component. If a spouse dies early, after 30 years, the survivor's annuity payment is cut in half.
However, after 30 years, inflation will most likely reduce the value. IOW 30 years later at a long-term inflation average of 3.5%... Example: $10k/yr has the purchasing power of about $3.6k/yr... close to 1/3.
There are several trade-offs. Longevity versus more dollars earlier. The benefit of more dollars earlier would seem to help since a larger early income stream would take a little more pressure off of the portfolio (in earlier years).
However, If the annuity is for a relatively small amount of payout... marginal increases may not be of any practical benefit.
Anyone done this form of analysis or know of whitepapers published on strategies for selecting annuity payouts?