New-style annuity offers guaranteed income, access

Getting more expensive?

Did anyone keep quotes from Vanguard/AIG from last Jan-Feb, and compare them to now? 10 to 20 year TIPS were kissing 2.75 real coupon back then, and have shrunk dramatically since.

Do the quotes reflect this change?

Ha
 
Unsure of relation of AIG annuities to TIPS

Not sure whether the question below was directed to the annuity quote I pasted in, but I'll reply as best I can.

In brief, I don't know the formula for calculation of the annuities. It must involve numerous factors such as life expectancy, interest rates, market predictions, and is likely highly proprietary.
Over the various quotes I've gotten, I've tried to get a sense of the quotient of the original investment amount over the inflation-adjusted annual income it yields, as a function of age.

My rough obervations, using a monthly payout:
Age: Ratio of lump sum to resulting annual payout:

48 23.5
50 22.5
55 17
60 about 14.5 (corresponds to about 6.9%/year)

Obviously, the older you get, the smaller the ratio, and the larger the percentage of the original lump sum one receives each year.

So, under current conditions at 55, if you invested $ 1 mill, you'd get about $58,800 per year (or, just under 6%). Now, if AIG goes under, you have a very big problem. Hence, the problem with private insurance company annuities. What the likelihood of such a calamity is, I don't know.
 
I think the returns on an immediate fixed annuity are comprised of 3 things- investment earnings (interest), return of principal and the forfeit of premiums for those poor souls who died before recovering their investment. I think VG has the best annuities out there. I think the returns are tied to the 10 yr. Treasury which is down from the last few months.
 
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