Income Annuity Archives - Retirement Researcher

Is Buying an Annuity in a Zero Interest Rate Environment a Good Idea?

By Wade Pfau, Ph.D., CFA, RICP® | April 8, 2020 |

The Federal Reserve’s decision to cut its benchmark federal funds rate from 1% to a range of 0% raises significant questions for those reassessing their retirement nest egg—a common occurrence following a dramatic selloff in equities according to research conducted by Indiana University’s Alessandro Previtero —and the value of annuities in providing guaranteed lifetime income.

Is Buying an Annuity in a Bear Market a Good Idea?

By Wade Pfau, Ph.D., CFA, RICP® | April 3, 2020 |

As the stock market experienced unprecedented growth over the past eleven years, many people were naturally less interested in the lifetime income options from pensions or annuities. Who wouldn’t rather have all the assets today so they can invest them with the idea of earning high returns?

What Are Annuities?

By Bob French, CFA | February 23, 2017 |

Annuities are like power tools. In the right hands, they can help you considerably, but if you don’t know what you’re doing, you could cut your fingers off.

Understanding the Tools in Your Retirement Income Toolbox

By Wade Pfau, Ph.D., CFA, RICP® | April 7, 2016 |

You should be familiar with all of the tools in your retirement income toolbox. Retirement plans can be built to manage varying risks by strategically combining the following retirement income tools in different ways.

Annuity Pricing Sensitivity

By Wade Pfau, Ph.D., CFA, RICP® | August 25, 2015 |

With all of my discussions of annuities lately, it is worthwhile to also consider the sensitivity of annuity pricing to interest rates, gender and age-related mortality factors. Relationship Between Payout Rates and Interest Rates Figure 1 estimates the relationship between annuity payout…

Securing Longevity Insurance Through Income Annuities

By Wade Pfau, Ph.D., CFA, RICP® | August 20, 2015 |

I have published a few pieces in the past couple weeks on how income annuities are priced and used. Understanding how to use annuities can be a great benefit when planning for retirement. Let’s consider another possibility.

Annuity Pricing 102

By Wade Pfau, Ph.D., CFA, RICP® | August 18, 2015 |

In today’s scenario, we’ll see what happens to the price of an annuity if:
1. We guarantee income will be provided for at least 10 years, regardless of whether the annuitant lives.
2. We provide a cash refund if the annuitant dies before at least receiving their full principal payment.
3. We include a cost-of-living adjustment for annuity payments.

Income Annuity 101

By Wade Pfau, Ph.D., CFA, RICP® | August 13, 2015 |

How are different types of annuities priced? It’s not as hard as you might think, as the basic recipe requires just three ingredients:

Retirement Income Strategies with Annuities

By Wade Pfau, Ph.D., CFA, RICP® | August 12, 2015 |

Income annuities come in a variety of shapes and sizes. It can be overwhelming to know which one makes the most sense for your situation. In this column, I explore how income annuities work and what options are available.

Evaluating Investments vs Insurance in Retirement

By Wade Pfau, Ph.D., CFA, RICP® | July 6, 2015 |

We must avoid from the notion that investments or insurance alone will best serve retirees. Investments vs Insurance – each has its advantages

White Paper: Reduce Retirement Costs with Deferred Income Annuities Purchased Before Retirement

By Wade Pfau, Ph.D., CFA, RICP® | July 6, 2015 |

This study uses a methodology proposed by Milevsky (2006) to evaluate the impact of guaranteed income products on the cost of funding retirement and shows when, and for which clients, a deferred income strategy makes sense.

Improving Retirement Outcomes with Investments, Life Insurance, and Income Annuities

By Wade Pfau, Ph.D., CFA, RICP® | May 13, 2015 |

Certain approaches to building retirement income strategies offer more spending AND greater legacy.