Annuity Payouts That Rise With Cost of Living

Immediate annuities are attractive because they promise a guaranteed level of income for life, no matter what happens to the stock market or interest rates. But your fixed payout will buy less when the cost of living rises.

To combat that concern, several companies are starting to offer immediate annuities that increase the payout to keep up with inflation. Some raise payouts automatically by 3% or 5% a year. Others tie payouts to changes in the consumer price index. But this feature comes at a big cost: The payouts start much lower than they do with the fixed version...

Kiplingers: Annuity Payouts That Rise With Cost of Living