Open AccessVariable Lifetime Annuities: Can You Live Long Enough To Receive Fair Value?
Author(s) -
Ronald A. Milne,
Glenn Vent
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v15i2.5678
Subject(s) - annuity , variable (mathematics) , economics , actuarial science , portfolio , inflation (cosmology) , value (mathematics) , term (time) , life annuity , econometrics , pension , financial economics , finance , statistics , mathematics , mathematical analysis , physics , quantum mechanics , theoretical physics
This article presents an analysis of variable lifetime annuities and quantifies the advantages and disadvantages associated with this type of instrument. Given recent long-term rates of return and current low inflation rates, variable annuity contracts provide an effective means of compensating for inflation. An individual only needs to invest a small portion of retirement funds in variable annuities to protest the entire portfolio against the risk of long-term inflation without the risk of having ones entire retirement income based on variable annuities.