COnfused about entering an annuity
I am having trouble figuring out how to enter an annuity to be purchased with some of my retirement fund accounts.
First, what I would like to enter is an annuity that will have a ten-year guarantee, grow with inflation, and leave 2/3 to my wife after I expire. I can easily enter the ten-year guarantee. But I can't figure out how to add the growing with inflation. If I try to enter my assumed inflation rate (3.5%) in the box labeled "Annuity will grow annually by", the reports seem to indicate that my payment grows a little each year (note: I just looked back at the ESPlanner entry box and see that the value in this box changed to 4% -- it happened twice so I know it's not me -- could this be a bug?). Second, after I die at 95, there is a value in the column labeled "Retirement Account Annuity" on the "Wife's Retirement Accounts" tab of the detail workbook. But the value is not 2/3 of the amount that was in the "Husband's Retirement Accounts" tab before my death -- it's closer to 1/6th.
Finally, at the bottom there is an option to select a fixed or variable annuity. I selected fixed, but what is the nominal rate of return box for? How does it relate to the box above, for the amount the annuity will grow annually?
RSS
HI JIM, I REPLY IN CAPS BELOW. BEST, LARRY
First, what I would like to enter is an annuity that will have a ten-year guarantee, grow with inflation, and leave 2/3 to my wife after I expire. I can easily enter the ten-year guarantee. But I can't figure out how to add the growing with inflation. If I try to enter my assumed inflation rate (3.5%) in the box labeled "Annuity will grow annually by", the reports seem to indicate that my payment grows a little each year (note: I just looked back at the ESPlanner entry box and see that the value in this box changed to 4% -- it happened twice so I know it's not me -- could this be a bug?).
THIS SOUNDS LIKE A BUG. WE'LL CHECK IT OUT. IF YOU SET THE GROWTH RATE AT 3.5 PERCENT, IT SHOULD STAY AT 3.5 PERCENT.
Second, after I die at 95, there is a value in the column labeled "Retirement Account Annuity" on the "Wife's Retirement Accounts" tab of the detail workbook. But the value is not 2/3 of the amount that was in the "Husband's Retirement Accounts" tab before my death -- it's closer to 1/6th.
WE'LL CHECK THIS OUT AS WELL.
Finally, at the bottom there is an option to select a fixed or variable annuity. I selected fixed, but what is the nominal rate of return box for? How does it relate to the box above, for the amount the annuity will grow annually?
THE RATE OF RETURN YOU SPECIFY AFFECTS THE SIZE OF THE ANNUITY THAT THE PROGRAM PURCHASES FOR YOU USING YOUR RETIREMENT ACCOUNTS. THE GROWTH RATE ALSO ENTERS (BUT IN A DIFFERENT WAY) INTO THE FORMULA DETERMINING WHAT ANNUITY CAN BE OBTAINED IN EXCHANGE FOR THE RETIREMENT ACCOUNT ASSETS BEING ANNUITIZED.