The concept is seductive: a financial product that provides upside exposure in the event that equity markets trend up and to the right while also providing a floor of protection in case the bottom falls-out from under markets again.

Sort of like having your cake and eating it too. Very tempting in light of the massive financial uncertainty that has existed for the past several years.

Laurence Kotlikoff is a Professor of Economics and Boston University. Professor Kotlikoff is one of the nation’s leading experts on fiscal policy, national saving and personal finance.

Professor Kotlikoff is the author or co-author of 15 books and he publishes extensively in newspapers, magazines and blogs on issues of personal finance, financial reform, taxes, Social Security, healthcare, deficits, generational accounting, pensions and insurance.

Mark J. Warshawsky is Director of Retirement Research at Towers Watson.

Dr. Warshawsky served as assistant secretary for economic policy at the U.S. Treasury Department from 2004-2006 and he has held senior level economic research positions at the Federal Reserve Board, the Internal Revenue Service and TIAA-CREF.

The Penn Mutual Inflation Protector variable annuity was launched in November 2010.

This variable annuity product incorporates a living benefit feature and is designed to provide owners with an income base that keeps pace with the rate of inflation.

The income base of the Penn Mutual Inflation Protector increases based upon the greater of:

The Society of Actuaries (SOA) just published a series of short whitepapers or “briefs” that focus on some of the major decisions that are encountered by retirees.

This is a great resource for consumers who are seeking objective content produced by experts.

The Society has clearly made efforts to create content that is accessible to a non professional audience.  The briefs are clear, short and focus on consumer-relevant topics such as “when should I retire.”

There are 11 briefs, and the topics include:

Consumer discretionary spending is the major driver of the U.S. economy as household purchases make-up about 71 percent of U.S. gross domestic product (GDP).

Without growth in consumer spending, the economy would most likely go nowhere.

Since economic growth is generally considered a good thing, it stands to reason that we should be looking for things that contribute to consumer spending.

Canadian Finance Minister Jim Flaherty intends to propose legislation that bans banks from selling products that are similar to annuities.

Canadian law already prevents banks from selling annuity products.

Canadian finance officials are apparently concerned that the lines between annuity and banking products are increasingly blurred.

Bank products that are represented as lifetime cash flow vehicles presumably fall under this area of concern.

Annuity criticisms are a dime-a-dozen. 

The majority of financial advisors seem to have some issue with annuities, consumer perception is generally terrible and the financial media often appears to provide a reflection and reinforcement of prevailing sentiment.

There is a case to be made for “control of assets” as the common denominator for both the consumer and financial advisor perspectives.

Control of assets basically refers to the fact that annuities involve handing over money to an insurance company. 

Congress is considering an alternative inflation measure as part of its deficit reduction initiatives.

The alternative inflation measure is known as the chained consumer price index or chained CPI.  The chained CPI includes an adjustment mechanism that presumably accounts for consumers switching to substitute goods and services when a similar category of goods or services experiences rapid price increases.

The overall result of this adjustment for substitutes is a price index that that increases at a slower pace than other price indexes such as the CPI-W or CPI-U.

A price index such as the consumer price index (CPI) is intended to provide a rough gauge of the general direction of prices in the economy.

An increasing consumer price index represents price inflation while a decreasing price index may provide an indication of deflation.