In contrast to inflation, deflation is that rare economic condition when prices of goods and services fall due a lack of demand. The last time large scale deflation occurred was when the U.S. economy practically came to a halt during the Great Depression in the 1930s. There can be a domino effect from falling prices – factories shut down because of declining profits, more and more people are laid off, household incomes shrink, and companies and individuals default on their loans. In a more recent example, falling housing prices have put pressure on many homeowners--forcing them into distressed sales which creates even further downward pressure on property prices and other asset values.

Consider Inflation Protected Immediate Annuities for Estate Planning

Financial planning and estate planning have been brutally difficult over the past decade. High levels of market volatility , the possibility of deflation, and now threats of inflation have complicated the financial lives of millions of people. Almost anyone in or nearing retirement is faced with incredibly complex decisions. If, for example, you retired in 2000 yet remained fully invested in the S&P 500 you would have watched well over a third of your retirement nest-egg evaporate. Do you...

Deflation Impacts Annuities in UK

There are many concerns about inflation in light of recent government stimulus programs, but deflation can also be a concern for owners of annuities. In the UK, owners of inflation linked annuities are being impacted by the biggest monthly drop in the retail price index since 1948: "Standard Life has already written to its 25,000 customers with RPI-linked annuities to warn them that their income is set to fall, and similar annuities from Prudential will also pay out less." Source: Financial...

How do annuities protect against inflation?

This is a super important question and consideration--particularly given the financial crisis and our current economic environment.  There are some comments on this topic throughout the site including this blog post.

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What type of risk is associated with annuities?

There are a number of risks associated with annuities, and these risks often depend on the type of

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