The risk of a decrease in future purchasing power due to rising prices. Inflation risk can impact fixed annuities that do not contain inflation protection because it erodes the future power of a stream of fixed payments. For example, a relatively modest 3% rate of inflation will reduce the purchasing power of a $3,000 monthly payment to $1,660 within 20 years.
It really depends on what your overall financial needs are. It is true that a certificate of deposit or CD is insured and less costly than an
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.
This is a great question but it is difficult to answer briefly.
