Market Value Adjusted Annuities

In the last 25 years, interest rates on retirement savings have fluctuated from 14% to less than 4%,  and no one can really be sure what the future holds (you can get estimates using the annuity calculator). Sometimes this makes finding an investment that pays a steady income (which adjusts for rising and falling interest rates) a difficult chore.    One method is to select investments with various maturity dates to lock in your money over a range of interest rates. This is typically done by laddering bonds.  Long-term fixed investments usually pay a higher rate than short-term ones. However, as interest rates go up, it could be costly to liquidate long-term investments and reinvest the money at newer, higher rates. So how can you keep up with the best yields available while protecting your income against rate decreases?    Market value adjusted annuities (MVAA) are fixed annuities that let you lock in interest rates for several terms that can range from one to 10 years.   At the end of each term, the annuity company will present a new interest rate and offer you an opportunity to withdraw your money without surrender charges. But what if you wanted the money [...]

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