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  #11  
Old 10-13-2009, 11:09 AM
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Serious answer, if she is really concerned about purchasing power. She should build up a stock of food. And, if she's up to the work involved, put in a garden. Then at least she doesn't have to worry about starving.
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  #12  
Old 10-13-2009, 11:32 AM
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Payouts are not surrendarable, so probably nothing can be done for this particular one. Have her talk to the company and see whether they would put a CPI adjustment to the benefit, of course the benefit would be decreased first, but I doubt that would happen.
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Serious answer, if she is really concerned about purchasing power. She should build up a stock of food. And, if she's up to the work involved, put in a garden. Then at least she doesn't have to worry about starving.
Thank you both for these very practical ideas.

Before anyone throws a at JMO, doing something physically and tangibly constructive does a lot for peace of mind in general.
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  #13  
Old 10-13-2009, 02:20 PM
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Yes, but that's not the situation. The annuity was purchased several years ago. Time has passed, and now there is a desire to hedge the existing annuity against devaluation of the greenback.
In other words, how does she put the toothpaste back in the tube.

I figure she'd have to find a way to sell the stream of payments to somebody else, like how some companies will buy the future payout of a life insurance policy from an elderly or ill person. Then she can take that lump sum and use some of it to buy gold, or an annuity in euros.
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Old 10-13-2009, 02:35 PM
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Does she have a lot of equity in a home? If so, do a cash out refinance into a 30 year mortgage with a fixed payment that is the same size or smaller than the monthly payment of the annuity. Now she has a fixed income and a fixed outgo, and a big pile of cash. Invest the cash in inflation sensitive assets - TIPs would be the most conservative, but could also get into floating rate loans, commodities, equities that are based on real goods (P&G, General Mills, etc), foreign assets which wouldn't suffer from dollar destruction.
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Old 10-13-2009, 02:40 PM
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Does she have a lot of equity in a home? If so, do a cash out refinance into a 30 year mortgage with a fixed payment that is the same size or smaller than the monthly payment of the annuity.
If she and her husband are not working she won't be able to get a mortgage, unless the annuity proceeds provide enough income to qualify. But she could get a reverse mortgage.
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Old 10-14-2009, 02:56 AM
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Go for a viatical policy settlement
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Old 10-14-2009, 09:19 AM
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TIPS, she could invest in TIPS. TIPS pay a low coupon ( <2% I think) but the principal accretes at the CPI.

Her social security benefits are indexed to CPI presently.

Seems odd that given we had 0% CPI last year and were at risk, and still may be at risk, for deflation she's worried about hyperinflation. It's also odd that she she's worried about inflation via dollar value decline instead of inflation directly. The value of the dollar relative to other currencies is impacted by lots of things. For example, everything else constant, there could be inflation in the US and the dollar strengthens against the Euro if there is also inflation in the Eurozone.

I don't know if there are CPI indexed annuities. She could sell the annuity but given the low yield curve environment, illiquid secondary market, and the risk of anti-selection she'd take a bath.

http://www.google.com/search?hl=en&s...ed+annu&aqi=g1
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Old 10-26-2009, 04:46 PM
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several carriers have cpi indexed annuites, but selling the one she has (AND getting a fair value) is unlikely to happen.
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