Annuity123 is dedicated to providing Americans with unbiased information about retirement, answering the tough questions you want to know.

With hundreds of articles on every retirement planning topic you can think of, peace of mind is just a click away.

How to Drive Through Inflation with an Indexed Annuity

Richard Ericson

You know you’re getting old when you are telling your children how much things used to cost. When I was a boy, my father used to moan when gas prices hit $0.30 a gallon. We sold our boat when gas prices skyrocketed to $0.40 a gallon. In 1980, a Porsche 911 cost $32,000. Today, the similar Porsche runs $151,000, which is a 371% increase! At that rate, in another 25 years, that same car will run $600,000.

Various driving conditions call for different tools, and the tires are different for driving on ice and snow versus driving on a race track. A Porsche pulling a 25-foot waterskiing boat is not very effective, while racing a Ford 350 diesel isn’t very good around the turns.

Index annuity contracts are no different. Some are stronger for growth, while others offer more options like LTC benefits, enhanced death benefits, or various annuitization options. The chassis on an annuity provides safety, protection, and various guarantees. What is not included in an indexed annuity is risk, high expenses or the related stresses that come with risky investments.

What about inflation? When an investor is driving an indexed annuity, as a driver, you need to be ready for inflation. Here are two simple ways to address inflation with an equity indexed annuity income rider.

1. Step up

2. Laddering

The income rider on your indexed annuity will guarantee you exceed the standard inflation rate of 3% during the growth stage of your annuity. What about during distribution? Typically, when an investor “turns on” the income for life, the income payments remain level, and these payments will last the rest of the owner’s life. The level benefit doesn’t address inflation.

There are several annuities that offer a step-up, which is an annual increase in lifetime income which steps up by a certain percentage. One particular contract steps up 3% each year once the income rider is activated. Another contract steps up each year in proportion with the capped index rate. If the index goes up, the income amount steps up accordingly.

Laddering. By utilizing two or more contracts at the same time, an annuity owner creates additional flexibility by allowing one bucket of money to continue to grow while another bucket is distributing funds. Instead of one contract with $500,000, two $250,000 contracts can address inflation even with a level-payout amount.

Click here to learn more from Richard Ericson.

About the Author:

Richard Ericson was born and raised in Salt Lake City, played quarterback for Weber State University and coached football at the Division One level for 10 years at Weber State and Utah State Universities as offensive coordinator. He now coaches individuals on how to invest safely in their retirement plans. He has had his own radio program and was featured in Fox Business News emphasizing risk-free investments. Rich’s expertise is working with business owners utilizing advanced tax strategies to reduce risk and build tax-favored and tax-free wealth. Rich received his Bachelor’s Degree in Communications and his Master’s Degree in Education from Weber State University. He is currently licensed to sell Property & Casualty, Life and Health insurance, as well as annuities. With his expertise in analyzing risk, Rich is well qualified to help individuals evaluate their opportunities to reduce tax, legal, and market risk.

Richard strongly believes that money which grows consistently and without risk is the safest investment for his clients’ retirement income. “Playing the ‘Wall Street Game’ with your sacred money is a sure way to run out of money when you need it the most,” warns Rich. He further states, “If you want to play the stock market game with 30-40% of your wealth, that’s fine, as long as you have enough money in safe, guaranteed investments to meet your retirement goals.”

He can be reached at (303) 749-5853 or


Annuity123 does not offer insurance, investment, or tax advice.  You should always seek the guidance of qualified and licensed professionals concerning your personal insurance, investment, or tax matters.  Annuity123 is simply a platform allowing retirement planning professionals to help educate the community on various retirement planning topics.  Annuity123 does not directly support or take responsibility for ensuring the accuracy of the content displayed in the articles themselves or any feedback that may get added in the Comments section from the community.

Leave a Reply

Your email address will not be published. Required fields are marked *