Interest Rates and SPIA

[bluemarlin08]

How much of an impact does interest rates have on immediate annuity payouts?
Talking to someone the other day that felt that interest rates have small impact on payouts.

 

[scagnt83]

How much of an impact does interest rates have on immediate annuity payouts?
Talking to someone the other day that felt that interest rates have small impact on payouts.

Interest rates have everything to do with a SPIA payout.

The Payout Rate is a combination of the Credited Interest Rate, plus a Return of Premium amortized over the expected life of the annuitant(s).

Some companies actually state the current interest rate used to calculate the payout rate.

The only real variable about a SPIA is the Current Interest Rate it uses.

Back when interest rates were half reasonable, SPIA payout rates were through the roof. A 65 year old could get an 8.5% payout rate. Now 70 year olds are getting 7%ish.