Old-Age Annuities in Time of Inflation

October 10, 1956

Report Outline
Plight of Fixed-Income People in Inflation
Scope of Present Retirement Protection
Operation of Variable-Yield Annuity Plans
Variable Annuities and the Public Interest

Plight of Fixed-Income People in Inflation

The Rise since mid-1956 in prices of many consumer goods has again directed public attention to the plight in time of inflation of older persons dependent upon annuities, pensions, social security benefits, and other types of fixed or inflexible income.

The importance of maintaining the purchasing power of the rapidly increasing number of fixed income receivers has led to a search for some kind of old-age insurance that will keep the money incomes of retired persons in step with changes in the cost of living. The most interesting development in this field has been the emergence of variable-yield insurance plans under which policy holders' premiums are invested in common stocks and retirement annuities move up or down in accordance with the yield from those “inflation-compensating” securities.

Effects of Rising Prices on Value of Annuities

The man who received a moderate inheritance in the mid-1930s and used it to buy an annuity contract which would begin paying off after 20 years is now receiving payments in dollars worth no more than half the dollars he invested. Not only has the value of the dollar fallen sharply over the last two decades, but—partly as a result of inflation—taxes have more than doubled, so that the annuitant has considerably less buying power than he expected when planning for his retirement.

ISSUE TRACKER for Related Reports
U.S. Dollar and Inflation
Jul. 19, 2019  The Future of Cash
Oct. 2008  The Troubled Dollar
Feb. 13, 1998  Deflation Fears
Mar. 13, 1987  Dollar Diplomacy
Oct. 14, 1983  Strong Dollar's Return
Jul. 11, 1980  Coping with Inflation
May 16, 1980  Measuring Inflation
Dec. 07, 1979  Federal Reserve's Inflation Fight
Jun. 09, 1978  Dollar Problems Abroad
Sep. 20, 1974  Inflation and Job Security
Feb. 26, 1969  Money Supply in Inflation
Feb. 14, 1968  Gold Policies and Production
Dec. 15, 1965  Anti-Inflation Policies in America and Britain
Mar. 15, 1965  World Monetary Reform
Dec. 02, 1964  Silver and the Coin Shortage
Oct. 17, 1962  Gold Stock and the Balance of Payments
Dec. 15, 1960  Gold and the Dollar
Oct. 10, 1956  Old-Age Annuities in Time of Inflation
Jan. 17, 1951  Credit Control in Inflation
Aug. 10, 1949  Dollar Shortage
Oct. 04, 1943  Stabilization of Exchanges
Jan. 21, 1941  Safeguards Against Monetary Inflation
Mar. 25, 1940  United States Gold in International Relations
Dec. 14, 1937  Four Years of the Silver Program
Oct. 04, 1934  Inflation in Europe and the United States
Jan. 30, 1934  Dollar Depreciation and Devaluation
Sep. 05, 1933  Stabilization of the Dollar
May 29, 1933  Invalidation of the Gold Clause
Mar. 15, 1933  Inflation of the Currency
Oct. 25, 1924  Bank Rate and Credit Control Federal Reserve Policies and the Defaltion Issue
Aging Issues
Retirement, Pensions, and Social Security