Updated Implied Discount Rates for Single Premium Life Annuities as of November 25, 2022

In prior posts, we discussed possible assumptions used by life insurance company actuaries in pricing single premium immediate life annuities (SPIAs).  In those posts, we provided implied discount rates consistent with quotes obtained from ImmediateAnnuities.com based on two different mortality assumptions (one based on life expectancy (50% probability of survival) and the other based on a 25% probability of survival, which is the basis we recommend in our website for planning purposes).     

In this post, we will examine the implied interest rate assumptions built into quotes from ImmediateAnnuities.com as of November 25, 2022 and compare the quotes and the implied interest rates with the results of the similar exercise we performed as of July 25, 2022.  You may wish to revisit our prior posts for more general discussion of annuity pricing assumptions.

Managing Upcoming Holiday Expenses

Retirees, I don’t want to be the Grinch who stole your Christmas (or your holiday season), but if you haven’t done so already this year, you might want to estimate your end-of-year financial status by updating the data in your Actuarial Financial Planner (AFP). And, if your updated end-of-year Rainy-Day fund (the balancing item of your retirement assets and spending liabilities) is uncomfortably negative, you might want to think about reducing some of your discretionary expenses going forward, including your upcoming holiday spending. Alternatively, you might want to consider going back to work or finding other sources of income. In this post, I will provide some suggestions on how you can update your beginning of year AFP to year end.