To figure the annual income from that, analysts typically look at what the family would get from a fixed annuity.
If you decided to receive a fixed annuity, you should spend a portion of it and put the remainder in investments to supplement your fixed payments and keep up with inflation.
With an ordinary fixed annuity, I would need much less because an insurance company can provide income only during my lifetime (rather than into perpetuity), and they can diversify the uncertainty of my demise with other annuitants.
While it has a 15% market share in traditional fixed-annuity life insurance products, it has less than 2% of Germany's mutual fund market-and virtually nothing in equity-linked variable annuities.
Messrs Feldstein and Samwick also assume that retired folk will convert their personal retirement accounts into a variable-rate annuity, based on a combination of stocks and bonds, rather than a fixed-rate annuity.
They were issued by Manulife (subsequently taken over by John Hancock) and were called Flexible Purchase Payment Deferred Combination Fixed and Variable Annuity Contracts Non- Participating.
"Seventy percent of the profits related to these annuity programs come from the fixed account, " says Edward Siedle, who runs Benchmark Financial Services and investigates money-management abuses.
How much you'll receive each month when you start to draw down your annuity will then depend on how your variable or fixed investments do over time.
While most HECM reverse-mortgage options carry adjustable rates and offer a line of credit or annuity-like payouts over time, the sole fixed-rate HECM choice is available only with a lump-sum payout.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
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