Fixed immediate annuities are often quoted without any kind of cost of living increase. However it might be a good idea to buy one with a increase built in to account for inflation in the long term. I usually use the immediateannuities.com website to get quick quotes on fixed immediate annuities but they don't have any options for inflation/COLA increase options on the annuities.
Fidelity has an estimator for fixed immediate annuity payouts. One nice feature of their estimator is that it also gives an option to get a 2% annual increase for the payments. I used their calculator and plugged in different ages and tested for single versus joint and with or without the 2% annual increase.
Here are the monthly payouts for an investment of $100,000 comparing different ages for 65, 55 and 45 years old as well as single versus 100% joint survivor and with or without the 2% annual increases :
| 65 | 55 | 45 | |
| single | $594 | $485 | $423 |
| single+2% | $484 | $371 | $310 |
| joint | $495 | $427 | $386 |
| joint + 2% | $390 | $319 | $273 |
That gives differences in payouts of :
| 65 | 55 | 45 | |
| single | 19% | 24% | 27% |
| joint | 21% | 25% | 29% |
A 2% annual increase is worth around 20-30% difference in thee value of the annuity. A higher cost of living increase would be worth more.
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