Defined terms for the annuity market and lifetime income landscape.
Real interest rate is the interest rate that remains after removing the effect of expected inflation, expressing the rate of return in terms of purchasing power rather than dollar amounts.
Real income is income expressed in constant purchasing-power terms, adjusting for inflation over time; nominal income is income expressed in the currency amounts actually paid, without inflation adjustment.
Real yield is the yield on a bond after adjustment for inflation, expressing the return the investor earns in units of purchasing power rather than nominal dollars; it is directly observable on Treasury Inflation-Protected Securities.
Realized value is the share of the theoretical pooling benefit that a real lifetime income product actually delivers, expressed as a fraction of what a frictionless pool could produce for the same individual at the same planning age.
