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 versus nominal discount rate is the distinction between a rate stated in real terms (return above inflation) and a rate stated in nominal terms (including inflation), applied so that projected cash flows and the rate used to discount them are on the same basis.
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.
