This post has gotten way too long. So I am writing the end
here at the beginning [and rewriting what was below on how I got here in the
next post].

How can increased monthly annuity payments reduce total
benefits (payout)? Because the first payment is 10, 20, 30, 40, and 50% lower
than the not increased monthly benefit rate, and the calculator “interest rate”
needed to schedule the ever-increasing payments is not great enough to catch up
(Chart 20).

The annuity calculator for setting the fixed no benefit rate
(that works perfectly) begins to drift off course as the marketed increased
payment rate rises from 1% to 5%. The calculator is the perfect model for
setting the fixed rate (Chart 19).

It duplicates the chart in the marketing brochure (Chart 16).

It duplicates the chart in the marketing brochure (Chart 16).

The mystery was solved when I realized the same calculator
was being used for both monthly payment rates: fixed monthly payment benefit
rate and the five increased monthly payment rates. I could now use the
calculator to explore the behavior of trying to match

**lower starting**monthly payments to**increased**monthly payments.
Chart 20 shows that the total payout drops very little with
a 1% and a 2% increased monthly payment. No problem here. At 3%, the calculator
“interest rate” needed to maintain a 3% increased payout is a bit more than 3%;
at 4% it is 5%; and at 5% it is 7.5% with the fixed rate calculator still failing
badly when used in this way; nearly $7,000 off track.

Charts 21 and 22 show how it goes off track. The marketing
is good. Get a 5% increased monthly payment each year. I believed it. Why
question? I then asked Excel to show me the actual increase in relation to the
marketed increase. What a surprise!

The claim that the increased payment is 1% or 2% is good. At
3% there is a gentle decline of about 0.5%; not an increase. There is about a
1% bonus at the start of the 5% claim followed by a drop of over 2% by the end of
the 20-year contract. Not enough money is paid out during those last high
monthly payment years. The result is a $6945 loss in monthly payments for the
illustrated contract in relation to the fixed rate monthly payment contract we
are buying (please see the next post if you are interested in the details).

Valid comparisons between contracts (annuities and CDs) must
show the amount in the pot, the duration of the contract, and the total payout. I need these three values to work through a reinvestment scheme in a
new post.

The marketing from the 10% personal bank loan (in the next post) to
the 5% increased payment annuity does not count with one exception. My fixed
rate annuity calculator generates an interest rate that can be compared to
simple interest (CD interest) as a common denominator, if I have that last increased payment
from the increased payment contract.