Annuity SPIA

Terry Says

You are referring to a Single Premium Immediate Annuity. (This is far different than an “indexed” or “equity-linked” annuity that is designed to make your money grow inside the contract. And those typically carry heavy fees and many other restrictions — a subject for a different day!)

But I think you need to understand how immediate (or even deferred) annuities work. Here’s a link to a column I wrote a few years ago, explaining: https://www.terrysavage.com/when-annuities-work/

Basically, yes you can lock in a lifetime of payments now – depending on your age, and other factors. So you want to deal with a strong insurance company that will be around for the rest of your life to keep paying!
And even more importantly, you need to know you’re locking in a fixed payment. What looks like a nice monthly sum right not, might not buy lunch in the future if inflation returns. Specifically, at “only” 3% inflation annually, the spending power of your fixed monthly check would be cut in half in 25 years!

So a SPIA might be appropriate for only a smaller part of your retirement investments.