Immediate annuity
Place a lump sum and income can begin the following month, then continue for life.
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If retirement is close or already here, a lump sum you have spent a lifetime building can start paying you as soon as next month. An immediate annuity (SPIA) has the carrier guarantee a set payment for the term of the contract, with no exposure to market swings.
What it gives you
Income starts at once
After a single premium, the agreed payment begins as early as the following month and continues for life. No gap in income at the moment you stop working.
You choose how it pays
For life, for a guaranteed period, or jointly across a couple. We decide together which fits your circumstances.
Market risk cannot reach it
A SPIA is not an investment; it is a carrier guarantee. Whatever the market does, the amount agreed at signing is what arrives.
A possible tax advantage
Bought with ordinary money rather than an IRA, the portion of each payment that is return of principal is not taxed as income (the exclusion ratio).
Before you commit
This one is hard to undo
Once an immediate annuity starts, the lump sum is generally no longer available to draw on freely. I would annuitize only the portion that covers living costs and leaving the rest liquid.
Annuities
Types of annuities Sorted three ways (when it pays, what it is for, how it invests) the right one becomes obvious.
Fixed-rate annuity (MYGA) A guaranteed rate above a bank CD, growing your retirement money without market exposure.
Buying guide Four steps: settle the goal, compare the carriers, read the conditions, then decide.
Index annuity (FIA) Principal protected when the market falls, index-linked interest when it rises.
Guaranteed income for life The payment continues for life even if the account runs dry. A second Social Security, built for you.