I usually don't respond twice to the same question/thread, but in this case I'll make an exception.
It has been suggested by those on these thread/forum/other forums that you should not consider an SPIA until your 70's, 80's or beyond; especially in today's low-interest environment.
As one who has an SPIA, I'll just respond in this manner.
1. Many "experts" say that the current rate of interest is low. Yes it is, and I won't debate that fact. However looking at the M* forum (Bogleheads) a comment was made by Taylor Larimore that he received a 10% return on his/DW's SPIA. I know that both Taylor/me purchased an SPIA (he purchased two - DW/me, one) within a similar timeframe of a year or so, but our return is calculated at just under 5%.
Why the difference? Primarily since SPIA returns (if you calculate using an IRR spreadsheet) also represent a return of your own investment/premium. It does not only represent actual returns upon your money.
In my/DW's case, our IRR calculation is based upon a guaranteed 28-year return, which will give us an amount equal to twice (non inflation adjusted) what we paid. If we both/either live longer? Those additional payments will actually increase in percentage gain, month by month. Of course, if we both pass before the 28 year period ends, the remaining payments go to our estate and we are held to that slightly under 5% long term result.
It's not the current interest rate, but also the "longevity credits" that you have to calculate. The older you are the higher rate of monthly income you will receive, regardless of interest rates at the time of purchase. There is simply less time that the insurance company needs to measure risk, and make payments.
2. Regardless of interest rates, one must measure the income vs. the need for that income, regardless of age.
Many folks continue to state that "you must" wait until you are in your 70's, 80's along with the idea that current interest rates are "too low". What they fail to consider is that while rates are low, will the purchase of an SPIA provide a basic level of retirement income, regardless of age?
I mentioned that the primary reason we purchased an SPIA was to provide a base of income for an eleven year period; from the time I retired till age 70, when I will claim SS (for the benefit of my DW). Could I have withdrawn it only from my TIRA (which makes up the bulk of my retirement investment/savings)? Sure.
However, in eleven years, a lot can go wrong with the market. That's why we jointly decided to take 10% of our "stash" and purchase an SPIA, which reduces our ER withdrawals and allows us to continue to be active in the equity/bond markets with the majority of our retirement investments. Remember, we put only 10% of our then retirement assets into an SPIA.
OTOH, over those eleven years (4 down, thus far), the SPIA has provided us with a good base of income while allowing us to delay SS and maximize our benefits (that's another story), regardless of the early age that we purchased it.
Again, I'm not trying to convince anybody. Not everybody can benefit from an SPIA (the only annuity I would consider). However, I'm just trying to give a few thoughts to consider, while "generally accepted facts" are constantly thrown around, without proper context to consider...
