...And while your comment on returns is understandable, they are two different things IMO. I'd supplement my income with an annuity for the longevity insurance aspect, my portfolio may not be able to meet that need of if I live to be 110.
Exactly.
Most folks who look at an annuity (specifically an SPIA) still look at it as an investment, rather than an income vehicle, for the rest of your life (if that is the option you take).
Can you make more "on the outside"? Sure. However, you can also lose due to investment risk.
Additionally, folks forget that over time, your own money (preimum) is returned to you to cover a portion of your current retirement expenses, every month, and the remaining amount available for investment (by the insurance company) gradually is reduced. Again, much different than an investment program.
Interest rates have less to do with SPIA payments when compared to your age (the older you are, the higher payments - since you have less time to collect, much like SS) and the options you select (such as inflation adjusted, remaining spousal coverage at 100% of current payments, just to name a couple).
It's just another tool in the retirement income toolbox and is not meant to cover all your needs, but just a "foundation" of income, as our SPIA does for us, while moving a bit of "market risk" from our remaining retirement investment portfolio.
And yes, it's not for everybody
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