Single Premium Immediate Annuities Quote

What’s a SPIA?
A single premium immediate annuity is a contract with an insurance company whereby:
 
You pay them a sum of money up front (known as a premium), and
They promise to pay you a certain amount of money periodically (monthly, for instance) for the rest of your life.
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A single premium immediate annuity can be a fixed annuity or a variable annuity. With a single premium immediate fixed annuity, the payout is a fixed amount each period. With a single premium immediate variable annuity, the payout is linked to the performance of a mutual fund. For the most part, I’d suggest steering clear of variable annuities. They tend to be complex and expensive. And because they each offer different bells and whistles, it’s difficult to make comparisons between annuity providers to see which one offers the best deal.
 
In contrast, fixed SPIAs are helpful tools for two reasons:
 
They make retirement planning easier, and
They allow for a higher withdrawal rate than you can safely take from a portfolio of stocks, bonds, and mutual funds over the course of a potentially-lengthy retirement.
It’s also possible to buy a fixed SPIA with a payout that adjusts upward each year in keeping with inflation. Naturally, inflation-adjusted fixed annuities require higher initial premiums than fixed annuities without an inflation adjustment.

​Retirement Planning with SPIAs
Fixed SPIAs make retirement planning easier in exactly the same way that traditional pensions do: They’re predictable. If you know that you need $X of income each year in retirement, you can go to an online annuity quote provider, put in $X as the payout, check “yes” for inflation adjustments, and you’ll get an answer: “For $Y, you can purchase an annuity that will pay you $X per year, adjusted for inflation, for the rest of your life—no matter how long you might live.” (In order to get the most meaningful figure, be sure to get a quote for a SPIA with a payout linked to the consumer price index, rather than one that simply promises a fixed percentage increase from year to year.)
 
Pretty easy, right? You now have a specific figure for the minimum amount of savings necessary to retire safely. With a traditional stock and bond portfolio, retirement planning is more of a guessing game.
 
SPIAs and Withdrawal Rates
Fixed SPIAs are also helpful because they allow you to retire on less money than you would need with a typical stock/bond portfolio. For example, even with the low interest rates that prevail as of this writing, according to immediateannuities.com (a website that provides annuity quotes from various insurance companies), a 65-year-old male could purchase an inflation-indexed annuity paying 4.7% annually.
 
If that investor were to take a withdrawal rate of 4.7% from a typical stock/bond portfolio, then adjust the withdrawal upward each year for inflation, there’s a meaningful chance that he’d run out of money during his lifetime—especially given the current environment of low interest rates and high stock valuations. That risk disappears with an annuity.
 
How is that possible? In short, it’s possible because the annuitant gives up the right to keep the money once he dies. If you buy a SPIA and die the next day, the money is gone. Your heirs don’t get to keep it—the insurance company does. And the insurance company uses (most of) that money to fund the payouts on SPIAs purchased by people who are still living.
 
In essence, SPIA purchasers who die before reaching their life expectancy end up funding the retirement of SPIA purchasers who live past their life expectancy.

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