How to Use Annuities During Retirement
Embracing the Basics
Yesterday, Morningstar’s Jasmin Sethi published a comprehensive paper called “Should We Have More Annuities?” She responds yes, but with an asterisk. Jasmin has little use for complex products, such as fixed index and variable annuities. Rather, she favors the most basic varieties: 1) single premium immediate annuities, or SPIAs, which begin their payments shortly after they are purchased; and 2) deferred versions of SPIAs. (With the latter, the investor buys the annuity today, but the benefits arrive later.)