A $300,000 Annuity Guarantees $1,900 a Month for Life, but Here Is What Retirees Are Giving Up

1 hour ago 2

Drew Wood

Sun, May 3, 2026 astatine 10:07 AM CDT 6 min read

Quick Read

A 67-year-old considering a $300,000 Single Premium Immediate Annuity (SPIA) generating $1,900 monthly faces a prime betwixt guaranteed beingness income and portfolio growth; a 60/40 portfolio would compound to astir $828,000 implicit 15 years astatine 7% returns, vastly exceeding the annuity’s $342,000 payout crossed the aforesaid period. SPY and AGG returns implicit the past decennary amusement equities person dramatically outpaced bonds, with SPY up 247% versus AGG’s 18% gain.
The precocious SPIA payout of 7.5%-7.8% looks charismatic due to the fact that enslaved yields are elevated and mortality credits are built in, but the fixed nominal outgo erodes 37% of purchasing powerfulness successful 10 years and 45% successful 20 years assuming 3% inflation, making a smaller annuity covering lone the spread betwixt Social Security and indispensable expenses the strategy astir retirees should prosecute instead.
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A 67-year-old with a $1.2 cardinal nest ovum sits crossed from an security cause who pitches a cleanable trade: manus implicit $300,000 today, cod $1,900 a period for the remainder of his life, nary substance what the marketplace does. The mathematics sounds generous due to the fact that rates are higher than they person been successful years. The outgo shows up successful places the brochure does not advertise.

This script appears perpetually connected Bogleheads and the Dave Ramsey telephone line: a precocious retired antheral with humble oregon nary pension, Social Security covering immoderate but not each fixed expenses, and a six- oregon seven-figure rollover IRA. He wants a paycheck. An advisor offers one. The question is whether trading a 3rd of his portfolio for that paycheck is worthy it.

It matters due to the fact that the dollar amounts are ample capable that a incorrect prime cannot beryllium undone. A Single Premium Immediate Annuity (SPIA) is irrevocable. Once the cheque clears, the main belongs to the security company.

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The numbers connected the array

Age and household: 67-year-old male, azygous beingness quote, nary play certain
Portfolio: $1.2 cardinal total, with $300,000 earmarked for the annuity
Current SPIA payout rate: astir 7.5% to 7.8%, translating to $22,800 a year
Core tradeoff: guaranteed beingness income versus liquidity, ostentation protection, and heirs
What is astatine stake: a 4th of his investable wealth, locked permanently