Single Premium Immediate Annuity

In surveys the number one fear of seniors is the fear of running out of money. To combat this fear, many turn to single premium immediate pay annuities.

How to Get a Ballpark Estimate on the Payout of a Single Premium Immediate Pay Annuity

Go to http://www.immediateannuities.com
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Fill in the data as shown with your own info: (CLICK IMAGE TO ENLARGE).

Here we have put in $100,000 and the ages of 65 for the annuitant and his wife. Click "calculate." The first and most basic option pays $626/month ( as this is written) as long as the annuitant lives. If the annuitant dies the day after signing the contract, the insurance company keeps the $100,000. If the annuitant lives to be 120, the insurance company has to make monthly payments over that entire period.

You'll notice added features on the page. Whenever something beneficial is added, the payout decreases. In general, annuities are not heir friendly. To add features that leave something to heirs reduces the monthly payout. Also notice the payout for females is less. The reason is simple--women live longer.

Three points worth knowing and remembering:

-the payout depends on interest rates. As rates rise, the payout will increase.
-putting some portion of assets in an annuity in retirement reduces the risk of running out of money in old age.
-the long-term financial viability of the insurance company issuing the contract is important.