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Immediate Annuities
In my article on annuities, I focused on one type, variable annuities. My view on VAs hasn't changed, but there's a different type of annuity that's worth discussing called an immediate annuity.

Simply put, an immediate annuity provides a guaranteed annual payment in return for a lump sum payment. There is no return residual value upon the death of the owner, this in return for a higher annual income than the going interest rates.

Looking at, I find that a 70 year old woman can receive an annual payment of $8484 for her $100,000 principal. Nearly 8.5%. One can do the math and see that at 5% fixed, a withdrawal of $8484 will draw down her savings by the time she is 88. If she lives past 90, she may wish she had gone the immediate annuity route.

If a spouse or dependant is a concern, there are options for Joint Lifetimes, or for Single Lifetime with a 5-20 year payout to the beneficiary.

This type of annuity can be part of a well planned portfolio, replacing a certain portion of fixed income by providing a guaranteed stream of payments and possibly freeing up other funds that may remain invested in the stock market, to provide overall growth to the portfolio.