What are the drawbacks of purchasing a fixed immediate annuity?
All of the above information sounds promising but it doesn’t mean that immediate annuities are for everyone. Purchasing a single premium immediate annuity is a permanent decision that will last for the rest of your life. So you should seriously consider the following before selecting an immediate annuity product. It’s important to remember that these products are purchased for a reliable stream of income with an emphasis on security. They are not designed for maximum return. You can typically expect fairly conservative returns that don’t often exceed the returns we see in the bond markets, but they’ll do so with considerably more security. The fact that the income derived from SPIA’s will never change can be viewed as a double-edged sword. While the steady stream of payments is often welcomed the downside is the loss of purchasing power to inflation. This is the inherent problem with fixed income investments, in general, and for the most part can’t be avoided without delving into equit
