No. of Recommendations: 2
An annuity is certainly a plausible option in the case (Vanguard has been best when last checked, but look at TIAA-Cref). I'd at least explore the inflation adjusted option, or if I remember there was something you could self-adjust at intervals.

Another possibility, given she wants to spend more earlier (she may be wrong about no longer wanting to travel as she gets older and other expenses g up, like help caring for the house), would be simply to spend down that 1/3 of her assets herself, using something like a CD ladder.

Simply waiting for interest rates to go up may also make sense. We'll see, but when interest rates are higher, so are fixed-annuities.

Government is about the buy an 80% stake in AIG (don't you love these market forces are God folks when things fall apart), so there's something more to add to debt. Someday interest rates must go up to pay for it all.
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