No. of Recommendations: 4
retof writes,

In the March 2007 AARP Bulletin, beginning on page 22 there is an article titled "Fixed for Life". It's about immediate annuities as an income producing vehicle. It makes the point that a retired couple, each 65 could purchase an annuity for $100,000 and could recieve about $584 per month as income.

If you crank through the numbers that works out to just a little over $7000 per year for about a 7% return on your initial $100,000.

That seems like a pretty high rate of return for an annuity. Any ideas?

Don't forget that you are giving away the $100,000 principal to the insurance company when you purchase the annuity, so it's not a 7% return. You can keep your $100,000 and get a 5.25% return today on a 5-year FDIC-insured CD.

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