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

Seems reasonable to me. Check it out yourself at the online calculator at

Remember, when you buy an annuity, you get a payout for a certain number of years (your lifespan or a certain guarantee period, whichever is longer), but you give up your principal to the annuity company -- your heirs don't get the money. The company is betting that you won't outlive your life expectancy.

Secondly, several articles that I have recently read say that if you want to outlive your money in retirement and leave a little for the kids you should only withdraw about 4% from your retirment savings each year.

(1) that's talking about early retirement, at age 50 or so
(2) that assumes that you adjust your withdrawal upwards each year for inflation (it's not always 4% of your portfolio)
(3) a lot of 65-year-olds die shortly after they annuitize.

An annuity is really insurance; it is the opposite of "life insurance". You buy life insurance to guarantee a payout in the event of your death. You buy an annuity to guarantee that no matter how long you live, you'll keep getting paid.

FYI, annuities are typically not adjusted for inflation, and those that do increase their payment each year, typically don't guarantee to keep up with inflation.
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