No. of Recommendations: 2
>> While various surveys show that roughly 15 to 25 percent of corporations offer annuities to workers who are retiring, including big employers like I.B.M., a 2009 Hewitt Associates study reported that just 1 percent of workers actually bought one. <<

Well, that's true, but anyone who would have cashed in stocks in 2008 and early 2009 to buy an annuity would have been insane (given that they would have been selling stocks low into a low-interest rate environment when annuities pay out squat). And in reality, it was only the last couple of years that reminded some people how much they would have preferred a steady income stream in retirement instead of a risky 401K.

The other problem is that very SPIAs offered up contain COLAs, and when they do the initial payout shrinks dramatically.

I would expect *some* uptick in the number of people who would want to convert risky assets into secure income, but that security comes at a price. And that price is *never* higher than it is in an environment similar to what we've had in the last 2+ years: risk-aversion leading to volatile stock markets and very low bond interest rates. This is the time when more people are willing to pay a high premium for "security" -- often the worst time to "buy" more security.

Depending on the market conditions and tax laws in the future and what the next 15-20 years hold for us, I might consider trading in *some* of my 401K and IRA investments for an SPIA -- assuming stocks aren't beaten down at the time and that interest rates aren't pathetic. That time sure as heck isn't now, especially not the bond rates that determine annuity payouts.

Annuities mostly suck, but SPIAs aren't inherently terrible -- but there are certainly wrong times to buy them.

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