No. of Recommendations: 5
Here are some items

#1 At age 47 a person has life expectancy of at least 35 years. Even if inflation averages only 2% (it has been just over 2.5% for few decades) the $400 per month figure will have purchasing power of a mere $200. Now the bad news -- life expectancy means half the people live longer.

#2 Insurance companies are the folks that make up, sell and administer annuities - both the one you could get now and one you might get in the future. Those people are not doing this for free.

#3 If you take $10,000 (not a prediction, just a figure I made up) and put it in an IRA and invest in a dull, boring index fund earning an average of 6.5% (well under average over last several decades) would grow to $35,235 in 20 years -- full retirement age for a person 37 currently is 67, but that is likely to be extend several months.

Option #3 will not work if you lack the discipline and maturity to leave the money invested. You cannot take it out to buy a car, fix a roof, pay for a kid's college. The lack of discipline is the major reason annuities make sense for many people.

The real issue you need to address is very simple. Do you have the maturity and guts to not spend money before you are 65? If you have doubts, take one annuity or the other and just expect to have very little income 30 or 40 years out because even moderate inflation will eat you alive. If you have the average of 3% for 35 years, that $400 will have purchasing power of $137.

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