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Some years ago I considered buying an annuity and annuitizing immediately. Then I made some comparisons and discovered that if instead of buying an annuity I bought 30 year treasury bonds, the income would be the same! Now, if I buy treasuries (which I did with that money) the income stream at my death would go to my heirs, and at the end of 30 years, the principal would return. If I live, also at the end of 30 years there is principal coming back. The annuity would give the income stream until I die, then the insurance company would keep the principal.
That didn't seem to me like a good investment.
A variable annuity, in which you take no immediate income and the principal is invested in mutual-fund-like entities, is somewhat less bad.
Before buying an annuity for income stream, check with a couple of companies with the question. If I had say $100000 and bought an annuity and immediately annuitized it, at my age what amount of income would I get? Then compare to what you could get from good quality corporate bonds or even treasuries.
There is another aspect for your heirs: if you just bought stocks, at your death there is a step-up so your heirs do not pay capital gains taxes from when you bought until when you die. They inherit cost basis as of the date of your death. But if you put your money in an annuity, profit is taxed at regular income rates.
Best wishes, Chris
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