A single premium immediate annuity, also known as an SPIA, is a contract between you and an insurance company, where you give the insurance company a lump sum of money and then the insurance company can give a guaranteed payment for a certain period of time or until you die. An SPIA can give distributions monthly, quarterly or yearly and consists of the principal and any earnings it has accrued. The interest rate of an SPIA can be fixed, or adjusted annually.
An SPIA comes with some advantages and here are just a few of them. Security is one advantage of an SPIA where it can provide you with income for a lifetime or for a certain period of time, that way you don’t have to worry about outliving your savings. Another advantage of an SPIA is the simplicity that allows you to set it up and then all you have to worry about is collecting your payments. The next advantage of an SPIA is the higher returns that you will receive compared to a CD or Treasury rate. One final advantage of an SPIA is that you may be able to defer taxes on this annuity until you are in your retirement years, when you could be taxed at a lower rate. There are many choices for an SPIA and it is best to work with United Retirement Advisors Group to figure out what is best for you in your retirement years.