A False Sense of Security

 

Like many HD contributors, I don’t own a Single Premium Immediate Annuity (SPIA). Social Security and pensions cover most all of our spending, I don’t need no stinkin’ SPIA.

Or do I? I’ve done the math. The calculators tell me I’m in good shape. But I know this sense of security I feel is precarious. There are any number of things that could blow up my plan. Lengthy care in a nursing home, victim of fraud, catastrophic market events are all examples of things that could upset my applecart.

In a perfect world I can make lots more money in the market than by purchasing a SPIA. Sadly, this world isn’t perfect, and a SPIA can guarantee my income will last as long as I do. Yes there is a cost to be paid, just as there is with insurance for my health, home, cars and life. I’ll probably never need the insurance, but then again, I might.

If I do end up buying, I’ll get one with a return of premium, or a period certain that guarantees my beneficiary at least gets back the unused portion of the premium. The moral of my story is to keep an open mind about SPIAs.

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