Angst Over Annuities

Giving up a lump sum in favor of a series of payments may wreak havoc with our mental accounts.

How about this sweet deal: You collect regular income in retirement provided by strangers who don’t need the money. Plus, the income lasts as long as you do, so you eliminate the risk of running out of funds.

That describes an annuity, something everyone should consider as part of a retirement plan, but relatively few people do. Specifically, we're talking about an immediate fixed annuity, which lets you invest a lump sum that immediately begins paying you income until you die.

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Bob Frick
Senior Editor, Kiplinger's Personal Finance