Retirees, Ladder Annuities to Hedge Your Bets

Handing over a large lump sum to an insurance company in exchange for a stream of guaranteed payments is a hard pill to swallow for many investors. Add in uncertainty about interest rates, which affect annuity payouts, and the decision to buy an immediate annuity becomes more challenging.

After three years, the first annuity will come up for renewal. You can withdraw the money, recommit those funds for another three years or extend the ladder by choosing a longer maturity. You have the same options, he says, each time another annuity in the ladder comes to the end of its initial guarantee period.