Immediate annuities: Do-it-yourself pensions

Online calculators, such as the one at immediateannuities.com, give free quotes. For example, a 67-year-old woman living in Montana with $75,000 to invest in an annuity could receive up to $507 in monthly income without survivor benefits. That would drop to $497 if the annuity was designed to continue for five years after her death or $472 for an annuity that continues to pay out 15 years' guaranteed income for a beneficiary after her death.

In addition to finding out which company will give you the best payout, you'll also want to investigate the financial stability of a prospective annuity company. If the company is offering a killer payout but it goes under, chances are you'll outlive your annuity. Check with the four independent rating agencies-- A.M. Best, Fitch, Moody's and Standard & Poor's -- to gauge the health of annuity providers.

If you want to purchase an immediate annuity, but feel you are less healthy than average and won't live as long, take your case to your annuity provider, Berman says. It's the opposite of what you do with a life insurance company when you try to prove you're healthy and deserve a lower premium. Instead, you will want to prove to your annuity provider that you will likely live a shorter life on average so you deserve a higher monthly payout.

Finally, choose the immediate annuity that is most suitable for your individual circumstances. For example, if you want a 15-year annuity with inflation protection, choose a company that offers that type of annuity rather than settling for an annuity that doesn't match your needs.

Immediate annuities aren't for everyone and they shouldn't be the only vehicle in a retirement plan. Nevertheless they can supplement your retirement portfolio and at least ensure a steady income.