When a retiree needs a fixed income
Gianola rarely recommends annuities in her practice. But the fee-only (non-commission) planner says there is one circumstance in which she occasionally has suggested a "single-premium immediate annuity" (SPIA): to create or shore up regular income in retirement.
"You give a chunk of money to an insurance company and immediately turn it into an income stream for the rest of your life," Gianola says.
"For some people, that gives them a lot of peace of mind that they'll get (a set amount of money every month) no matter what the stock market is doing for the rest of their life," she says.
Just remember that the monthly payout is not going to change. "That's why you don't put all your money in," Gianola says.
Check with the state regulator that oversees your annuity company. Ask if the company crashes, will it insure these annuities. And how much of your money would be protected?
So, you should be sure to choose a strong company. "Pick a no-load company, so you're not paying commissions," she says.