The True Impact of Single-Premium Immediate Annuities on Retirement Sustainability: A Total Wealth Perspective

Abstract

This paper challenges conventional wisdom about the use and value of single premium immediate annuities (SPIAs). In fact, the authors suggest that the primary scenarios where SPIAs should be used are specifically those where the intent is to hedge significant longevity risk beyond life expectancy, and that for most retirees, the more effective way to improve retirement outcomes is simply to implement the rising equity glide path that bucketed SPIA strategies indirectly create.

Keywords: retirement, retirement income, annuities, single premium immediate annuities, SPIAs

JEL Classification: G10, G11