You Already Have an Annuity
My friend Sean Mullaney, the FI Tax Guy, recently published an interesting article about the potential downsides of annuities. One of his observations is so simple that I think it's easy to overlook:
Most Americans already have an annuity. It's called Social Security.
Think about what an annuity is trying to accomplish. You give up some control over a pool of money in exchange for a predictable stream of income, often for the rest of your life. Social Security already provides lifetime income, with the added benefit of inflation adjustments.
For a married couple receiving substantial Social Security benefits, that could represent tens of thousands of dollars of annual income that they don't have to generate by selling investments.
