Below is an excerpt from the New York Times
To ensure the basics are covered, healthy retirees could potentially use a portion of their modest portfolio to buy a plain-vanilla annuity, where you give money to an insurer in exchange for a guaranteed stream of income that starts immediately or at some future date.
Fixed annuities aren’t especially attractive right now, given the low interest rate environment, but they do have one advantage: “The payout rate on an income annuity can be higher than bonds because it provides a source of return that investments cannot,” said Wade D. Pfau, a professor of retirement income at the American College of Financial Services, referring to the fact that annuity holders who live longer benefit from those who die earlier since their money is pooled together.
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