A 7.6% payout on a $300,000 single premium immediate annuity locks up principal but exceeds state insolvency protection limits.
A $300,000 single premium immediate annuity (SPIA) offers $1,900 monthly for life, equating to a 7.6% annual payout. The payment blends interest and returned principal, with insurers retaining any remaining balance upon death.
This contrasts with the 4% rule, which generates $1,000 monthly from the same principal while preserving liquidity and inheritance potential. Most states cap insolvency protection at $250,000, leaving a portion of the annuity exposed.
Demand for guaranteed income products has surged as retirees seek stability amid market volatility, but the trade-offs include lost access to emergency funds and reduced flexibility.