A $400,000 Annuity Guarantees $2,600 a Month for Life, but Here Is the $190,000 Retirees Are Giving Up Quick Read – A life-only SPIA on $400,000 pays $2,600 monthly but surrenders roughly $190,000 in residual estate value to the insurer at death. – Most of each annuity check is…
mply return of principal, not yield, and fixed payments lose real value as inflation compounds over decades. – Partial annuitization covers only the gap between Social Security and fixed expenses, keeping remaining assets liquid, inheritable, and invested. – A 65-year-old retiree with $400,000 set aside is considering an annuity that pays roughly $2,600 a month, guaranteed for life. That’s about $31,200 a year, paid like clockwork until they die
No market risk. No sequence-of-returns worry. No spreadsheet to maintain.
It’s a tempting deal, especially when the 10-year Treasury has already swung from about 4% to nearly 4.7% over the past year. But there’s a trade-off: roughly $190,000 in expected estate value the retiree gives up over a normal lifespan. Baby Boomers currently hold an average 401(k) balance around $267,900, and a $400,000 nest egg sits comfortably in the “enough to consider annuitizing some of it” range.