Why Immediate Annuities Still Work in 2025 (And Always Have)

Looking for guaranteed retirement income you can count on — no matter what happens in the market? A Single Premium Immediate Annuity (SPIA) could be your answer. This straightforward contract turns a lump sum of money into reliable, consistent income that lasts for life. No hidden fees. No market exposure. Just pure contractual guarantees.

In this blog, we’ll explore:

What a SPIA is
How it works
Why it’s still one of the most pro-consumer annuities available
And who should consider using one, especially in today’s retirement environment

What Is a Single Premium Immediate Annuity?

A Single Premium Immediate Annuity (SPIA) is the original annuity — the simplest, cleanest version. Here’s how it works:

You deposit a lump sum with a life insurance company.
In return, the company begins paying you a guaranteed stream of income that usually starts within 30 days.
That income can be for life, a certain period, or a combination of both.

There are no hidden fees, no ongoing management costs, and no market risk. It’s a risk-transfer contract, pure and simple.

Explained So Even a 9-Year-Old Can Understand

Let’s simplify this:

"You give an insurance company a big chunk of money. Every month, they send you a check. They do that until you die no matter how long you live.” If you live to 110, you still get paid. If you die earlier, and you chose a refund or period-certain option, your heirs get the rest. That’s it.

Why SPIAs Still Make Sense in 2025

Simplicity

SPIAs have no hidden features. You know:

Exactly how much income you'll get
When it will start
And how long will it last

Guaranteed Lifetime Income

Once your payments begin, they never stop, even if you outlive your life expectancy.

Customization

You can choose:

Single life or joint life (for spouses)
Refund options to protect your premium
Period certain terms (e.g., “10 years no matter what”)

Used with IRA, Roth, or non-qualified money

It works for all account types, and income can be structured for tax efficiency.

Do Interest Rates Matter for SPIAs?

Yes, but not as much as people think.

Most people believe they should “wait for higher interest rates” before buying an immediate annuity. But life expectancy is the primary pricing factor, not interest rates.

You could wait 3–5 years for better rates and miss out on 36–60 payments in the meantime. That lost income often outweighs the bump in rates.

No Fees, No Gimmicks, No Pressure

SPIAs are:

Fee-free (what you’re quoted is what you get)
Not designed for growth (they're income contracts)
Issued by highly rated insurance carriers that are often household names

There’s no fluff here, no market-linked tricks, no “bonuses,” no false promises of unlimited upside.

If someone’s trying to dress up a SPIA with complexity, run.

SPIA Payout Example

Here’s how it works conceptually:

You’re 68 and you invest $250,000 into a SPIA. The annuity company pays you $1,200/month for life (example only, actual numbers vary weekly). That check keeps coming no matter what the markets do.

You’ve just turned part of your nest egg into a personal pension guaranteed.