100 best money moves

Move 58: Figure out if an annuity is for you

Immediate annuities, which provide a guaranteed monthly payout for life, can be a smart place for some people to put a portion of their retirement nest eggs. Repeat: some people. To figure out if you're among them -- and what your next moves should be -- answer the four questions below.

1. Are you worried that you won't have enough guaranteed income in retirement?
NO: You can stop reading; you don't need an immediate annuity.
YES: Continue to the next question.

2. Are you willing to give up access to some of your savings?
NO: Because it locks up the money you put in -- no do-overs possible -- an immediate annuity is not a good choice for you.
YES: Continue to the next question

Do you need the income now?
NO: Wait a bit. As its name indicates, this kind of annuity begins paying out immediately, so it doesn't make sense to buy one until you want the income stream to begin.
YES: Continue to the next question

Do you have a spouse who needs income?
NO: Buy a plain-vanilla immediate annuity now.
YES: Buy one with a survivor option. That way your spouse will be covered if she outlives you.

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Last updated April 28 2011: 11:32 AM ET