CDs, Treasuries and income annuities can all produce dependable income. They differ on three things that matter a lot in retirement: how much they pay, who stands behind them, and whether you can get your money back.
| SPIA | Bank CD | U.S. Treasuries | |
|---|---|---|---|
| What you get | Income for life; principal is paid out as part of each check | Interest; principal back at maturity | Interest; principal back at maturity |
| Backed by | The issuing insurer’s claims-paying ability | The bank, plus FDIC insurance up to limits | The U.S. government |
| Get your money back? | Generally no | Yes, with an early-withdrawal penalty | Yes; can be sold before maturity at market price |
| Lasts as long as you do? | Yes | No — ends at maturity | No — ends at maturity |
| Inflation | Level payments unless you buy an increasing option | Fixed rate | Fixed rate (TIPS adjust for inflation) |
Why a SPIA can pay more each month
A SPIA check includes interest and a return of your own principal, plus “mortality credits” — money from people in the pool who die earlier helps pay those who live longer. A CD or Treasury pays interest only and gives your principal back at the end. So comparing a SPIA payout rate with a CD rate isn’t apples to apples.
Where CDs and Treasuries win
Access and flexibility. Money you may need — for emergencies, a home repair, or heirs — usually belongs in something you can get back.
Many retirees use both: a SPIA to cover basic monthly bills for life, and CDs or Treasuries for money they want to keep reachable.
