A single premium immediate annuity — a SPIA, pronounced “spee-uh” — is the simplest annuity there is. You give an insurance company a lump sum once. In return, it pays you a fixed amount every month, starting within a year, for as long as you live.
How it works
- You pay once. The “single premium” can come from savings, a CD, or a rollover from an IRA or 401(k).
- Income starts soon. “Immediate” means payments begin within 12 months — often the next month.
- The amount is set in writing. Your monthly check (before tax) is fixed in the contract. Markets going up or down don’t change it — but inflation does reduce what it buys over time.
- It lasts as long as you do. Even if you live to 100, the checks keep coming.
Some people think of it as buying a pension with their own savings. Like Social Security, it pays a check for life — but there are real differences: most SPIA payments stay level and don’t rise with inflation the way Social Security’s cost-of-living adjustments do, and the payments are backed by the issuing insurance company, not the federal government.
Who a SPIA is often a good fit for
- People whose Social Security and pension don’t cover their basic monthly bills.
- People who worry about running out of money if they live a long time.
- People who would rather not manage investments or watch the market in retirement.
- People in good health, or with long-lived parents — the longer you live, the more a SPIA pays in total.
Who a SPIA usually isn’t for
- Anyone who may need the money back. A SPIA trades a lump sum for income. You generally can’t cash it in later. Keep a separate emergency fund.
- People in poor health with a shorter life expectancy, unless a guarantee option protects their heirs.
- People whose main goal is leaving money to children. Other tools may fit better.
- Putting in everything. Most people use part of their savings, not all of it.
What decides how much you get
Your age (older means more per month), your sex, whether it covers one person or two, the guarantee option you choose, and interest rates on the day you buy. Rates differ between insurance companies — sometimes by several percent — which is why comparing carriers matters. See what different amounts buy at different ages.
