Single Premium Immediate Annuities typically are referred to using the acronym, SPIA. The product’s origin can be traced back to the Roman times when Roman soldiers and their families were promised a pension type lifetime payment for their dutiful service to the empire. SPIAs were the only annuity sold in the United States until 1952, and have been used in this country for over 200 years. The first SPIAs in the U.S. were used to provide pensions to retired Presbyterian ministers in Pennsylvania.
SPIAs can be purchased for a lifetime income stream, for a certain payment period, or a combination of both. SPIAs work as a pure transfer of risk strategy that provides a guaranteed income stream you customize to match your specific goal. There are no moving parts, no annual fees, no stock market attachments, no frills, no shiny things, and no complexity. This is simple as it gets when it comes to annuities, and that is a good thing. I always say that if you cannot explain it to a nine year old, then don’t buy it. No offense to 9 year olds!
The SPIA transfer of risk strategy is focused around a particular type of risk called Longevity Risk. Longevity Risk is a fancy phrase many financial journalists and the annuity industry love to use to make themselves sound much smarter than they are. Longevity Risk means the possibility of outliving your money. That’s it.
SPIAs are a transfer of risk strategy, pure and simple. You are giving money to a quality annuity carrier and transferring the risk to them to provide a guaranteed income stream. Instead of you hoping to outlive your money, the annuity carrier is on the hook to pay you no matter how long you live.
In this episode, The Annuity Man discusses:
- What is a SPIA and how does it work
- The history of SPIAs
- The benefits and limitations of a SPIA
- How to get your free copy of the SPIA Owner’s Manual
- SPIAs are simple & efficient transfer of risk pension plans
- SPIAs quotes are customizable to contractually guarantee your specific goals
- SPIAs are commodities, and all carriers should be quoted to find the highest contractual guarantee
- SPIA payments are primarily based on your life expectancy, not interest rates
Fun with Annuities Podcast is hosted by America’s Annuity Agent, Stan Haithcock, The Annuity Man. Hear brutal annuity facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Author of 7 books, Stan dives deep on all annuity types and strategies. It’s fun, learning the contractual truths on how annuities actually work and if they’ll fit your personal retirement lifestyle. Listen in on how you can be livin’ the reality, not the dream.
Listen on Stitcher, Apple Podcasts, and Spotify. Get the best and highest confinement care and enhanced benefit quotes using Stan's proprietary annuity calculators. You can also receive all 6 of The Annuity Man Owner's Manuals for free and under no obligation and see a live feed of the best fixed rates for your specific state of residence.