Annuities Explained: When a Guaranteed Income Stream Makes Sense and When It Doesn't

The U.S. annuity market holds $3.3 trillion in assets per LIMRA 2025. Variable annuities charge an average 2.1% in total fees versus 0.03% for index funds. A $500,000 single premium immediate annuity (SPIA) at age 65 pays approximately $36,000/year guaranteed for life, but fixed payments lose 50% of purchasing power over 20 years at 3.5% inflation. This guide covers every annuity type (SPIA, DIA, fixed, fixed indexed, variable), payout rates, mortality credits, surrender charges, the annuity puzzle, when guaranteed income makes sense, and when fees destroy value.