Not everyone has $1M to annuitize. Learn how a $300K SPIA can cover lifetime fixed costs—and why timing and structure matter more than amount.
SPIA in Real Life: What Can $300,000 Do for a Retiree Couple?
You don’t need a million dollars to benefit from a Single Premium Immediate Annuity (SPIA). For many retirees, annuitizing even a portion of their portfolio can dramatically reduce stress—and cover life’s essentials.
Case Study: Joint Life + 20-Year Certain SPIA
Meet Kevin and Linda, both 65 and recently retired. They want to ensure a steady income to cover utilities, groceries, and insurance—no matter how long they live.
They allocate $300,000 from their 401(k) to purchase a SPIA with the following structure:
- 👫 Joint Life: Income continues until both pass
- ⏳ 20-Year Period Certain: Income is paid at least 20 years, even if both pass early
- 💵 Monthly Income: $1,800 (guaranteed for life)
That’s $21,600/year—7.2% effective yield on a guaranteed basis, with survivor and legacy protection.
Why This Structure Works
- ✅ Protects against longevity risk for both spouses
- ✅ Guarantees family receives value if early death occurs
- ✅ Locks in monthly income for fixed expenses
How SPIA Fits Into a Broader Plan
Kevin and Linda cover core expenses with SPIA + Social Security:
- 🧾 SPIA Income: $21,600/year
- 🧓 Social Security (combined): $48,000/year
- 📌 Total Fixed Income: $69,600/year
This fully covers their essential costs. Their remaining $600,000 is invested for discretionary spending and legacy goals.
Alternative Scenarios for SPIA Use
- ✔ Solo retiree, age 70, wants max income → $200K SPIA, Single Life, no refund → $1,350/month
- ✔ 55-year-old retiring early → SPIA deferred 5 years for max payout at 60
- ✔ High-income couple uses SPIA to reduce Required Minimum Distributions (QCD-linked)
When SPIA May Not Fit
- ❌ You want full liquidity and control
- ❌ You need inflation-adjusted income (unless optional rider is added)
- ❌ You expect a short retirement horizon
Takeaway
- 📌 SPIA is a retirement income engine—not just for millionaires
- 📌 With the right structure, even $100–$300K can secure peace of mind
- 📌 It's not all or nothing—SPIA works best as part of a hybrid income strategy
