Should You Buy an Annuity from Social Security?

Steven A. Sass

IB#12-10

The brief’s key findings are:

  • Households now retiring need to transform their 401(k) and IRA savings into retirement income.
  • One way is to delay claiming Social Security to increase their monthly benefit, using savings to pay current expenses while they wait.
  • In effect, they are buying an annuity from Social Security:  The savings used is the “price” and the increase in their monthly benefit the annuity income it “buys.”
  • Buying an annuity from Social Security is generally the best deal in town, especially in today’s low interest-rate environment.