How to Shop for an Immediate Annuity

Annuities come in all shapes and sizes--some with complex calculations that try to do a little bit of everything, often with high fees. But immediate annuities are simple: You hand over a lump sum to an insurance company, and they promise to pay you a fixed amount every month or year for the rest of your life.

"It's the purest form of guaranteed income," says Rob Williams, managing director of financial planning at Charles Schwab. "It's the [option] most like purchasing your own pension. If you want to maximize the guaranteed payment you're getting, the single-premium immediate annuity is the place to look."

For people who have little or no pension, an immediate annuity can provide a stable paycheck