In a Wall Street Journal article, Shelly Banjo and Kristen McNamara highlighted the advantages of fixed immediate annuities. Like standard fixed annuities, they are generally safe investments for retirees. Unlike them, these products begin making payments soon after you deposit a lump sum and provide an income stream with little delay.
The top immediate annuity rates in the market are around 4.75% to 5.40%, which seems to be a decent return when compared to a 10-year Treasury note or 5-year CD (each of which have interest rates of under 3%)
However, McNamara and Banjo warn that as soon as immediate annuity holders start to recieve payments, they owe taxes on the earned interest.