What Is a SPIA? Turning a Lump Sum Into a Paycheck

A SPIA, or single premium immediate annuity, is a contract where you pay an insurer one lump sum and it begins sending you fixed payments almost immediately, usually within a month to a year, for a set period or for the rest of your life. In return, that lump sum is no longer yours to spend.

Almost nobody gets a pension anymore. A SPIA is what it looks like when you buy one yourself, at retail, with money you already have.

That is the entire idea, and it is the oldest idea in the insurance business. You give a company a pile of money. The company gives you a check every month until you die. Underwriting the length of a human life is what insurers have done longer than they have done anything else, which is why this product is simple to understand and hard to improve on for the one job it does.

It is also the least flexible contract in the annuity family, and any honest explanation has to lead with that. This guide covers the trade in both directions. The full income annuity family is mapped on the income annuities guide.

What does SPIA stand for?

SPIA stands for single premium immediate annuity, and each word in that name is doing real work.

How does a SPIA work, step by step?

A SPIA has the shortest path from purchase to payment of any annuity, which is exactly why it exists.

When do SPIA payments start?

Payments from a SPIA generally begin within one year of purchase, and most contracts start the first payment about 30 days after the premium is received. The IRS definition of an immediate annuity is what draws the one-year line: if the first payment is scheduled more than a year out, you are buying a deferred income annuity instead, which is a different product with a different price.

How much does a SPIA pay?

The payment scales with age, and it is quoted per 100,000 dollars of premium. These figures are snapshots of the immediateannuities.com income grid carried in AnnuaLife’s rate feed as of September 2, 2026, for a single-life-only payout, and the income rates page refreshes them.

Source: immediateannuities.com income grid, carried in AnnuaLife’s rate feed, rate date September 2, 2026, single-life-only payout. Your quote will differ by state, carrier, payout option, and the rate environment on the day you buy. Run your own numbers on the annuity payout calculator before you take any of these as your figure.

How do payout options change the check?

Every protection you add for your heirs comes out of your monthly payment. The trade is visible and consistent, and here it is in one product, one age, one gender, on one day.

Source: immediateannuities.com income grid, carried in AnnuaLife’s rate feed, rate date September 2, 2026. Read that table twice. Adding a 10-year certain period cost about 2 percent of the monthly income on that day, while a 20-year certain period cost roughly 10 percent. For most buyers with heirs, some form of refund or period certain is worth the reduction, and “life only” is the right answer mainly when the maximum check is the whole point and no one is depending on the money after you.

Who is a SPIA a good fit for?

A SPIA fits people who have a specific monthly shortfall and a specific pile of money to solve it with.

• Retirees with a gap between fixed expenses and guaranteed income. Social Security plus a SPIA covering the mortgage, utilities, and insurance is the classic use: cover the bills you cannot skip, invest the rest.
• People who are worried about outliving their money. A life payout does not stop, which is a form of longevity insurance nothing in a brokerage account replicates.
• People who do not want to manage withdrawals. No sequence-of-returns decisions, no rebalancing, no annual withdrawal-rate debate.
• Someone taking a pension lump sum who wanted the pension. A SPIA can rebuild the payment stream the lump sum replaced, and it lets you shop the price.
• Buyers who value simplicity. A SPIA has no cap, no participation rate, no surrender schedule, and usually no ongoing fee, because the cost is built into the payout rate.

Immediate annuities remain a small corner of the market. LIMRA’s final 2025 U.S. retail annuity sales report, published in 2026, put SPIA sales at 14.4 billion dollars, up 6 percent, against 464.1 billion dollars in total retail annuity sales. The product that best matches the popular idea of what an annuity does is one of the least purchased.

Who should not buy a SPIA?

The disqualifiers here are sharper than for any other annuity type, because the decision is generally permanent.

• You may need that lump sum back. Most SPIAs cannot be cashed out once payments begin. Money that goes in stops being an asset you can access and becomes an income stream.
• You are annuitizing too much. A SPIA covering fixed expenses is a plan. A SPIA holding most of your savings leaves you income-rich and cash-poor when the roof needs replacing.
• You have a health condition that shortens life expectancy. Standard SPIA pricing assumes average longevity. A period-certain or refund option helps, and a medically underwritten quote is worth asking about, but a life-only bet is a poor one here.
• Rates are the only reason you are buying today. SPIA payouts move with interest rates, and locking a lifetime payment at a low point in the rate cycle is permanent. Compare quotes, and consider laddering purchases across a few years.
• You want your heirs to receive the full amount. Even with a refund feature, a SPIA is built to pay you, not to transfer wealth. Life insurance does that job.
• Inflation is your primary worry and you buy a level payout. A fixed check buys less every year. The 2026 Social Security cost-of-living adjustment was 2.8 percent (SSA, October 2025), and a level SPIA payment gets no such raise. Our annuity inflation risk guide covers the options.

What should you compare before you buy?

Because a SPIA cannot be undone, the comparison work all happens before the purchase.

• Quotes from multiple carriers for the identical option. Same premium, same payout option, same start date. This is the only apples-to-apples comparison, and the winner changes month to month.
• Carrier financial strength. You are relying on this company for decades. Read the AM Best rating alongside every quote, and be honest about whether an extra few dollars a month justifies a weaker balance sheet.
• The payout option, priced both ways. Get the life-only number and the refund number, then decide what the difference buys your family.
• Single versus joint life if you are married. A joint payout continues for a surviving spouse and starts lower. Our single life vs joint annuity payout guide covers the math.
• How much of your savings this represents. Set the number before you shop, not after a quote impresses you.
• The tax treatment of the money you are using. Non-qualified premium creates payments that are part return of principal and part taxable interest under the exclusion ratio. Qualified money is generally fully taxable as it comes out. See the annuity taxes guide, and confirm your own situation with a tax professional.

Moving forward

The pension you were never offered is still purchasable. That is the honest appeal of a SPIA, and it is worth taking seriously in an era when guaranteed income mostly has to be bought rather than earned.

The catch is equally honest: you are trading a balance for a promise, and you do not get to trade back. That trade is right for the portion of your savings that exists to pay bills, and wrong for the portion that exists to handle surprises.

Start with the arithmetic rather than a sales conversation. Put your own numbers into the annuity payout calculator to see what a given premium would produce at your age, then compare that against the actual gap in your monthly budget. If the numbers line up, current payout quotes live on the income rates page, and a Certified Annuity Advisor can price the payout options side by side before anything is signed.

Frequently asked questions