Retiring in 10 years: Should I invest in annuities?

http://money.cnn.com/2011/06/14/pf/expert/retirement_saving_annuities.moneymag/index.htm?section=magazines_moneymag&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmagazines_moneymag+%28Money+Magazine%29

Aside from guaranteeing income for life -- which no other investment can do -- annuities have another advantage: They can generate a higher level of sustainable income than any other investment earning the same return.

How, you may ask, is that possible? Well, some people who buy annuities will die before life expectancy, while others will live longer.

That allows insurers to build into their annuity payouts extra payments known in insurance circles as a "mortality credits." "The insurer is essentially passing along money that would have gone to the people who die early to those who are still alive," says David Blake, director of the Pensions Institute at the Cass Business School in London. "That amounts to an additional return."

For extra safety, you can spread however much you plan to invest among two or three such insurers and also take care that the amount you invest with any single company doesn't exceed the coverage limit of the life insurance guaranty association in your state.