What is an immediate annuity (SPIA) and what are its pros and cons?

A single premium immediate annuity (SPIA) is the simplest annuity: you hand an insurer a lump sum and they pay you a fixed monthly income for life starting almost right away. The big advantage is longevity insurance – you can't outlive the payments, and it removes the guesswork of how much you can safely spend. It also tends to pay more than you'd safely draw from bonds, because it pools mortality risk across many buyers. The downsides are real: you generally give up access to that lump sum, a plain SPIA offers no inflation adjustment unless you pay extra, your heirs may get nothing, and payouts hinge on interest rates the day you buy. A common approach is to annuitize just enough to cover essential expenses, then invest the rest.