Fidelity’s Immediate Annuity Overview

The Fidelity Immediate Annuity is a financial product sold as an immediate annuity that will “guarantee income for life.” But the recommendation often lacks transparency about what you give up, why Fidelity pushes SPIAs, and what better options exist for couples who want flexibility, liquidity, growth, and legacy.

why we dont like fidelity immediate annuity

Why Fidelity Recommends Their Immediate Annuity

Fidelity’s planning tools often show a projected risk of depletion in your late 80s. Their internal algorithm then pushes immediate annuitization as the quickest way to reduce the “failure rate” in a Monte Carlo analysis—even if the recommendation doesn’t align with your goals, your spouse’s needs, or your legacy plan.

This leads to SPIA suggestions for reasons such as:

It simplifies the advisor’s job
It eliminates investment risk on paper
It creates a predictable income for their model
It’s the fastest way to stabilize projections

But SPIAs are not the only solution—and often not the best solution.

Key Features

Guaranteed Income: The primary advantage of the Fidelity Immediate Annuity is the assurance of a predictable income. This can be particularly beneficial for retirees seeking a steady cash flow to cover their living expenses.
Flexibility in Payment Options: Fidelity offers various payment frequency options, including monthly, quarterly, semi-annually, and annually. This allows policyholders to choose the payout schedule that best fits their financial needs and lifestyle.
Customization: Policyholders can select from single life, joint life, or period-certain annuity options. This flexibility enables individuals to tailor their annuity to their specific circumstances, whether they require income for life, a fixed period, or to cover both themselves and a spouse.
Inflation Protection: For an additional cost, Fidelity offers an option to increase the annuity payments to keep pace with inflation. This can be a crucial feature for maintaining purchasing power over time.
Financial Strength: Fidelity is a well-established and reputable financial institution. The company’s strong financial stability provides an added layer of security for annuity holders.

Types Of Retirement Accounts Accepted

Why You Should Think Twice Before Buying a Fidelity SPIA

1. It’s Irreversible

Once you annuitize, you cannot take back your principal. Your choices are locked in for life.

2. Your Payments Don’t Keep Up With Inflation

Fidelity primarily sells level-payment SPIAs. These lose purchasing power every year—especially with rising healthcare costs.

3. Fidelity Often Recommends Far Too Large an Allocation

Suggesting half your portfolio is excessive and removes the liquidity needed for medical bills, home repairs, travel, or emergencies.

4. SPIA Payouts Are Often Lower Than GLWB Income

Across 10+ year timelines, SPIA payouts often fall into the same range as a GLWB—but without liquidity, growth, or inflation potential.

5. Limited Legacy Value

Unless you add refund or period-certain options (which reduce your payout), your heirs may receive nothing. If you die early, the insurer keeps what’s left.

6. Your Money Stops Growing

A SPIA turns your entire principal into income. No index-based growth. No compounding. No upside.

7. Fidelity Doesn’t Shop Every Carrier

Independent brokers can access dozens of A-rated carriers, often with stronger rates or more favorable contract terms.

8. Better Tools Exist

Fidelity’s system prioritizes financial simplicity—not maximizing your legacy, flexibility, or total retirement security.

Helpful Tip: Before committing your entire nest egg to an irreversible contract, you should run your own numbers. Use a free Fidelity income annuity calculator to see if a guaranteed income stream actually aligns with your specific financial goals (the highest payout), or if you are just buying the first product suggested to you.

A Better Alternative: Use a GLWB Instead of a Fidelity SPIA

A Guaranteed Lifetime Withdrawal Benefit is superior for most couples and most retirees.

Why a GLWB Works Better

Liquidity throughout retirement
Market-linked growth without market risk
Inflation-adjusted income options
Joint lifetime income for both spouses
The remaining account value passes to your beneficiaries
Withdrawals between 5% and 8% for life
Ability to increase income over time
No irreversible annuitization

A GLWB gives you guaranteed income and the flexibility that Fidelity’s SPIA takes away.

If You Still Choose the Fidelity SPIA, Buy Life Insurance to Protect Your Investment

Some retirees will still choose to buy Fidelity’s immediate annuity because they value simplicity or fear market volatility. If so, there is one essential step you must take:

Buy life insurance to protect the value of the money you annuitize.

Here’s why:

Once you annuitize, your principal is gone.
If you pass away early, the insurer keeps the remainder unless you choose expensive refund options.
Life insurance replaces the lost value so your spouse or children receive the legacy you intended.
For couples, it ensures the surviving spouse is not left underfunded.
For families, it ensures your annuity purchase doesn’t become a financial loss due to early death.

This is the only reliable way to protect the portion of your portfolio you hand over to Fidelity.

It is functionally the same as “insuring” your annuitized asset.

Long-Term Care Insurance Prevents Portfolio Ruin

Long-term care costs can devastate retirement savings.
LTC insurance—or an annuity with LTC benefits—protects assets so your income plan remains intact, your spouse is protected, and your estate remains preserved.

Is Fidelity's Immediate Annuity Any Good?

Once You Secure GLWB Income, Life Insurance, and LTC Coverage, You Never Have to Worry About Retirement Money Again

These three pillars eliminate the fear of running out of money:

Lifetime income for essentials
Spousal protection and legacy replacement
LTC coverage to prevent catastrophic expenses

Once these are in place, the remaining investment portfolio can be used freely for growth, lifestyle, or legacy.

Next Steps

Contact The Annuity Expert for free quotes on GLWB annuities, SPIA alternatives, life insurance, and long-term care insurance.
We will compare all your options side-by-side—including Fidelity’s SPIA—and help you build the safest, most flexible retirement-income plan.

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Fidelity’s Immediate Annuity Overview