Annuity vs Bond Ladder Comparison
Immediate annuities offer guaranteed lifetime income but no liquidity and no inflation protection. Bond ladders provide flexibility and inflation-adjustable yield but no longevity insurance. This calculator surfaces which structure produces more income for your situation.
Annuity Mortality Credit
Insurance companies pool risk across many annuitants. Those who die early subsidise those who live long. This 'mortality credit' is what allows annuities to pay higher rates than risk-free bonds for the same age. At 65, a 5.85% monthly payout per $1K represents both yield AND mortality credit.
Bond Ladder Flexibility
Build a Treasury ladder: 5-15 bonds spaced annually. As each matures, reinvest at then-current rates (handles rising-rate environments). Income adjustable, principal preserved for heirs, and can be liquidated for emergencies. No mortality credit — but no irrevocability either.
Hybrid Approach Most Common
Annuity research (Wade Pfau, Michael Finke) typically recommends partial annuitisation: 30-50% of retirement savings in annuity for longevity insurance + essential expense floor, remaining 50-70% in bonds/equities for flexibility, inflation protection, and inheritance. Pure all-or-nothing on either side is rarely optimal.
Source: Society of Actuaries mortality tables; Wade Pfau retirement income research. Last updated: May 2026.