Consider Alternatives to Annuities in Retirement Years

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Q I am near retirement. I will receive a small pension in addition to Social Security. The two checks will total about 70 percent of my pre-retirement take home pay. To compensate for some of the 30 percent drop-off in pay, I'm thinking of buying an annuity. What type of annuity should I purchase? Should I buy it from an insurance company, a bank, or elsewhere? Does an annuity make sense for me?

J.M., New York

A If you go the annuity route, buy an immediate annuity that makes payments as soon as possible, says Tim Shmidl, a financial consultant with Prism Financial Group, in Overland Park, Kan.

He recommends that the annuity come with a guaranteed …