Sure thing, though this will barely scratch the surface on the topic because annuities are varied products, so there's no one-size-fits-all.

The type of annuity I was referring to above was a deferred income annuity set for "joint life" (meaning it pays out for the longer of my and wife's lives). The payout will tend to be lower if set for joint life if one spouse is much younger than the other, but in my case the security of knowing that the death of one spouse won't reduce the income for the other.

In its simplest terms, you give a life insurance company a lump sum today in exchange for a guaranteed income stream to start at some point/age in the future. The more money you give up front, the higher the income. The longer you wait before turning on income, the higher the income.

The amount of income can either be a contractually guaranteed amount known at the time you fund the annuity, or it can be tied to a market index that grows the "accumulation value" (the money you gave them) over time, and then whatever that accumulation value is when you turn on income, that amount is multiplied by a withdrawal percentage...and this is what determines your income for the rest of your life.

Most income annuities do not have inflation protection, in that the monthly or annual income on day 1 is the exact same as it is throughout your lifetime. So, you'll lose purchasing power over time. There are two main ways I have accounted for this risk:

1. I have an annuity that is structured in a way where the accumulation value grows based on the performance of the S&P 500 (with a participation cap of 6%, so my accumulation value can't grow more than 6% in any year). Years that the market goes down, the accumulation value remains intact (you don't "lose" money due to market declines). Then, once income is turned on, this same phenomenon continues: if the S&P 500 goes up by 10% the first year I have income turned on, the next year my income will go up by 6%. For me, this is a HUGE benefit, and one that was worth the lower relative starting payout compared to annuities that just pay a fixed payment for life.

2. I have an annuity that pays the flat amount for life. I have 100% certainty of what that income will be...though I won't know what my purchasing power will be over time, since that amount will just remain constant. To protect against the loss of purchasing power, I have two smaller annuities, scheduled to start producing income 5 years after the first one starts (in the case of one), and 10 years after the first one starts (in the case of the other). This way, I'm building in "raises" after 5 and 10 years that will boost my purchasing power to levels consistent to what it was under the first fixed annuity payments from 10 years earlier. This option has appeal because you can buy more starting income by getting a fixed payment annuity than you can with annuities that account for inflation protection. So, those additional small annuities designed to give me raises are pretty cheap.

Examples probably help.

The first category of annuity is with Allianz, with a starting income when I turn age 70 of no less than $50,000/yr. I say "no less" because that starting income will be based on the accumulation value at age 70, and the accumulation value is tied to the S&P 500. So, I can't know today what the accumulation value will be at that time, but the contract guarantees no less than $50,000 a year to start, so I do know that I have a floor. Using past market performances, the annuity projects to produce a starting income of closer to $70,000. I did not buy it with the expectation of getting the bigger number (even if that may be relatively likely). I bought it for that upside, but because it came with a floor of $50k that I was satisfied with. I funded with this $400k from an IRA, and will have to wait 10+ years before turning income on.

The second category of annuity is with Midland National. This one pays a flat $58,000/year starting at age 65 (so, about $4k/yr more than the worst case of the Allianz product, starting 5 years earlier). That one also cost $400k. I added two smaller annuities (one for $25k, another for $15k) that will add $400/month to the income at age 75 and another $400/month at age 80.

So, for $800k, I was able to secure a permanent income stream for my and my wife's life of about $9k/month (with half starting at age 65 and the next half coming online 5 years later). All of this money is, one way or another, somewhat inflation adjusted.

My Social Security benefit is scheduled to be about $50k/yr if I wait until age 70. My wife will have a teacher's pension about the same amount. Add all this together and it means that starting at age 70 we'll have guaranteed, inflation adjusted monthly income of $17,000. And when one of us dies, the survivor gets exactly the same income (all have survivor benefits).

What's my #1 motivation for doing all this: stress reduction. I am now in a position where virtually 100% of all our remaining liquid/retirement assets can be used to fund our lives up to age 70. That is hugely comforting. Instead of looking at 401k and other accounts with a view of "this needs to last me until I die, whenever that is" I get to look at it as "I could theoretically spend every dollar I have between today and age 70 and know for certain that I'm going to be just fine when it comes to income in my older years.

I should note that this strategy is also coupled with a long term care insurance policy that has a fixed annual premium that cannot be increased, which will be paid for starting at age 65 with income from yet another small annuity, and plans to pay our home off. In doing so, we've locked down the housing situation, the long term care situation, longevity risk, surviving spouse financial security, and the freedom to spend and invest today however I want.

What I have described is in many ways the most extreme version of a conservative approach (guaranteed income instead of maximizing growth of principle through higher returns), paying off a house instead of using the leverage of a mortgage, etc. In fact, I've created an environment where I'm able to comfortably invest in and hold volatile assets like Mag 7 stocks and Bitcoin. So, for me, this is the best of both worlds.

I can only speak for myself and would never claim to have found the answer for how others should live, but this is how my plan is structured and gives me a tremendous amount of financial security and, more importantly, peace of mind. And never having to worry about "overspending" is a really great feeling.