Turmoil in the stock market. Paltry interest rates at the bank. What are the newly retired to do?

Many are taking a look at buying a fixed annuity instead.

These products let you swap a lump sum for a fixed income for life. They’re sold by insurance companies, and have long been considered a safe way to ensure a steady income in retirement.

They have a fair amount to commend them — especially in theory. They eliminate the risk that you’ll outlive your savings. And they let you squeeze out extra income while you’re alive, at the cost of leaving nothing for your heirs.

But there’s a big problem right now. Annuity payout rates have slumped.

These may be a particularly risky bet right now. Anyone buying an annuity will be locking in today’s low interest rates for life. You’ll be earning a low level of return. And it could leave you at risk if inflation picks up.

Consider a newly retired 65-year-old woman who invests $100,000 in a fixed annuity today. According to ImmediateAnnuities.com, a comparison website, that will buy her an income of $590 a month, or about $7,000 a year.

Ten years ago, she would have gotten nearly $9,000.

And a generation ago, she could […]