Perhaps the guaranteed payments of an annuity exceed the guaranteed returns of an investment portfolio. The companies managing the annuities have the capital to invest in businesses and ventures that a typical person can't. Such as financing, large real estate developments, or investments in startups, small businesses, or private equity.

With a stock portfolio, the only guarantee cash-flow is dividends since capital appreciation varies a lot year-to-year. Dividends are usually in the 2-3% range. A large, diversified real-estate portfolio might see 8-15% yearly returns in cash, which can be distributed, saved, or reinvested as needed.

> If you composed a portfolio of high dividend, stable, stocks... Could you theoretically have a "guaranteed" monthly income AND the ability to liquidate, in the event of an emergency?

No. You can buy an annuity, or US Treasury bonds, but guaranteed high returns don't exist, and adding in a liquidity requirement doesn't help.

Note that GM declared bankruptcy in 2009. Even if it is still "too big to fail," that doesn't mean investors can't lose all their money.

I never claimed guaranteed high returns. An annuity doesn't guarantee you "high" monthly income. It guarantees you AN monthly income.

My comment was to address the question regarding why more people don't use annuities, and I'm not sure your response counters that.

Regarding GM, yes, I'm aware they went bankrupt. But correct me if I'm wrong - Investors didn't lose their shares? The government bailed them out, and they're operational today. That's what I mean by "too big to fail".

> In the case of GM, investors who held shares of the company before its reorganization saw their equity holdings cancelled in March, 2011. Per the company's reorganization plan, they did not receive any shares of the "new" GM.

http://www.fool.com/investing/general/2016/02/23/what-a-corp...

No, that doesn't insure against old age. Consider this method of getting a guaranteed income: take your pot of money M and divide it by N, where N is the maximum number of years you could expect to live (if, say, you lived to 121). Then you can get a guaranteed income of M/N per year. But this is silly, because most of the time you die much earlier, and the money goes to waste.

The whole point is to transfer money from worlds where you die early to worlds where you die late. An annuity does this by pooling your money with many people living to different ages. For a large pool and accurate actuarial tables, the number of people who die every year can be predicted, so one can determine an amount of money to pay out each year such that each surviving person gets the same amount each year, with long-surviving people getting more total money (as desired).