Professor Jeffrey Brown, from the University of Illinois-Champaign Urbana, recently co-authored a paper, "Framing Lifetime Income," about which he stated that, "Guaranteed lifetime income, such as in the form of annuities, is incredibly valuable for retirees.real estate has created 90%+ of the worlds Millionaires

 It is the single best way on a risk-adjusted basis to maximize one's ability to spend retirement without concerns about running out of resources.  Every other strategy either exposes the individual to more risk or reduces one's ability to consumer."

Not even close, Professor!

Over the past two centuries, real estate has created about 90% of the world's millionaires.  During The Great Recession, as stocks and bonds plunged in value, rental real estate income actually rose in the United States.  Anything that an annuity can do to "maximize one's ability to spend retirement without concerns about running out of resources" investing in real estate through actually owning the property or financing private mortgages can do much, much better.

Professor Brown's remarks were part of an article by Robert Powell, an editor for Retirement Weekly.  Powell's piece, "Annuities as income, not investment," for MarketWatch, a unit of The Wall Street Journal, focused on how annuities were being viewed wrong by the investment community.  The best way to look at annuities should be " income, not investments."

That is very poor advice for investors as all funds should be directed to what is the best overall investment, not just a source of income.  Real estate and private mortgage notes endure, annuities do not.  Long after the income stream from an annuity is gone, the property will be still be producing rental income for the investors.  In addition, rental income rises about 4-5% annually in the United States.  From those increases, rental income will double in less than 15 years.

Private mortgage notes can easily outlast an annuity, too.

The financier of the private mortgage note can participate in an investment pool with others looking to underwrite the buying of properties.  That way the proceeds are constantly being recycled.  From that, a perpetual stream of income can be produced from the capital an investor puts in a private mortgage fund.   

Investing in real estate and/or private mortgage notes also results in much greater flexibility than an annuity for the individual.  It is the insurance company that sets the terms of the annuity.  These provisions are calculated so that the insurance company makes as much money as possible from those who buy annuities from it.  By contrast, individuals investing in real estate or private mortgage notes do so to result in their making the most money from the deal.  Insurance companies are "The House" when selling annuities.  Individuals are "The House" when investing in real estate or private mortgage notes.

Overall, an annuity is based on the ability of the insurance company to pay it; and, should that fail, the solvency of the state fund that backs it.  There have been scores defaults on annuities.  Properly selected, properties that produce rental income or private mortgage note financing are much, much more secure than that track record and much more profitable: that is why real estate, and not annuities, have created nine out of every ten millionaires around the globe!