$477 a month in the second year and match the $587 fixed-annuity payout
in year seven. Ten years of 10% returns would hike the couple's checks to $678 and two decades of 10% profits (which is about the historical average for stock investments over the long term) would deliver a $1,004 payment.

And the risk? One 0% year would knock the initial $458 payment down to $428 a month in year two. Twenty 0% years would shrink the payment to $111. Picking a higher assumed rate will provide a larger check in the beginning, but the payout will be tougher to maintain.

To compare annuities from companies that don't use the same assumed interest rates, ask for an illustration that shows how much the annuity will pay out over 20 years assuming a constant interest rate (such as 8%), recommends Shane Chalke, CEO of AnnuityNet.com, an annuity marketplace for financial advisers. This makes it easier to compare total payouts. Also compare investment choices. Many insurers let you invest only in a single company's funds; others let you choose from a variety of fund families.

--Reporter: MATT POPOWSKY