Would it make more sense to not buy the future annuity till one of us passes away because the living spouse could get so much more for a one person annuity?

Sounds good on paper, but what do you do until then? And what do you do if you both live to 100? (healthy and happy we hope!)

Annuities are not a great deal in terms of prices/returns, and inflation protection in annuities is an even worse deal. But looking at the single versus joint pricing, it seems a relatively fair price difference to me. It's also simple and meets the need well, so I don't see a problem going joint.

What can make some sense is this:
Instead of buying a deferred annuity which starts payments five (or however many) years from now, buy 5 year TIPS and then buy an immediate annuity with the final amount. The income is higher because you're older, you get a few years of return in the mean time, your capital is completely inflation protected in the mean time, and of course the money is in your estate instead of the hands of the insurance firm if you die before the five years is up. The only disadvantage is that it's something to sit on your financial "to do" list for a long time when you might want to be doing something else. And the smallish risk that interest rates and annuity rates will be lower at that time than they are now, but I think annuity returns for the very old are based more on mortality tables than interest rates on purchase date.

Jim