Putting aside 20% in 20 or 25yr TIPS in an IRA at inflation + currently 2.6% builds a big base. If that's needed before 25 years... just sell the TIPS?

You don't even have to sell them. The general notion is to run your "other" portfolio down linearly so it runs dry just as the TIPS mature. Planning a withdrawal strategy to last through an unknown time interval is very hard, but planning one to last for a specific number of years known in advance is not difficult. Buy an immediate annuity on the date that your money runs out, using the money from the TIPS which will be maturing that same month.

If for any reason your "run it down linearly" calculation was off and you go broke a bit early--perhaps, as another suggested, you had an unforeseen large expense to cover--just sell the TIPS then, and buy the immediate annuity. Your future income is lowered, but you still have income for life. The prices of TIPS are pretty stable, especially with not too many years before maturity.

In terms of internal rate of return, annuities are about the worst deal out there, probably farther than face value than the expected value of a lottery ticket. But, if purchased when you're already quite old, you're much more concerned about covering a wildly variable period of income than you are about the internal rate of return...for shorter periods, there wouldn't be time for that much return compounding, and it's the high rate of return (mainly of capital) that dominates. In short, to overgeneralize, an annuity is a truly horrible financial deal for a 68 year old but a pretty smart move for an 88 year old. It's still a horrible investment deal in terms of probably costing you far more than the actuarially fair number, but it meets a very specific need very well, by entirely cutting off longevity risk at a reasonable absolute cost.

Jim