If you want dependable cash flow starting right away, a Single Premium Immediate Annuity (SPIA) is often the best immediate annuity for monthly income. You exchange a lump sum for a guaranteed paycheck that can start within 30–365 days. For many retirees, that “pension-like” payment is the simplest way to turn part of a nest egg into reliable, predictable income—without market risk.

What makes a SPIA especially useful is the clarity. You can usually see the exact monthly payment for a given premium and payout design. There’s no cap rate, participation rate, or crediting strategy to interpret—just a contractually guaranteed income stream backed by the issuing insurer’s claims-paying ability. That simplicity is why SPIAs are commonly used to cover baseline expenses like housing, groceries, utilities, and insurance premiums.

How a SPIA Creates Monthly Income

A SPIA is a contract where you make a single premium deposit and the insurance company turns that deposit into a guaranteed income stream. You choose the first payment date (often 30–365 days from issue) and the payout structure. Once the annuity is issued, the payment amount is locked by contract. That means your monthly income doesn’t depend on the stock market, bond prices, or the performance of an index.

It’s important to understand that a SPIA payment is not an “interest rate” and it’s not a traditional investment yield. SPIA pricing is based on current interest rates, insurer pricing, and actuarial factors (often described as “mortality credits”). In plain terms: the insurer can generally pay more monthly income to older applicants than younger applicants, and single-life income is generally higher than joint-life income because it’s priced on one life instead of two.

Check Immediate Income Options in Minutes

Use the tool below to explore lifetime income illustrations. We’ll finalize exact monthly amounts for your state, age, premium size, and payout design—and then show you side-by-side comparisons so you can choose the design that fits your goals.

What Makes the Best Immediate Annuity for Monthly Income?

The “best” immediate annuity isn’t a single company or a one-size-fits-all product. The best SPIA is the one that produces the right monthly income with the right guarantees for your household. The monthly payment is influenced by your age, your payout start date, and the structure you choose to protect a spouse or beneficiaries.

For example, a life-only SPIA typically provides the highest monthly payment because it ends when you die. If leaving money to heirs is a priority, you can add a cash-refund guarantee (which returns unused premium at death) or a period-certain guarantee (such as 10 or 20 years). Those protections usually reduce the starting payment because the insurer is taking on additional guarantee risk.

Inflation planning is another core decision. A level SPIA payment stays the same each month, which is ideal for maximizing income right now. If you’re worried about purchasing power, you can add an annual increase option (commonly called a COLA). A COLA design typically starts with a smaller check but can become more valuable later in retirement if you live a long time and expenses rise over time.

Common SPIA Designs (And What You Give Up to Get Them)

Choosing a SPIA is essentially choosing a trade-off between maximum income, survivor protection, and beneficiary protection. Some retirees want the biggest check possible to cover living expenses. Others are willing to accept a smaller initial payment to ensure a spouse has lifetime income or to ensure heirs receive a minimum benefit if death occurs early.

Apples-to-Apples: How to Compare SPIA Quotes Correctly

SPIA shopping only works if you compare the same design across carriers. If one quote is life-only and another is cash-refund, the “higher payout” is not a meaningful comparison because the guarantees are different. The same issue happens when comparing single-life vs joint-life, or level payments vs COLA payments.

When we quote SPIAs, we typically align the quote set around the same start date, the same payout structure, and the same beneficiary guarantees. Then we compare carriers for pricing. This is often where retirees are surprised: two strong insurers can offer noticeably different monthly income amounts for the same premium and structure, especially when rates are moving.

Example: How Design Changes Monthly Income

Illustrative only—actual results vary by carrier, rates, state, and payout options.

If you’re age 70 and you choose a life-only SPIA, your payment will generally be higher than the same premium with a cash-refund or a period-certain rider. If you’re a married couple and you choose a joint-life 100% continuation payout, your payment will generally be lower than a single-life payout because it covers two lives. If you add a COLA, the first-year payment usually drops, but the long-run income stream may be more comfortable later in retirement.

Why a SPIA Is Often the Best Immediate Monthly Income Strategy

A SPIA is a direct solution to “income risk”—the risk that markets perform poorly early in retirement or that withdrawals become hard to sustain. For many households, placing a portion of assets into guaranteed monthly income can reduce stress and improve planning because you don’t have to rely on selling investments at the wrong time to pay essential bills.

SPIAs can also pair well with other retirement building blocks. Many retirees coordinate SPIA income with Social Security timing, required minimum distributions, and investment withdrawals. In many cases, the SPIA is used to cover needs, while investment accounts remain available for discretionary spending, emergencies, or legacy goals.

What If You Don’t Need Income Immediately?

If you don’t need income right now, you may be able to increase future guaranteed income by choosing an annuity designed for deferral. A Deferred Income Annuity (DIA) can lock in payments that begin later (such as age 75–80), often with higher future monthly income because you’re starting later. Another alternative is a fixed indexed annuity with an income rider, which may offer deferral credits and a guaranteed lifetime withdrawal feature while preserving some flexibility before income begins.

Some retirees prefer a simpler accumulation step first. A MYGA / fixed annuity can lock in a fixed rate for a set term and then you can evaluate income conversion later. If you want to compare guaranteed growth options alongside SPIA payouts, review current fixed annuity rates.

Tax Considerations for Immediate Annuity Income

How your SPIA is taxed depends on where the money comes from. If you purchase a SPIA inside an IRA or rollover account, payments are generally taxed as ordinary income when distributed. If you purchase with non-qualified funds (money not in a retirement plan), payments are often taxed under an “exclusion ratio” concept, where part of each payment is considered a return of principal for a period of time. The key point is that gross income and net income can differ materially, and the most accurate planning includes your tax bracket and withholding preferences.

How Diversified Insurance Brokers Helps You Choose the Right SPIA

SPIA decisions are easier when the quote set is properly structured. At Diversified Insurance Brokers, we quote immediate annuities across a broad carrier universe and help you compare the payout designs that matter most—single vs. joint life, period certain vs. cash refund, and level vs. COLA. Then we narrow the choices based on your goals: maximum paycheck, spousal protection, inflation protection, or legacy guarantees.

We also help you coordinate the SPIA with the rest of your retirement plan. In many cases, the “best immediate annuity for monthly income” is not the one with the highest raw payout—it’s the one that produces the right monthly amount while keeping the rest of your assets positioned sensibly for liquidity, emergencies, and long-term goals.