Do Annuities Pay an Income for Life?
Jason Stolz CLTC, CRPC
Do annuities pay an income for life? Yes—specific annuity types are engineered to provide a paycheck you cannot outlive. By turning a portion of your savings into guaranteed monthly income, you can reduce market anxiety and longevity risk while coordinating benefits for a spouse and legacy goals.
Below, we explain how lifetime income works, ways to compare options, and smart tactics to integrate annuities with Social Security and other assets. Use the embedded calculator to preview income, then check today’s top rates.
Compare Lifetime Income Annuities
Shop top carriers, explore payouts, and see which structure fits your retirement plan.
How Lifetime Annuity Income Works
Lifetime income can be created by immediate annuities (income starts right away), deferred income annuities (income starts later), or fixed indexed annuities with income riders that guarantee a minimum payout regardless of market performance. Many retirees blend approaches to balance guaranteed income with flexibility.
| Annuity Type | Income Start | Typical Use Case |
|---|---|---|
| Immediate income annuity | 30–60 days after funding | Turn a lump sum into guaranteed lifetime payments right now. |
| Deferred income annuity | Future date you select | Lock in higher payments by starting income later. |
| Fixed indexed annuity + rider | Flexible, at retirement | Protect principal, grow tax-deferred, and activate guaranteed lifetime income. |
To see how designs compare, review our guide to guaranteed income from annuities and our overview of the best retirement income annuity structures.
Estimate Your Lifetime Annuity Income
Tip: Run scenarios for single life, joint life, and different start ages to visualize payout changes.
Taxes, Spousal Protection, and Legacy Choices
- Tax treatment: Qualified annuities funded by IRAs or 401(k)s are taxed as ordinary income when paid; non-qualified annuities are taxed only on the earnings portion via the exclusion ratio.
- Spousal benefits: Joint-life options can continue income for the survivor.
- Beneficiaries: Contracts can include refund features or pay remaining account value to heirs.
When comparing offers, evaluate roll-up versus payout rate tradeoffs and whether you need annuity inflation protection for long retirements.
Funding Lifetime Income the Right Way
You can fund income annuities with IRA, 401(k), 403(b), TSP, SIMPLE, or SEP assets (among other types of retirement accounts) using direct, trustee-to-trustee movements that preserve tax deferral. Start with our walkthrough on how to transfer an IRA to an annuity and see when a direct rollover makes sense. If you are still saving for retirement, learn the mechanics of how fixed indexed annuities work before turning on income.
Want a quick preview? Use our annuity payout calculator tool to estimate monthly payments by age, amount, and start date.
Check Today’s Lifetime Income Rates
View current payouts across carriers and structure an income plan you won’t outlive.
Talk With an Advisor Today
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FAQs: Lifetime Annuity Income
Can I outlive my annuity income payments?
No. Lifetime income contracts pay for as long as you live; joint options can continue payments for a surviving spouse.
How do income riders compare with annuitization?
Income riders preserve contract control and a stated lifetime withdrawal amount, while annuitization permanently converts value into a payment stream. Each can guarantee lifetime income—compare features and flexibility before choosing.
Will my income keep up with inflation over time?
Some contracts offer inflation-adjusted increases or indexing strategies. Review options for annuity inflation protection if rising costs are a priority.
Is the income fully taxable every year?
Qualified income (IRA/401(k) funding) is generally fully taxable. Non-qualified income typically includes a tax-favored return of principal using the exclusion ratio until basis is recovered.
What happens if I die shortly after starting payments?
Depending on your election, beneficiaries can receive a refund of unused premium, a guaranteed period, or the remaining account value. Choose benefits that fit your legacy goals.
How do I compare today’s payout rates quickly?
Run scenarios with the on-page calculator, then check our current income annuity rates to see carrier-by-carrier payouts.
